When an FI Pre-Commits to Lending at a Fixed Rate

question 110

Multiple Choice

When an FI pre-commits to lending at a fixed rate, it is exposed to

• A)credit risk.
• B)interest rate risk.
• C)takedown risk.
• D)funding risk.
• E)exchange rate risk.

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Definitions:

Performance-Based Pay

A compensation system in which an employee’s financial remuneration is directly linked to their performance or productivity.

Advantages

The favorable positions or conditions gained by a person or organization that provide a better opportunity for success.

Disadvantages

Negative or unfavorable aspects and conditions that hinder success or effectiveness.

Labor Costs

Expenses related to compensating employees, including wages, salaries, benefits, and taxes, incurred by an employer.