Interest Rate Risk Is Part of the Loan Commitment Contingent

question 102

True/False

Interest rate risk is part of the loan commitment contingent risk because of the uncertainty of changes in interest rates before the borrower exercises his option to borrow.

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Definitions:

Shrimp

A small, decapod crustacean commonly found in marine and freshwater environments, often used as food.

Midpoint Formula

A method used to calculate the elasticity of demand or supply by averaging the start and end points of a range.

Price Elasticity

A gauge for the sensitivity of the amount of a good that is demanded or offered to alterations in its pricing.

Quantity Supplied

The amount of a particular product that a firm would be willing and able to offer for sale at a particular price during a given time period.