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:

GAAP

A set of rules and standards designed to improve and standardize accounting practices, making financial statements comparable across companies.

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board (IASB) for global use.

Lower Of Cost Or Market

A method that values inventory at the lower of its historical cost or its current market price.