Which of the Following Situations Is Similar to the Externality

question 65

Multiple Choice

Which of the following situations is similar to the externality effect?

• A)Exercising an adverse material change in conditions clause as a last resort, thereby canceling or repricing a loan commitment.
• B)Increase in the cost of funds above normal levels while many FIs scramble for funds to meet their commitments to customers during a credit crunch.
• C)In a loan commitment, the borrower takes down only part of the funds over the specified time-period.
• D)The buyer of a commercial letter of credit fails to perform as promised under a contractual obligation.
• E)All of the options.

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Definitions:

Random Mixture

A combination of elements or items without any specific order or pattern.

Natural Environment

The physical, chemical, and biological conditions that exist in an area, not influenced or altered by human activity.

"Survival of the Fittest"

A phrase often associated with natural selection, describing the process by which organisms better adapted to their environment tend to survive and produce more offspring.

Self-Awareness

The act of knowing one's own identity, emotions, reasons behind actions, and desires.