Because of Compensating Balances and Fees Used to Increase Return

question 11

True/False

Because of compensating balances and fees used to increase return on a loan, the credit risk premium is not the fundamental factor driving the promised return once the base rate on the loan has been set.

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Definitions:

Professional Liability

A form of liability arising from the conduct of professionals such as doctors, lawyers, and accountants, due to negligence or malpractice in their professional duties.

Racketeer Influenced and Corrupt Organizations Act

A federal law aimed at combating organized crime in the United States by facilitating extended penalties for acts performed as part of a criminal organization.

Violation

The act of disobeying or acting against a law, rule, agreement, or code of conduct.

Imprisonment

The act of confining someone in a prison or other facility as a form of punishment following conviction for a crime.