During the Last Year You Have Had a Loan Commitment

question 75

Multiple Choice

During the last year you have had a loan commitment from your bank to fund working capital for your business. The total line available was $2,500,000, of which you took down $1,000,000. It is now the end of the loan commitment period and your bank is asking you to pay the back-end fees. You have misplaced the paperwork that listed the terms of the commitment, but you know you paid total fees (this does not include any interest paid to borrow the $1,000,000) of $15,000 on this loan commitment. You remember that the back-end fee was 30 basis points. Calculate the front-end fee on this loan commitment.

• A) 30 basis points
• B) 42 basis points
• C) 60 basis points
• D) 70 basis points

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Definitions:

Conditioned Stimulus

A stimulus that was once neutral but, after pairing with an unconditioned stimulus, now triggers a conditioned response.

Higher-order Conditioning

A form of conditioning involving the modification of reaction to a neutral stimulus by first associating this stimulus with another conditioned stimulus.

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, is able to elicit a conditioned response.

Unconditioned Stimulus

In behavioral psychology, a stimulus that naturally and automatically triggers a response without any learning process involved.