First National Bank Has an Employee Benefit Program Whereby All

question 140

Multiple Choice

First National Bank has an employee benefit program whereby all bank employees who meet the bank's credit underwriting standards may obtain consumer loans for major purchases or expenses at a rate that is less than the bank's prime rate. Can the bank allow its executive officers to borrow under this program?

• A) No. Executive officers may not have preferential interest rates under any circumstances.
• B) No. However, the related interests of the executive officers may take advantage of it.
• C) Yes. However, executive officers must secure their loans with collateral valued at 100 percent of the loan balance or more.
• D) Yes. Provided the program is available to everyone at the bank as an employee benefit, executive officers may also participate.

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Definitions:

Specially Made

Refers to goods that are custom-made to the specifications of a particular buyer, often not suitable for sale to others in the ordinary course of the seller's business.

Fraud

Purposeful falsehood carried out to obtain personal advantages or to injure someone else.

Substantial Beginning

A substantial beginning refers to a significant amount of work or progress that has occurred, typically in the context of a project or endeavor.

Unenforceable

Refers to a term or contract that cannot legally be enforced by the courts due to various reasons such as violating law or being against public policy.