How Does a Financial Statement Audit Affect a Bank Manager's

question 54

Multiple Choice

How does a financial statement audit affect a bank manager's decisions in providing loans to a corporate client?

• A) Information risk could be reduced, so the bank manager may lower the interest rate charged.
• B) The bank manager will lower the risk-free interest rate that applies to the corporation.
• C) The business risk for the client will be reduced, so the borrowing costs will decline.
• D) The business risk for the client will be increased, so the borrowing costs will be lowered.

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Definitions:

Consumer Surplus

The offset between what customers are willing and able to pay for a service or product and what they actually expend.

Consumer Surplus

The distinction between the ideal spending amount of consumers on a good or service and their actual expenditure.

Government

The organization that is the governing authority of a political unit, responsible for creating and enforcing laws and managing public services.

Transfer

The movement of something from one place, person, or ownership to another, often without the exchange of money.