The Eurocurrency Loan Market Is Characterized by Narrow Interest Rate

question 31

Multiple Choice

The Eurocurrency loan market is characterized by narrow interest rate spreads between deposit and loan rates. This is due in part to which of the following factors?

• A) The Eurocurrency market is a "wholesale" market.
• B) Loan amounts are very large, often in excess of $500,000.
• C) Eurocurrency borrowers are typically large, low-risk corporations or government entities.
• D) All of the above are legitimate reasons for the narrow spread in the Eurocurrency market.

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Definitions:

Reimbursement

The act of compensating someone for an expense or loss incurred.

Legal Liability

The legal responsibility to compensate for harm or damage caused by one's actions or failure to act.

Independent Contractor

A person who provides services to another entity under terms specified in a contract, but is not considered an employee of the company.

Office Equipment

Tangible property like desks, chairs, computers, and printers used in an office setting to facilitate work and operations.