Loan Commitments Ratio Measures the Volume of Promises a Lender

question 39

True/False

Loan commitments ratio measures the volume of promises a lender has made to its customers to provide credit up to pre-specified amount over a given time period.

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Definitions:

Cash Payback Period

The time it takes for an investment to generate an amount of cash inflows equal to the initial cost of the investment.

Net Cash Flows

The difference between cash inflows and cash outflows within a specified period, reflecting the total amount of cash being transferred into and out of a business.

Estimated Cost

A projection or approximation of the cost associated with a particular project, product, or activity.

Cash Payback Period

The time it takes for an investment to generate enough cash flow to recoup the initial outlay.