If P Is the Price of the Standby,NL Is the Cost

question 27

Multiple Choice

If P is the price of the standby,NL is the cost of a nonguaranteed loan,and GL is the cost of a loan backed by a standby guarantee,then a borrower is likely to seek an SLC if:

• A)P < (NL - GL).
• B)P > (NL - GL).
• C)P = (NL - GL).
• D)P < (NL + GL).
• E)P > (NL + GL).

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