Interest Rate Risk Is Part of the Loan Commitment Contingent

question 6

True/False

Interest rate risk is part of the loan commitment contingent risk because of the uncertainty of changes in interest rates before the borrower exercises his option to borrow.

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Definitions:

Long-Lived Assets

Assets with a useful life extending beyond one year, used in the operation of a business, such as equipment or buildings.

Allocated To Expense

A method of assigning or distributing costs among various accounts or periods as expenses.

Net Income

The net earnings of a business following the subtraction of all costs and taxes from the gross income.