Which of the Following Is True of an 'Adverse Material

question 28

Multiple Choice

Which of the following is true of an 'adverse material change in conditions clause' used in a loan commitment?

• A)It allows the FI to cancel or reprice a loan commitment.
• B)It protects the lender against takedown risk.
• C)It protects the lender against basis risk.
• D)Exercise of the clause helps defaulted borrowers.

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Definitions:

Double Bonds

Double bonds are chemical bonds between two chemical elements involving four bonding electrons as opposed to two in a single bond.

Compound

A substance formed from two or more elements chemically united in fixed proportions.

Chloromethane

A colorless, flammable gas with a slight sweet odor, used in the production of silicones and butyl rubber.

Ethyne

A hydrocarbon compound with the formula C2H2, also known as acetylene, used as a fuel and a chemical building block.