Basis Risk Occurs on a Loan Commitment Because the Spread

question 48

True/False

Basis risk occurs on a loan commitment because the spread of a pricing index over the cost of funds may vary.

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Definitions:

Moralistic

Pertaining to the expression of ideas about what is right or wrong behavior; often involving the imposition of moral standards onto others.

Superego

In Freudian psychoanalysis, the part of the personality that represents internalized ideals, moral standards, and conscience, acting to suppress urges of the id and striving to make the ego act morally.

Moral Component

The aspect of a decision, action, or character that pertains to principles of right and wrong behavior.

Personality

The unique combination of characteristics and traits that define an individual's patterns of thought, emotion, and behavior.