Which of the Following Statements Is True

question 17

Multiple Choice

Which of the following statements is true?

• A)Loan contracts are bank debt contracts that generally have longer term to maturity than bond contracts.
• B)The longer term nature of loans allows the financial intermediary to exercise more monitoring power and control over the borrower.
• C)When bank loan contracts are sufficiently long term, the banker almost becomes like an insider to the firm.
• D)None of the listed options are correct.

---

Definitions:

Political Risk

The risk of losses due to political instability or changes in government policy that can affect investment values or business operations.

Foreign Direct Investment

An investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country.

Reputational Risk

The potential of losing stakeholder trust or diminishing brand value due to negative public opinion.

Valuation Risk

The potential for loss that arises from inaccuracies or errors in assessing the value of assets, liabilities, or investments.