Which of the Following Situations Is Similar to the Externality

question 86

Multiple Choice

Which of the following situations is similar to the externality effect?

• A)Exercising an adverse material change in conditions clause as a last resort,thereby canceling or repricing a loan commitment.
• B)Increase in the cost of funds above normal levels while many FIs scramble for funds to meet their commitments to customers during a credit crunch.
• C)In a loan commitment,the borrower takes down only part of the funds over the specified time-period.
• D)The buyer of a commercial letter of credit fails to perform as promised under a contractual obligation.

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Definitions:

Kaopectate

A medication used to treat mild diarrhea, known for its ability to coat the lining of the gastrointestinal tract.

Antibiotic

A type of medication used to treat bacterial infections by killing or inhibiting the growth of bacteria.

Duracillin

A long-acting form of penicillin used for treating bacterial infections by inhibiting the bacteria's cell wall synthesis.

Novocaine

A synthetic compound used as a local anesthetic in medical procedures, known chemically as procaine.