A $200 Million Loan Commitment Has an Up-Front Fee of 20

question 36

Multiple Choice

A $200 million loan commitment has an up-front fee of 20 basis points and a back-end fee of 25 basis points on the unused portion.
-If 50 percent of the commitment is taken down, the back-end fee is

• A)$250,000.
• B)$4,000,000.
• C)$400,000.
• D)$775,000.
• E)$375,000.

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Definitions:

Insolvent Debtors

Individuals or businesses that are unable to meet their financial obligations or pay their debts as they become due.

Chattel Paper

A document or electronic record that evidences both a monetary obligation and a security interest in specific goods.

Right to Payment

A legal entitlement to receive money as a result of a contract or legal agreement.

Liquidation

The process of converting company assets into cash to pay off debts, often preceding the dissolution of the company.