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A Commitment Fee Is a Fee Charged on Unused Balance

question 98

True/False

A commitment fee is a fee charged on unused balance of a revolving credit agreement to compensate the bank for guaranteeing that the funds will be available when needed by the borrower.


Definitions:

Substitute Products

Goods or services that can be used in place of one another, where the increase in price of one leads to an increase in demand for the other.

Total Utility

The total amount of satisfaction derived from the consumption of a single product or a combination of products.

Marginal Utility

The additional satisfaction or benefit obtained from consuming one more unit of a good or service.

Consumer's Income

The total amount of income a person earns from work, investments, and other sources, influencing their purchasing power and demand for goods.

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