Assume a Bank Makes a Loan Commitment to the Value

question 17

Multiple Choice

Assume a bank makes a loan commitment to the value of $10m at a fixed interest rate of 10 per cent p.a. for a period of one year. Assume the borrower only uses 50 per cent of the provided funds over the course of the year. If the bank charges a back-end fee of 0.5 per cent, what is the additional revenue the bank would generate?

• A) None, unless the loan is prepaid early.
• B) $2500
• C) $25 000
• D) $5000

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Definitions:

Aspiration

The act of drawing in or out using a sucking motion, often refers to the medical procedure of removing substances from the body.

Respiratory

Pertaining to or affecting respiration or the organs involved in respiration.

Tuberculosis

A contagious bacterial infection that primarily affects the lungs but can also damage other parts of the body.

Tubercul

A term associated with tuberculosis, a contagious bacterial infection caused by Mycobacterium tuberculosis that primarily affects the lungs.