A a Written,legally Binding Agreement That Obligates the Bank to Lend

question 48

Multiple Choice

A a written,legally binding agreement that obligates the bank to lend a firm any amount up to a stated maximum,regardless of the financial condition of the firm (unless the firm is bankrupt) as long as the firm satisfies any restrictions in the agreement is called

• A) a bridge loan.
• B) a single, end-of-period-payment loan.
• C) a short-term mortgage loan.
• D) a committed line of credit.

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Definitions:

WACC

Weighted Average Cost of Capital; a measure of a firm's cost of capital in which each category of capital is proportionately weighted.

After-Tax Cost

The cost of a transaction or financial product after accounting for the effects of taxes on its overall expense.

Retained Earnings

The portion of a company's profits that is retained and reinvested in the company rather than distributed to shareholders as dividends.

Tax Treatments

The specific methods or rules applied in calculating tax obligations or entitlements for different forms of transactions or entities.