How Does a Syndicate Affect the Interest Rate That an MNC

question 41

Multiple Choice

How does a syndicate affect the interest rate that an MNC can expect to pay for a loan?

• A)Since syndicates pool resources to make loans,each participant in the syndicate assumes less risk related to the loan,and lower risk usually results in a lower interest rate on the loan.
• B)Since syndicates are government-sponsored institutions,they can obtain funds at less cost than other institutions,so they can loan money to MNCs at a lower interest rate.
• C)Since there is a significant cost involved in forming a syndicate,the interest rates charged by syndicates on the loans they make are higher to compensate for the increased costs.
• D)Since syndicates loan money to MNCs,the interest rates that they charge are the same interest rates that the MNC could obtain from any other source of funds.

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Definitions:

Sampling

The process of selecting a subset of individuals, objects, or observations from a larger population to make inferences about the whole.

Observational Studies

Research methods in which subjects are observed in their natural environment without any intervention by the researcher.

Reactivity

The tendency of a person to alter their behavior or response due to the awareness of being observed or measured.

Directionality Problem

An issue that arises when it is unclear whether one variable causes changes in another or vice versa, complicating the interpretation of study results.