Which of the Following Statements Is FALSE

question 103

Multiple Choice

Which of the following statements is FALSE?

• A) Regardless of the loan structure, the bank may include a compensating balance requirement in the loan agreement that reduces the usable loan proceeds.
• B) A common type of fee is a loan origination fee, which a bank charges to cover credit checks and legal fees.
• C) Firms frequently use lines of credit to finance seasonal needs.
• D) The commitment fee associated with a committed line of credit is designed to decreases the effective cost of the loan to the firm.

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