Which of the Following Statements Is FALSE

question 27

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) Another 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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Definitions:

Mean Number

The average value obtained by dividing the sum of all values in a dataset by the number of values.

Significance Level

A threshold in hypothesis testing, typically denoted by alpha, indicating the probability of rejecting the null hypothesis when it is actually true.

Known Variance

In statistics, refers to a situation where the variance of a population is a known quantity, facilitating certain types of inference.

P(T<=t) Two-Tail

The probability that the test statistic T will fall in either tail of its distribution, assuming the null hypothesis is true, used in two-tailed tests.