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:

Contribute

To give or supply in common with others; providing a portion towards a common end, such as in a project or a pool of resources.

Benefit

An advantage or profit gained from something.

Long-Run Equilibrium

A state in which all aspects of the market, including supply and demand, are balanced over a sustained period.

Club Meeting

A gathering of members belonging to a specific club aimed at discussing agendas, activities, or other topics of mutual interest.