13-70 Which of the Following Situations Is Similar to the Externality

question 105

Multiple Choice

13-70 Which of the following situations is similar to the externality effect?

• A)Exercising an adverse material change in conditions clause as a last resort,thereby canceling or repricing a loan commitment.
• B)Increase in the cost of funds above normal levels while many FIs scramble for funds to meet their commitments to customers during a credit crunch.
• C)In a loan commitment,the borrower takes down only part of the funds over the specified time-period.
• D)The buyer of a commercial letter of credit fails to perform as promised under a contractual obligation.
• E)All of the above.

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Definitions:

Crystal Ball

A forecasting and risk analysis software used in financial, operational, and project applications.

Program Evaluation and Review Technique

The Program Evaluation and Review Technique (PERT) is a project management tool used to estimate the duration of a project by analyzing the time required for various tasks.

Project Management

The practice of initiating, planning, executing, controlling, and closing the work of a team to achieve specific goals and meet specific success criteria at a specified time.

Central Limit Theorem

A statistical theory that states that, given a sufficiently large sample size from a population with a finite level of variance, the mean of all samples will be approximately equal to the mean of the population.