11-52 from the Perspective of an FI,which of the Following

question 79

Multiple Choice

11-52 From the perspective of an FI,which of the following is an advantage of a floating-rate loan?

• A)Stable interest payments will be received throughout the loan period.
• B)The pre-specified interest rate remains in force over the loan contract period no matter what happens to market rate.
• C)The bank can request repayment of a loan at any time in the contract period.
• D)The default risk is completely eliminated.
• E)The interest rate risk is transferred to the borrower.

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Definitions:

Social

Relating to society or its organization; the interaction between individuals or groups.

Emotional

Relating to feelings or the process of expressing feelings; a psychological state involving thoughts, physiological changes, and an outward expression.

Hindsight Bias

is the tendency to believe, after an event has occurred, that one would have predicted or expected the outcome.

Just-World Phenomenon

A cognitive bias that leads people to believe that the world is inherently fair, causing them to rationalize an unjust situation as deserved by the victim.