Which of the Following Is True of an 'Adverse Material

question 28

Multiple Choice

Which of the following is true of an 'adverse material change in conditions clause' used in a loan commitment?

• A)It allows the FI to cancel or reprice a loan commitment.
• B)It protects the lender against takedown risk.
• C)It protects the lender against basis risk.
• D)Exercise of the clause helps defaulted borrowers.

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Definitions:

Adam Smith

An 18th-century Scottish economist and philosopher, often considered the father of modern economics, best known for his work "The Wealth of Nations" which promotes the idea of free markets and the invisible hand guiding economic activity.

Public Interest

The welfare or well-being of the general public; often used to justify government actions or policies intended to protect or benefit the population as a whole.

Selfish Interests

Actions or motives focused primarily on one's own advantage, benefit or well-being, often at the expense of others.

American Industry

The sector of the U.S. economy involved in the production of goods and services, encompassing a wide range of activities from manufacturing to technology.