Which of the Following Is Not True About Syndicated Loans

question 87

Multiple Choice

Which of the following is not true about syndicated loans?

• A) A borrower that receives a syndicated loan incurs various fees besides the interest rate.
• B) The loans are only denominated in U.S. dollars.
• C) The loans are provided by a group of banks to a borrower.
• D) The loans are usually formed in 6 weeks or less.

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Definitions:

Compounded Annually

The process of earning interest on an investment where the accrued interest is added to the principal sum once per year.

Nominal Rate

The nominal rate is the interest rate stated on a loan or investment agreement, not accounting for inflation or other factors that affect the real rate of return.

Compound Annual Rate

The rate at which an investment grows annually when interest is reinvested to earn additional interest.

Nominal Rate

The interest rate before adjustments for inflation or other factors, often referred to as the stated or face interest rate.