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Question
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.
Answer
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Related questions
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