Which of the following statements is FALSE?

Select one: a. A common type of fee is a loan origination fee, which a bank charges to cover credit checks and legal fees. b. Firms frequently use lines of credit to finance seasonal needs. c. Regardless of the loan structure, the bank may include a compensating balance requirement in the loan agreement that reduces the usable loan proceeds. d. The commitment fee associated with a committed line of credit is designed to decreases the effective cost of the loan to the firm.

Which of the following statements is FALSE?

Select one:

a. A common benchmark rate is the London Inter-Bank Offered Rate, or LIBOR, which is the rate of interest at which banks borrow funds from each other in the London interbank market.

b. With a variable interest rate, the terms of the loan may indicate that the rate will vary with some spread relative to a benchmark rate, such as the yield on one-year Treasury securities or the prime rate.

c. With a discount loan, the borrower is required to pay the interest at the beginning of the loan period.

d. The prime rate is the rate banks charge other banks.