Chapter 33: Medium and Long-Term Credit Products Flashcards
1
Q
Business Credit Products
A
Lender provides borrower with money/business or service
Borrower commits to pay back credit with interest
2
Q
Medium-term loans
A
Fixed term and fixed IR
8-10 years, up to 25 years
Bank must maintain certain ratio of liquid funds and cannot ensure liquidity for this over this period of time, so can place some loans with investors
3
Q
Interest and commission
A
IR for medium term loans is based on market IR for CM when loan is taken out
Banks also apply a charge on top and a signing fee
