Many loan agreements with banks have market disruption clauses that allow banks to actually charge corporate borrowers their "real cost of funds," not just the published LIBOR.

Question

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Many loan agreements do contain market disruption clauses that allow banks to charge their "real cost of funds" instead of just the published LIBOR. This is because during times of market disruption, the LIBOR rate may not accurately reflect the bank's borrowing costs, and the bank may need to charge a higher rate to compensate for this.

Many Loan Agreements with Banks Have Market Disruption Clauses That