Which of the following statements is correct about a corporation that borrows from its bank at "Prime plus one %?" The interest rate:
A) is set at a level of the prime rate at initiation of the loan, plus one %.
B) can fluctuate up to 1 % upwards over the life of the loan.
C) can be changed upwards but not downwards over the life of the loan.
D) can be changed upwards or downwards in accordance with prime rate changes over the life of the loan.
Correct Answer:
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