An "adverse material changes in conditions" clause is included in loan commitments to protect the FI against
A)credit risk.
B)interest rate risk.
C)takedown risk.
D)funding risk.
E)exchange rate risk.

Question

Quizplus · Accepted Answer

An "adverse material changes in conditions" clause is included in loan commitments to protect the financial institution against credit risk. This clause allows the lender to cancel the commitment or adjust the terms of the agreement if there is a significant negative change in the borrower's creditworthiness or financial condition.

An "Adverse Material Changes in Conditions" Clause Is Included in Loan