20-143 What is the credit equivalent amount of the off-balance-sheet letters of credit,both standby and commercial?

Question

Quizplus · Accepted Answer

The credit equivalent amount of off-balance-sheet letters of credit is calculated as a percentage of the face value. For standby letters of credit, the percentage is usually 100%, while for commercial letters of credit it can range from 50% to 100% depending on the nature of the underlying transaction. Assuming an average credit conversion factor of 60%, the credit equivalent amount of the off-balance-sheet letters of credit would be $80 million * 60% = $48 million. Therefore, the correct answer is C, $48 million.

20-143 What Is the Credit Equivalent Amount of the Off-Balance-Sheet