A bank\"s commitment to provide a firm with loans up to pre-specified limit at an interest rate...

1) Long-term customer relationships ________ the cost of information collection and make it easier to ________ credit risks.

A) reduce; screen

B) increase; screen

C) reduce; increase

D) increase; increase

2) Unanticipated moral hazard contingencies can be reduced by

A) screening.

B) long-term customer relationships.

C) specialization in lending.

D) credit rationing.

3) A bank\"s commitment to provide a firm with loans up to pre-specified limit at an interest rate that is tied to a market interest rate is called

A) an adjustable gap loan.

B) an adjustable portfolio loan.

C) loan commitment.

D) pre-credit loan line.

4) Property promised to the lender as compensation if the borrower defaults is called ________.

A) collateral

B) deductibles

C) restrictive covenants

D) contingencies