174k views
3 votes
The interest rate on the syndicated loan depends all of the following EXCEPT:?

1) currency denominating the loan.
2) maturity of the loan.
3) creditworthiness of the borrower.
4) loan provisions set by the International Monetary Fund.

1 Answer

6 votes

Final answer:

The syndicated loan interest rate is influenced by various factors except for interventions by the International Monetary Fund (IMF). Instead, it is influenced by the loan's currency, maturity, and the borrower's creditworthiness, among other economic indicators.

Step-by-step explanation:

The interest rate on a syndicated loan can be affected by a variety of factors, but not by the intervention of the International Monetary Fund (IMF). The factors that typically influence the interest rate on a loan include the currency denomination of the loan, the maturity of the loan, and the creditworthiness of the borrower. For instance, a borrower with a history of late payments poses a higher risk and may face higher interest rates.

Similarly, if the broader economic interest rates have risen, a low-interest loan made earlier becomes less attractive. On the other hand, a firm with high profits is seen as more likely to repay a loan, thus making the loan low-risk and more valuable. Additionally, the prevailing economic interest rates compared to the loan's fixed rate can affect a loan's attractiveness in the secondary market.

User Daoming Yang
by
8.0k points