Final answer:
It is false that an ideal arrangement exists when a bank acts as both a corporate trustee and a commercial lender, as their duties and interests may conflict. Bondholders have legal rights separate from the bank's lending interest, and different mechanisms apply when a corporation fails to make payments on bonds or loans.
Step-by-step explanation:
The statement that an ideal arrangement exists when a bank acts as both corporate trustee and commercial lender to the same corporation, whereby the bank can act quickly and call in its loans if it appears that the corporation may have difficulty making its bond payments, is FALSE. While both a bank loan and a corporate bond are ways for a firm to borrow money, their dynamics are distinct.
A bank that serves as a trustee for bondholders has a fiduciary duty to act in the best interests of the bondholders, which may conflict with its interests as a lender. Hence, an ideal arrangement would maintain a clear separation of roles to avoid possible conflicts of interest between serving bondholders and protecting the bank's lending position.