Assume that Bank A finances the media industry and Bank B finances the telecommunications industry, and Bank
Question:
Assume that Bank A finances the media industry and Bank B finances the telecommunications industry, and Bank C acts as an intermediary between these banks to mitigate their risk exposure. Bank A receives interest payments on $10,000,000 of outstanding loan receivables, which it pays to Bank C as the intermediary. Bank B also receives $10,000,000 in interest payments for outstanding loan receivables that it sends to Bank C, which switches the payments between Bank A and Bank B. Under this arrangement, Bank A receives the interest payments from Bank B, while Bank B receives interest payments from Bank A. What type of credit funding product does this facility structure represent?
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer