A default option is exercised when the holder requests a draw on the loan commitment.

Question

Quizplus · Accepted Answer

A default option is not exercised by the holder requesting a draw on the loan commitment; it refers to the situation where the borrower fails to meet the legal obligations of the loan agreement, potentially leading to default. Requesting a draw on a loan commitment is a normal part of utilizing a loan facility, not an exercise of a default option.

A Default Option Is Exercised When the Holder Requests a Draw