Which of the following statements is FALSE?

A) Regardless of the loan structure, the bank may include a compensating balance requirement in the loan agreement that reduces the usable loan proceeds.
B) A common type of fee is a loan origination fee, which a bank charges to cover credit checks and legal fees.
C) Firms frequently use lines of credit to finance seasonal needs.
D) The commitment fee associated with a committed line of credit is designed to decreases the effective cost of the loan to the firm.

Answer: D