How Does a Financial Statement Audit Affect a Bank Manager's

Multiple Choice

How does a financial statement audit affect a bank manager's decisions in providing loans to a corporate client?

A) Information risk could be reduced, so the bank manager may lower the interest rate charged.
B) The bank manager will lower the risk-free interest rate that applies to the corporation.
C) The business risk for the client will be reduced, so the borrowing costs will decline.
D) The business risk for the client will be increased, so the borrowing costs will be lowered.