A Compensating Balance Arrangement Usually Results in Which of the Following

question 51

Multiple Choice

A compensating balance arrangement usually results in which of the following for a company?

• A) Increase its interest income.
• B) Increase the effective interest rate on corporate borrowing.
• C) Decrease the effective interest rate on corporate borrowing.
• D) Exhibit no change in the effective interest rate on corporate borrowing.

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Definitions:

Least Likely

Refers to the option or outcome with the lowest probability of occurring in a given set of circumstances.

Live In Poverty

This describes individuals or households whose income falls below a certain poverty line, indicating a lack of sufficient resources to meet basic living expenses.

Percentage Points

Percentage points are used to express an absolute difference between two percentages, emphasizing the distinction between percentage changes.

Total Income

The sum of all earnings obtained from labor, capital investments, and any other source before any taxes or deductions are applied.