Which of the Following Statements Involving the Promised Return on a Loan

question 66

Multiple Choice

Which of the following statements involving the promised return on a loan is NOT true?

• A)Credit risk may be the most important factor affecting the return on a loan.
• B)Compensating balances reduce the effective cost of loans for the borrower because the deposit interest rate is typically greater than the loan rate.
• C)Compensating balances represents the portion of the loan that must be kept on deposit at the bank.
• D)Compensating balance requirements provide an additional source of return for the lending institution.
• E)Increased collateral is a method of compensating for lending risk.

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Definitions:

Retail Outlets

Physical stores or shops where goods are sold directly to the consumer.

Market Entry

The strategy or process of introducing new products or services into a market, considering factors like competition and regulatory environment.

Sales Per Square Foot

A retail metric that measures the amount of revenue a business generates for every square foot of sales space, indicating efficiency and productivity.

Retail Space

The area or premises used for the selling of goods to the public, including stores, malls, and online marketplaces.