When a Bank Requires That a Borrower Deposit Some of a Loan

question 28

Multiple Choice

When a bank requires that a borrower deposit some of a loan, the bank is

• A) requiring collateral.
• B) requiring compensating balances.
• C) credit rationing.
• D) none of the above.

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Definitions:

Salvage Value

The projected value of an asset when it reaches the end of its functional lifespan.

Profit Comparisons

The process of analyzing changes in profit metrics over time or against industry benchmarks to gauge financial health or performance.

Economic Differences

The variations in economic conditions and outcomes among different regions, populations, or time periods, often studied to improve economic policies.

Salvage Value Proportions

Estimated residual value of an asset after its useful life, represented as a portion of its original cost.