Which of the Following Is True of Compensating Balances

question 51

Multiple Choice

Which of the following is true of compensating balances?

• A)Compensating balances increase the effective cost of a loan.
• B)Compensating balances allow firms to convert their receivables into cash quickly.
• C)Only a small percentage of businesses can issue compensating balances.
• D)Most compensating balances are unsecured.

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Definitions:

Macro Variables

Broad variables that describe the overall context of an economy, such as GDP, unemployment rates, inflation, and interest rates.

Micro Variables

Small-scale factors that can affect a business or research outcome; often specific to a particular area or sector.

Demographic Variables

Characteristics of populations used in market research, such as age, gender, income, and education, to segment markets.

Global

Pertaining to or involving the entire world; often used in the context of businesses that operate internationally.