Would It Be Worth It to Incur a Compensating Balance

question 137

Multiple Choice

Would it be worth it to incur a compensating balance of $4,000 in order to get a 1.5-percent-lower interest rate on a 1-year, pure discount loan of $300,000?

• A) Yes, if the interest rate is less than 13.64 percent
• B) No, if the interest rate is less than 13.64 percent
• C) Yes, if the interest rate is more than 1.5 percent
• D) Not enough information is given to determine

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Definitions:

Discrimination

The unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, or gender.

DSM-5

The 5th edition of the Diagnostic and Statistical Manual of Mental Disorders, published by the American Psychiatric Association, serving as a principal authority for psychiatric diagnoses.

DSM-IV

DSM-IV, or the Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, is a manual published by the American Psychiatric Association that classifies mental disorders based on specific criteria.

Dimensional Approach

A method used in psychology to describe and quantify the extent of an individual's traits or symptoms along a continuum, rather than categorizing them as present or absent.