Compensating Balance Refers to the Portion of an Unsecured Loan

question 77

Multiple Choice

Compensating balance refers to the portion of an unsecured loan that ________.

• A) is kept on deposit at a lending institution
• B) has already been paid by the borrower
• C) has not been paid by the borrower
• D) is charged by the lender as interest
• E) is not supported by any collateral securities

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Definitions:

Specify

To state or describe something clearly and precisely.

Revoke

To officially cancel, withdraw, or annul a decision, order, or agreement.

Impunity

Exemption from punishment or loss or escape from fines in cases where actions could typically result in such consequences.

Joint Tenancy

is a form of property ownership where two or more parties hold equal ownership interests, and the survivor(s) inherit any deceased's share.