A Compensating Balance: I

question 97

Multiple Choice

A compensating balance: I.is required when a firm acquires bank financing other than a line of credit.
II) increases the cost of short-term bank financing.
III) represents an opportunity cost to the lending institution.
IV) is often used as a means of paying for banking services received.

• A)I and III only.
• B)II and IV only.
• C)II and III only.
• D)I and IV only.
• E)I, II and IV only.

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Definitions:

Tolerance

The process of becoming less responsive to a substance or stimulus after repeated exposure.

Withdrawal

A consequence of drug dependence that occurs when the drug is withheld, such that the person feels strong drug cravings and psychological and medical distress.

Cravings

Intense, urgent, or abnormal desires or longings, especially for food or substances.

Emotional Experiences

The internal personal feelings and reactions to events or thoughts, which can vary greatly in intensity and type.