Compensating Balances

question 46

Multiple Choice

Compensating balances:

• A) are used to finance inventories.
• B) earn high rates of interest for the firm.
• C) are ordered monthly (or quarterly) following forecasts based on cash budget analysis to compensate for shortfalls.
• D) increase the effective interest earned by banks on credit lines.
• E) require a commitment fee.

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Definitions:

Problem-solving Groups

Teams or collectives formed with the specific purpose of addressing and finding solutions to specific challenges or issues.

Target Setting

The process of establishing specific, usually quantifiable, goals to be achieved in a negotiation or strategic plan.

Negotiator Effort

The amount of energy, time, and resources committed by a negotiator to prepare for and engage in the negotiation process.

Multiple-issue Negotiations

Negotiations that involve several different issues or aspects, allowing for more complex interactions and opportunities for trade-offs.