A Firm Borrows $200,000 from the Bank, but Has to Maintain

question 85

Multiple Choice

A firm borrows $200,000 from the bank, but has to maintain a compensating balance of $15,000 with the bank.The annual interest rate for the loan is 13%.What is the effective annual rate if the interest is compounded annually?

• A)12.03%
• B)13.00%
• C)14.05%
• D)14.41%

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Definitions:

Communications Channels

The mediums through which information is transmitted from one party to another, including verbal, written, and digital platforms.

Distraction

An event or object that draws someone's attention away from the task at hand or their intended focus.

Active Listening

The act of concentrating on the true meaning of what others are saying.

Sensing

The way listeners pay attention to the signals sent from the speaker.