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A Firm Borrows $100,000 from the Bank, but Has to Maintain

question 74

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A firm borrows $100,000 from the bank, but has to maintain a compensating balance of $20,000 with the bank.The annual interest rate for the loan is 12%.What is the effective annual rate if the interest is compounded semi-annually?


Definitions:

Likely Products

Refers to the expected substances that result from a chemical reaction, based on the reactants and conditions.

Predominate Product

The main or most abundant product formed in a chemical reaction under the given set of conditions.

Major Product

The product that is formed in the greatest amount in a chemical reaction.

Geminal Dihalide

Organic compounds where two halogen atoms are attached to the same carbon atom.

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