If a Bank Lends at 10% but Requires a 12

question 175

Multiple Choice

If a bank lends at 10% but requires a 12% compensating balance, what is the effective interest rate on the loan?

• A)10.0%
• B)10.8%
• C)11.4%
• D)12.0%
• E)12.6%

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Definitions:

Receiver

In communication, the individual or entity that interprets and responds to a message sent by a sender.

Communication Barriers

Obstacles that impede the flow or understanding of information between communicators.

Poor Choice

A decision or selection made that is considered suboptimal or bad in hindsight.

Defensiveness

The protective reaction or behavior individuals exhibit in response to perceived threats or criticism.