The Effective Rate on a Loan with a 7% Stated

question 72

Multiple Choice

The effective rate on a loan with a 7% stated rate and 15% compensating balance is approximately ________.

• A) 11%
• B) 7.2%
• C) 8.2%
• D) 1.1%

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Definitions:

Current Asset

An asset likely to be converted into cash, sold, or consumed within one year or the operating cycle, whichever is longer.

Current Liability

A debt or obligation that is due within one year.

Revenue

The sum of money a business earns from selling products or offering services over a specific period.