A Compensating Balance Arrangement Usually Results in Which of the Following

question 51

Multiple Choice

A compensating balance arrangement usually results in which of the following for a company?

• A) Increase its interest income.
• B) Increase the effective interest rate on corporate borrowing.
• C) Decrease the effective interest rate on corporate borrowing.
• D) Exhibit no change in the effective interest rate on corporate borrowing.

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Definitions:

Negative Exponents

A mathematical operation indicating the reciprocal of a number raised to a positive exponent, e.g., x^-n = 1/x^n.

Polynomials

Polynomials are mathematical expressions that consist of variables and coefficients, involving operations of addition, subtraction, multiplication, and non-negative integer exponents.

Linear Equations

Mathematical equations where any variables appear to the power of one and graph as straight lines.

Linear Equations

Mathematical equations that represent straight lines when graphed, typically expressed in the form y = mx + b.