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

question 35

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% EAR with comp.Bal.=

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Definitions:

Freud

An Austrian neurologist named Sigmund Freud introduced psychoanalysis, a therapeutic approach aimed at treating mental health issues through discussions between a psychoanalyst and their patient.

Thanatos

A concept in psychoanalytic theory referring to an instinctual drive towards death or self-destruction.

Coping Strategies

Techniques or methods that individuals use to manage or mitigate stressful or difficult situations.

Gender Difference

Variabilities in characteristics, behaviors, or attitudes between males and females, often influenced by biological, social, and cultural factors.