Would It Be Worth It to Incur a Compensating Balance

question 47

Multiple Choice

Would it be worth it to incur a compensating balance of $4,000 in order to get a 1.5-percent-lower interest rate on a 1-year, pure discount loan of $300,000?

• A) yes if the interest rate is less than 13.64%
• B) no if the interest rate is less than 13.64%
• C) yes if the interest rate is more than 1.5%
• D) not enough information is given to determine

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Definitions:

Quantity Supplied

The amount of a good or service that producers are willing to offer for sale at a particular price over a given period of time.

Economy Moves

The dynamic changes and shifts in economic activity and trends over time, including growth, recession, and recovery phases.

Demand

The quantity of a product or service that consumers are willing and able to buy at a given price over a specified period.

Quantity Supplied

The complete quantity of a product or service that producers are prepared and can offer for sale at a certain price during a particular timeframe.