A Compensating Balance: I

question 39

Multiple Choice

A compensating balance: I. is required when a firm acquires bank financing other than a line of credit.
II) increases the cost of short-term bank financing.
III) represents an opportunity cost to the lending institution.
IV) is often used as a means of paying for banking services received.

• A) I and III only
• B) II and IV only
• C) II and III only
• D) I and IV only
• E) I, II and IV only

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Definitions:

Retrieve Information

The cognitive process of recalling or accessing information stored in memory.

Icon

A sensory memory for visual stimuli.

Stimuli

External events or occurrences that elicit responses from sensory organs, leading to a reaction or a specific behavior in an organism.

Long-Term Memory

The aspect of memory where information is stored for extended periods, potentially for a lifetime, comprising of knowledge, experiences, and skills.