The Inclusion of a Compensating Balance Requirement in a Line

question 88

True/False

The inclusion of a compensating balance requirement in a line of credit will reduce the effective annual cost of credit since the bank has additional collateral for the borrowing.

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Definitions:

Significant

Indicates that the results in statistical analysis are likely not due to chance, and there is a certain degree of reliability in the findings.

Power

The probability that a statistical test will correctly reject a false null hypothesis, a measure of a test's capability to detect an effect when there is one.

Hypothesis Testing

A statistical method used to evaluate the plausibility of a hypothesis by using sample data.

Confidence Level

A measure of how certain one can be about the accuracy of the results obtained from a statistical test, often expressed as a percentage like 95% or 99%.