A Compensating Balance

question 20

Multiple Choice

A compensating balance:

• A)requirement generally applies to inventory-type loans.
• B)is a means of paying for banking services received.
• C)requirement is generally set equal to one percent of the amount borrowed.
• D)decreases the cost of short-term bank financing.
• E)refunds a portion of the borrower's interest if a loan is repaid early.

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Definitions:

Psychological Disorder

A psychological disorder is a mental health condition characterized by disruptions in thought, behavior, emotions, or a combination of these, impacting daily functioning.

Antisocial Personality

A trait of individuals displaying behaviors that are against societal norms, including manipulation, deceit, and a lack of empathy; closely associated with antisocial personality disorder.

Schizophrenia

A chronic and severe mental disorder characterized by disturbances in thought, perception, and behavior, leading to detachment from reality (psychosis).

Depression

A mood disorder characterized by ongoing depressive feelings or a disengagement with usual pursuits, crucially undermining daily activities.