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:

Representativeness

A cognitive heuristic in decision-making, where the similarity of objects or events is used to infer the probability of an event or the categorization of an object.

Intrinsic Task Motivation

The drive to engage in an activity for the inherent satisfaction and interest in the task itself, rather than for external rewards.

Domain-Relevant Skills

Specific abilities or expertise that are necessary and relevant to excel in a particular field or domain.

Creativity-Relevant Processes

Cognitive and behavioral mechanisms that facilitate the generation of novel and useful ideas or solutions.