A Compensating Balance Is a Checking Account Balance Equal to a Certain

question 38

True/False

A compensating balance is a checking account balance equal to a certain percentage of the amount borrowed from a bank under a line-of-credit or revolving credit agreement.

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Definitions:

Probabilities

The measure of the likelihood that an event will occur, quantified as a number between 0 and 1, where 1 indicates certainty.

Escalation of Commitment

Escalation of commitment refers to the phenomenon where individuals or groups continue to invest in a decision or project despite evidence of its ineffectiveness or failure, often due to cognitive biases.

Avoiding Trap

A decision-making error where individuals choose to evade or postpone decisions to avoid conflict or mistakes.

Determine Right Course of Action

The process of making decisions that align with one’s ethics, goals, and the available information to achieve the best outcome.