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:

Mixed Blessing

A situation or event that has both positive and negative aspects.

Double Approach/Avoidance Conflict

A psychological conflict that arises when a person is faced with a decision involving both desirable and undesirable aspects of two conflicting goals.

Locus Of Control

A mental construct denoting how much people think they possess the power to influence occurrences that impact their existence.

Optimist

An individual who tends to be hopeful and confident about the future or the success of something.