A Bank Manager Lends a Corporate Client $1,000,000 for Six

question 26

Multiple Choice

A bank manager lends a corporate client $1,000,000 for six months. The bank charges a $1,000 fee to set up the loan. The corporate borrower repays $1,050,000 in six months. What is the effective annual rate on the loan?

• A) 5%
• B) 5.1%
• C) 10.25%
• D) 10.47%
• E) none of the above {$1,050,000/($1,000,000 - $1,000)}² - 1 = 10.47%

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Definitions:

Organizational Behavior

The study of individual and group dynamics within an organizational setting, focusing on improving job performance and well-being.

Organizational Variables

Factors or characteristics within an organization that can influence its operations and outcomes.

Total Quality Management

A management approach focused on continuous improvement of processes, products, and services, emphasizing quality control in every aspect of an organization's operations.

Forces

Influences or factors that cause changes within a system or process, potentially affecting outcomes.