Compensating balances to be maintained with the bank decrease the effective rate on a loan.
Answer the following statement true (T) or false (F)
False
A compensating balance is a minimum checking account balance that a firm must maintain with a bank to borrow funds, it is generally 10 to 20 percent of the amount of loans outstanding. Compensating balances can raise the effective rate on a loan. See 14-5: Computing the Cost of Short-Term Credit
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A. node B. process C. project D. system
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Indicate whether the statement is true or false
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Answer the following statement true (T) or false (F)