Multiple Choice
A bank lends a firm $1,000,000 for one year at 12 percent on a discounted basis and requirescompensating balances of 10 percent of the face value of the loan. The effective annual interest rateassociated with this loan is
A) 15.4 percent.
B) 13.3 percent.
C) 12 percent.
D) 13.6 percent.
Correct Answer:
Verified
Correct Answer:
Verified
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