Multiple Choice
A bank lends a firm $500,000 for one year at 8 percent and requires compensating balances of 10percent of the face value of the loan. The effective annual interest rate associated with this loan is
A) 8 percent.
B) 7.0 percent.
C) 8.9 percent.
D) 7.2 percent.
Correct Answer:
Verified
Correct Answer:
Verified
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