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The problem facing the US financial system in the late 1980s

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The problem facing the US financial system in the late 1980s and early 1990's had which of the following characteristics?;A. Collapse of real estate values;B. International banking competition;C. Increased debt in highly leveraged companies;D. All of the above;Kenneth's Arrows and Bows borrows $10,000 for one year at 12 percent interest. What is the effective rate of interest if the loan is discounted?;A. Less than 12.5 percent;B. More than 12.5 percent, but less than 13.5 percent;C. More than 13.5 percent, but less than 14.5 percent;D. More than 14.5 percent;Compensating balances;A. are used by banks as a substitute for charging service fees.;B. are created by having a sweep account.;C. generate returns to customers from interest bearing accounts.;D. are used to reward new accounts;Koopman's Chickens, Inc. plans to borrow $300,000 from its bank for one year. The rate of interest is 10 percent, but a compensating balance of 15 percent is required. What is the effective rate of interest?;A. Less than 11.4 percent;B. More than 11.4 percent, but less than 11.6 percent;C. More than 11.6 percent, but less than 11.8 percent;D. More than 11.8 percent

 

Paper#33703 | Written in 18-Jul-2015

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