1. A compensating balance arrangement between a firm and its bank
a. increases the return on the loan to the bank.
b. forces the firm to keep a minimum balance in its checking account.
c. increases the cost of the loan to the firm.
d. all of the above
2. When a firm factors its accounts receivable as opposed to pledging them, the firm will:
a. offer the lender the accounts receivable as collateral to the loan
b. sell the accounts receivable at a discount to the lender
c. in all cases, remain liable for any uncollected accounts sold to the lender
d. none of the above