1.What are compensating balances and why do banks require them from some customers? Under what circumstances would banks be most likely to impose compensating balances? .
2.What happens when a bank charges discount interest on a loan?
3.What is trustworthy collateral from the lenders’ perspective? Explain whether accounts receivable and inventory are trustworthy collateral.
4.Trade credit is free credit. Do you agree or disagree with this statement? Explain.
5.What are the pros and cons of commercial paper relative to bank loans for a company seeking short-term financing?