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A firm borrows $100,000 from the bank, but has to maintain a compensating balance of $20,000 with the bank. The annual interest rate for the

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A firm borrows $100,000 from the bank, but has to maintain a compensating balance of $20,000 with the bank. The annual interest rate for the loan is 12%. What is the effective annual rate if the interest is compounded quarterly? Select one: a. 13.00% b. 12.03% C. 14.05% d. 15.87%

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