Define compensating balances, Financial Management

Assignment Help:

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?

Compensating balances are funds which a bank needs a customer to keep in a non-interest bearing account till the loan is retired.  Banks occasionally impose compensating balance needs so as to increase the bank’s return on a loan.  Compensating balances are most similarly to be employed when the stated interest rate on a loan is below the bank’s required rate of return.


Related Discussions:- Define compensating balances

Stock Valuation, You have just purchased a stock that would pay the dividen...

You have just purchased a stock that would pay the dividends of the first four years as D1 = $0.65, D2 = $0.74, D3 = $0.79, D4 = $0.84. You were also told that the dividends would

Functions of finance financial management, Q. Explain Functions of Finance ...

Q. Explain Functions of Finance Financial Management? Functions of Finance or else Financial Management: - The functions of Financial Management are: (1) Determining the Fin

Australian securities and investment commission, Australian Securities and ...

Australian Securities and Investment Commission: The Australian Securities and Investment Commission (ASIC) is an independent government body established by the ASIC Act 1989.

What is unsanctioned expenditure, Q. What is Unsanctioned Expenditure? ...

Q. What is Unsanctioned Expenditure? The expenditure, which is regularly incurred without the sanction of the competent authority or beyond the sanctioned limit of funds provid

Explains the reason for the negative synergistic gains, What can be the rea...

What can be the reason for the negative synergistic gains for British acquisitions of U.S. firms? Negative synergies for British acquisitions of U.S. firms (united state firms) m

Common size and index analysis, sk company had the following balance sheets...

sk company had the following balance sheets and income statements over the last 3 years

Reinvestment income, Other than zero coupon bonds, all fixed in...

Other than zero coupon bonds, all fixed income securities make periodic payments in the form of coupon interest. This coupon interest can be rei

Define country’s economic well being enhanced, How is a country’s economic ...

How is a country’s economic well-being enhanced through free international trade in goods and services? As per to David Ricardo, with free international trade, it is mutually adv

Day traders, Day Traders Day traders are basically the market markers. ...

Day Traders Day traders are basically the market markers. They create liquidity in the market by frequently buying and selling stocks throughout the day in the hope that the pr

LEVERAGE, Evaluate the importance of leverage in financial management of a ...

Evaluate the importance of leverage in financial management of a small scale company

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd