Explain banks circumtances to impose 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 that a bank needs a customer to maintain in a non-interest bearing account until the loan is retired.Banks occasionally impose compensating balance requirements so as to increase the bank's return on a loan.  Compensating balances are the majorly likely to be used when the stated interest rate on a loan is below the bank's required rate of return.

 

 


Related Discussions:- Explain banks circumtances to impose compensating balances

Show the objectives of inventory management, Q. Show the Objectives of Inve...

Q. Show the Objectives of Inventory Management? Objectives of Inventory Management- The objectives of Inventory Management are: To maintain a adequate large size of inventor

Find out the price of the swap from corporation's viewpoint, A company ente...

A company enters into a five-year interest rate swap along with a swap bank where it  agrees to pay the swap bank a fixed-rate of 9.75 percent yearly on a notional amount of DM15,0

Cash flow estimation and risk ananlysis.., as a financial analyst, you must...

as a financial analyst, you must evaluate a proposed project to produce printer ink. the equipment would cost 60000 plus 10000 for installation. annual sales would be 5000 units at

Savage friedman, Question: (a) Describe the axioms of utility. (b) An eco...

Question: (a) Describe the axioms of utility. (b) An economic agent has a logarithmic utility function, U(W) = lnw and has initial wealth $20,000. She is offered the subsequent g

Concept of yield spreads, The Central Bank is an authority responsible for ...

The Central Bank is an authority responsible for monetary policy of its country. It regulates money supply and credit, issues currency, and manages exchange rate.

Name a useful matrix for acquisitions is ansoff matrix, A useful matrix for...

A useful matrix for acquisitions is Ansoff Matrix (business strategy knowledge) Ansoff product/market growth strategies model is a framework for the creation of strategic optio

Role of the public expenditure management system, Question : (a) The ro...

Question : (a) The role of the Public Expenditure Management System (PEMS) is to allocate and use resources responsively, efficiently and effectively'. Briefly explain the abo

Explain why accounting profits and cash flows, Explain why accounting profi...

Explain why accounting profits and cash flows are not the same thing. Stock worth depends on future cash flows, their riskiness and their timing.  Profit calculations don't con

CVP analysis, What is the meaning of Breakeven point?

What is the meaning of Breakeven point?

I need urgent help in Financial Managment, How to get cost differential whe...

How to get cost differential when 100% done by a single party only.

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