Finance Quiz Question 8

label Business & Finance
account_circle Unassigned
schedule 1 Day
account_balance_wallet $5

Nov 24th, 2014

Compensating balance
A minimum balance that must be maintained in an account. The compensating balance is often used to offset a portion of the cost that a bank faces when extending a loan or credit to an individual or business, and is usually calculated as a percentage of the loan outstanding. The account where the funds are held are typically non-interest bearing, and the bank is free to use the money in other investment opportunities.

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Nov 24th, 2014

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