Compensating balances
Explain the term: compensating balances and why do banks require compensating balances from some customers? When can a bank impose compensating balances?
Expert
Compensating balances are funds that a bank requires a customer to maintain in a non-interest bearing account until the loan is retired. Banks sometimes impose compensating balance requirements so as to increase the return of bank on a loan. Compensating balances are most likely to be used when the stated interest rate on a loan is below the bank’s required rate of return.
Illustrates an example of measure of risk aversion?
Who proposed the concept of market efficiency?
Explain the three financial factors that affect the value of a business.
Explain the argued of Eugene Fama regarding excess return.
You take a taxi by the train station to the conference place. The taxi number is 20,922. How many taxis are there in the city?
Explain the terms: diversifiable and non-diversifiable risk. Which one is more important to financial managers in business firms?
Define market participants in the foreign exchange market?The market participants which comprise the FX market can be categorized in five groups: international banks, non-bank dealers, bank customers, FX brokers, and central banks. Internation
Why is Crash Metrics Constructed?
What is Generalized Auto Regressive Conditional Heteroscedasticity?
Assume that the pound is pegged to gold at 6 pounds per ounce, while the franc is pegged to gold at 12 francs per ounce. Of course it implies that the equilibrium exchange rate ought be two francs per pound. If the current market exchange rate is 2.2 francs pe
18,76,764
1926825 Asked
3,689
Active Tutors
1433504
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!