Why Would a Bank Require a Company to Maintain a Compensating

question 102

Essay

Why would a bank require a company to maintain a compensating balance?

Understand the concept of dividends and calculate returns on stocks.

Calculate the present and future values of uneven cash flow streams.

Understand the impact of interest rates on loan repayments.

Calculate the amount borrowed or lent based on installment amounts.

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Definitions:

DC Machine

An electrical machine that operates on direct current (DC) and includes both motors and generators.

Large Wire

Refers to an electrical conductor of a significantly large cross-sectional area, capable of carrying large currents with minimal resistance.

Many Turns

Refers to a coil or winding composed of a large number of turns of wire, enhancing its magnetic field or inductance.

Small Wire

Refers to electrical conductors of relatively small diameter, often used for low current applications or intricate electronic or electrical connections.