The Most Frequently Cited Justification for Requiring a Compensating Balance

question 135

Multiple Choice

The most frequently cited justification for requiring a compensating balance is:

• A) for a commission; to cover the costs of loaning the money
• B) to be reassured of some recovery in the event of bankruptcy of the firm
• C) to make bank borrowers also be depositors
• D) to pay interest for the use of the money

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Definitions:

Stress

The body's response to any demand or challenge, can be physical, mental, or emotional.

Transition

The process or period of changing from one state or condition to another, often involving development or adjustment.

Divorce

The legal dissolution of a marriage by a court or other competent body, ending the marital union and relieving both parties of marital obligations.

Increased Autonomy

The process or state of becoming more independent in one's thoughts, feelings, or actions.