Banks Sometimes Require Borrowers to Maintain an Average Demand Deposit

question 251

Multiple Choice

Banks sometimes require borrowers to maintain an average demand deposit balance equal to from 10 percent to 20 percent of the amount borrowed, this is called:

• A) line of credit
• B) compensating balance
• C) commitment fee
• D) revolving credit agreement

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Definitions:

Perishable

Describes products or services that have a limited life span or expiry date, after which they are no longer usable or valuable.

Empowerment Gap

The disparity between groups in their access to resources and opportunities that allow for empowerment and decision-making.

Service Gap

Results when a service fails to meet the expectations that customers have about how it should be delivered.

Knowledge Gap

The difference in understanding or information between individuals or groups, especially in relation to access or comprehension of specific subject matter.