The Required Compensating Balance Is Usually Computed as a

question 100

Multiple Choice

The required compensating balance is usually computed as a

• A) percentage of customer loans outstanding.
• B) factor of accounts receivable.
• C) percentage of the bank's commitments toward future loans.
• D) two of the other answers are correct.

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Definitions:

Truth In Lending Act

A U.S. federal law designed to promote informed use of consumer credit by requiring clear disclosure of terms and conditions of lending agreements.

Commercial Use

Refers to the use of a product, service, or property in a business or profit-making activity as opposed to personal, non-commercial purposes.

Open-End Credit Plan

A revolving line of credit that allows a borrower to make purchases or obtain loans up to a certain limit and repay part or all of the balance over time, with interest charges on the unpaid balance.

Credit Card Issuer

The financial institution or entity that provides a credit card to consumers, extending credit for purchases and cash advances.