Compensating Balances

question 98

Multiple Choice

Compensating balances:

• A) are used by banks as a substitute for charging service fees.
• B) are created by having a concentration account.
• C) generate returns to customers from interest bearing accounts.
• D) are used to reward new accounts.

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Definitions:

Lifetime Subscription

A one-time payment plan for a product or service that grants the subscriber access for the lifetime of the product or service.

Annually

Occurring once every year.

Renewal Rate

The percentage of customers or subscribers who choose to renew their contracts or agreements over a specified period.

Constant Dollar Withdrawals

A method of withdrawing funds from an investment account where the amount adjusted for inflation remains the same over time.