Sweep Accounts

question 3

Multiple Choice

Sweep accounts

• A)have made reserve requirements nonbinding for many banks.
• B)sweep funds out of deposit accounts into long-term securities.
• C)enable banks to avoid paying interest to corporate customers.
• D)reduce banks' assets.

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Definitions:

Operating Cycle

The duration between the acquisition of inventory and the collection of cash from receivables.

Cash Cycle

The time period it takes for a company to convert its investments in inventory back into cash, through sales.

Accounts Receivable Period

The typical duration in days that a company requires to receive payments from its sales made on credit.

Restrictive Short-Term Financial Policy

A financial strategy that prioritizes maintaining a lower level of current assets relative to liabilities, often to maximize profitability at the expense of liquidity.