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) a and c are correct.

Question

Quizplus · Accepted Answer

The required compensating balance can be calculated as a percentage of customer loans outstanding or as a percentage of the bank's commitments toward future loans. Therefore, both options A and C are correct, making choice D the best answer. Option B, "factor of accounts receivable," is not a commonly used method for calculating a required compensating balance.

The Required Compensating Balance Is Usually Computed as a