In this type of arrangement, any balances above a certain amount in a corporation's chequing account at the end of the business day are "removed" and invested in overnight securities that pay the corporation interest. This innovation is referred to as a ________.
A) sweep account
B) share draft account
C) removed-repo account
D) stockman account

Question

Quizplus · Accepted Answer

The arrangement described is known as a sweep account, where excess funds in a corporation's chequing account are automatically transferred or "swept" into an overnight investment. This helps the corporation earn interest on idle cash and maximizes the use of available funds. The other options (share draft account, removed-repo account, stockman account) do not accurately describe this specific arrangement.

In This Type of Arrangement, Any Balances Above a Certain