General Rent-All's officers arrange a $50,000 loan for the company. The company is required to maintain a minimum checking account balance of 10% of the outstanding loan. This practice is called

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The practice of maintaining a minimum checking account balance in order to secure a loan is known as a compensating balance. This ensures that the lender has a certain level of security, and is able to withdraw funds if necessary, in order to protect their investment.

General Rent-All's Officers Arrange a $50,000 Loan for the Company