Suppose that you deposit $8,000 in your bank and the required reserve ratio is 15 percent. The maximum loan your bank can make as a direct result of your deposit is: (enter a whole number)
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- What is Money? What makes it useful? Explain its primary and derivative functions of Money? (1000 words)Suppose that you deposit $8,000 in your bank and the required reserve ratio is 15 percent. The maximum loan your bank can make as a direct result of your deposit is: (enter a whole number)Would you consider deposits of money in banks and similar situations, such as savings deposit and current account deposits, contracts of depositum or mutuum?
- Consider a bank that has made a large number of loans at a fixed interest rate of 4% and pays 3% interest to depositors. Assume that interest rates go up. New loans are now being made at 6% throughout the economy and depositors are being paid 5% interest. How does this change affect the bank's financial position? (1oint-The Golden State Bank has total cash reserves of $110,000, deposits of $200,000, and loans of $90,000. The reserve requirement is 5 percent. This bank can make additional loans up to the amount of: $10,000 $5,500 $100,000 $190,000Case Study // BANKING IN A GLOBAL WORLD: HOW DO LARGE BANKS MAKE MONEY? Bank of America Bank of America borrowed $80,000,000 at 5% interest for 180 days from a Japanese investment house. At the same time, the bank made the following three loans, each for the exact same 180-day period: 1. A 7% simple interest note for $38,000,000 to a Canadian firm that extracts oil from Canadian tar sands; 2. An 8.2% simple discount note for $27,500,000 to a European contractor building a factory in South Africa; and 3. An 8% simple discount note for $14,500,000 to a Louisiana company building minesweep- ers in New Orleans for the British government. (a) Find the difference between interest received and interest paid by the bank on these funds. (а) (b) The bank did not loan out all $80,000,000. Find the amount it actually loaned out. (b) (c) Find the effective rate of interest to the nearest hundredth of a percent. (c) This seems like a low rate. However, Bank of America did this using funds borrowed…
- Total reserves that a bank has at the Fed are $14 million. Currently the bank has excess reserves of $5 million and has made loans of $100 million. The Fed's reserve requirement for the bank is 6%. What is the maximum deposit level (in $ millions) the bank can expand to by utilizing its excess reserves? [Input your answer rounded to 1 decimal places. Just input the numerical value. You do not need to put the $ symbol or "millions" in your answer.]suppose that you deposit 8000 in your bank and the required reserve ration is 15 percent the maximum loan your bank can make as a direct result of your deposit is11. Macroland has a very simple banking system, in which there is only one chartered bank (The First Bank). The government of Macroland imposes a minimum required reserve ratio of 3%. Individuals in Macroland hold a fixed amount of $1200 in the form cash to facilitate their daily transactions and will deposit any excess amount of money into their bank accounts. The initial balance sheet of the First Bank is as follows: Assets Liabilities & Equity Reserves $255 Chequable deposits $7500 Loans $7400 Shareholder equity $155 Note: Unless otherwise stated, the First Bank will hold the excess reserves fixed at the current level as shown in the initial balance sheet and will lend out any surplus of reserves beyond this. a. Find the required reserves and the excess reserves held by the First Bank. b. Suppose there is a change in money demand such that people increase their cash holdings by $45 by withdrawing cash from their bank accounts. By how much will the money supply change? c. Return to…
- Explain the impact of interest rate change in a bank income and net worth1. Inventory in detail all the vehicles you use for managing your cash flows, Include all your accounts that are mediated through banks and finance companies. Also, list your cards issued by banks, such as debit or ATM cards, and identify any direct deposits and automatic payments that are made through your savings and checking accounts. How might you further enhance your cash management through the use of banking tools?11. The monies that are very liquid such as cash, checkable (demand) deposits, and traveler's checks are considered to be
