A bank almost always insists that the firms it lends tokeep compensating balances at the bank. Why?

Q: Differentiate between deposit taking and non-deposit taking financial institutions with one real…

A: There are many types of financial institutions in the economy. The main two types of financial…

Q: The fed is responsible for keeping the banking industry stable. True or false

A: For the production and consumption of goods, economic agents have derived a barter system. In the…

Q: What is the major function of general banking operation?

A: When talking about banking operations, it can be said that this market includes the exchange of…

Q: What is the term used to describe policy made by the Bank of Canada?

A: In an economy, there are different types of economic policies made by the government of a country or…

Q: Are Deposit Insurance Institutions necessary in countries with no history of bank failures?

A: Deposit insurance is a measure carried out in numerous nations to safeguard bank investors, in full…

Q: A bank that has liabilities of $180 billion and a net worth of $20 billion must have

A: In a market, a net worth of a firm, bank or any other organization provide information about the…

Q: What is the risk if a bank does not diversify its loans?

A: The banks are the biggest financial institutions that operate in the country and indulge in…

Q: Why banks are best regulated by the markets

A: Banks are the financial institutions that are generally regulated by the central bank.Central bank…

Q: Why does the firm have to borrow the bank's liability rather than use its own? Explain briefly.

A: Start-ups and small businesses seeking to expand frequently have one thing in common: they require…

Q: Do banks create more money, more time, or both? Explain your answer.

A: Banks are the financial institutions that provide various financial services to the citizens of an…

Q: What are demand deposits and why should they beincluded in the stock of money?

A: Demand deposits are the funds that are deposited in the bank account which are payable on demand.…

Q: Differentiate between bank money and central bank money.

A: A central bank is a bank for bankers. The financial system is often managed by an institution that…

Q: Should bankers be empowered by law to inquire into the sources of their customers' deposit?

A: Every day, bankers, often referred to as retail bankers, work with customers by helping them with…

Q: Should determining whether a bank has adequate capital be done internally or externally?

A: Capital adequacy for banks is important because it ensures that banks have enough capital to absorb…

Q: By law, banks are allowed to lend an amount equal to their Group of answer choices   deposits…

A: A commercial bank is allowed to increase loans to the an amount which is equal to excess reserve.…

Q: How are banking laws made and implemented? What are the primary federal agencies that regulate…

A: Banking laws are made by the government and implemented by regulatory agencies. These agencies are…

Q: canda does not have an institution like fannie mae that securitzes mortgages. How do you think this…

A: Given  The statement is canda does not have an institution like fannie mae that securitzes…

Q: The amount a bank is required to withhold on a customer's deposits on reserve in their vault or on…

A: Banks hold a certain proportion of deposits as required reserves, mandated by central bank.

Q: Why is there a need to regulate Investment banks?

A: Investment banks are companies or corporate divisions that functions as an advisory in the financial…

Q: How would you determine the interest rate that the bank charges on the transaction?

A: Many payments are made through our bank accounts and each transaction has a cost attached to it. The…

Q: monetary reserve?

A: The banks which serve the general people and companies, are called commercial banks. Monetary…

Q: The bank you own has the following balance sheet:       ASSETS |     LIABILITIES    Reserves 75M |…

A: We own a Bank Assets  Amount Liabilities Amount Reserves 75M Deposits 500M Loans 525M Bank…

Q: Assess the banking sector from the perspective of the GDP of Canada

A: GDP: Gross Domestic Product  The gross domestic product is the total monetary or market value of all…

Q: "Banks make a profit by paying depositors a high rate to attract funds and making loans at a low…

A: The statement is incorrect. Banks create to make a profit if the interest rate they gather on the…

Q: Fractional Banking allows

A: Fractional borrowing refers to a kind of a banking system within which are required to keep a…

Q: What types of regulations commercial banks are subject to and why commercial banks are subject to…

A: It is very important to have a strong and well developed banking sector in order to maintain…

Q: what if the Bank of Cheap Loans tries to charge an even lower rate?

A: A number of banks and housing finance companies reduce the interest rate for a fee on the floating…

Q: Explain the role of capital in protecting a bank from insolvency.

A: Bank capital reduces risk by 1) absorbing losses in an accounting framework so that banks can remain…

Q: How does the banking system create money? Explain by giving an example.

A: The important function which the banks performs is the creation of money in the economy. This…