A bank has interest expense of $150 million, earning assets of $1.4 billion, and a net interest margin of 5.0%. The bank also has interest-bearing liabilities of $1.1 billion. The bank's spread ratio must be O 1.94% O 1.10% O 2.08% O 1.65%

A bank has interest expense of $150 million, earning assets of $1.4 billion, and a net interest margin of 5.0%. The bank also has interest-bearing liabilities of $1.1 billion. The bank's spread ratio must be O 1.94% O 1.10% O 2.08% O 1.65%

Name: A bank has interest expense of $150 million, earning assets of $1.4 b
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Description: A bank has interest expense of $150 million, earning assets of $1.4 billion, and a net interest marginof 5.0%. The bank also has interest-bearing liabilities of $1.1 billion. The bank's spread ratio must beO 1.94%1.10%2.08%1.65%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A bank is earning 6% on its $150 million in earning assets and is paying 4.75% on its liabilities. The bank's Net Interest Margin is __________________. A. 6.00% B. 10.75% C. 4.75% D. 1.25%
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An investor purchases a 90-day bank bill with a face value of$1million at4.88% . Caliculate the capital gain or loss (in $) from their investment if the bill is sold 10 days later at 4.55% .
Pixar Bank has the following balance sheet: Assets Cash 21,000 Liabilities and Equity Demand Deposits 550,000 Short-term Securities 369,000 Interbank Borrowed 151,000 Loans Total 400,000 Equity 790,000 Total 89,000 790,000 Pixar Bank's largest customer decides to exercise a $10,000 loan commitment. If the bank chooses to meet this loan commitment using purchased liquidity management techniques, which of the following correctly describes the balance in each account after the transaction? Select one: O a. Loans $410,000 and Funds Borrowed = $161,000 O b. Loans = $400,000 and Funds Borrowed = $161,000 О с. Loans $410,000 and Equity = $99,000 O d. None of the above e. Cash $11,000 and Loans = $410,000
Assume the Bank of Smallville opens its doors to depositors and receives $100,000 in cash deposits. a) Prepare a balance sheet for Bank of Smallville based on the above information. b) Assume furthermore that the bank has to abide by a 20% reserve ratio. How much in excess reserves does the bank hold? Could this bank make a loan in the amount of $90,000? Briefly explain. c) Based on the amount of excess reserves, if the bank makes the loans, show the immediate impact on the Bank of Smallville's balance sheet. d) Calculate value of the money multiplier? e) How much money would be created in the banking system if other banks also lend as much as possible? Part B a) What is meant by the term "excess supply of money?" How does the money market resolve this disequilibrium? b) Explain with diagrams, what happens to the money supply, interest rates, investment spending and GDP when the central bank makes open market purchases.
Given below is the balance sheet for the Bank of New Providence: Assets ($1,000,000s) Liabilities ($1,000,000s) Cash 52 Deposits 650 T-bills and Bonds 257 Long-term debt 326 Loans to Other Banks 95 Equity 88 Commercial Loans 364 Mortgages 296 Total 1,064 Total 1,064 The net profit for the bank was $10.3 million. A required reserve is specified at 5% of deposits. What is the Bank's EM?
A company has average accounts receivable of Rs. 10,00,000 and annual credit sales of Rs.60,00,000. Its average collection period would be a. 60.83 days b. 6.08 days c. 1.67 days d. 0.67 days
A bank earns 3% interest p e r a n n u m c o m p o u n d e d m o n t h l y f o r a n i n i t i a l s a v i n g s d e p o s i t of ₱ 100,000.00. F i n d t h e n e t v a l u e o f t h e deposit after 3 quarters if the e a r n i n g is subjected to a 21% tax
National Savings Bank offers money market accounts with varying interest rates, depending on the balance in the account. For accounts under $10,000, the interest rate is 2.5%; accounts between $10,000 up to and including $25,000 have an interest rate of 3.25%; accounts over $25,000 earn an interest rate of 5%. Write a piecewise function R for the interest earned on an account with x dollars.
Question: Given below is the balance sheet for the Bank of New Providence: Assets ($1,000,000s) Liabilities ($1,000,000s) Cash 52 Deposits 650 T-bills and Bonds 257 Long-term debt 326 Loans to Other Banks 95 Equity 88 Commercial Loans 364 Mortgages 296 Total 1,064 Total 1,064 The net profit for the bank was $10.3 million. A required reserve is specified at 5% of deposits. What is the bank's ROA?
A bank has the following balance sheet. It expects a net deposit drain of $500,000. Assets Liabilities and Equity Cash $300,000 Deposits $3,115,000 Loans 2,000,000 Equity 385,000 Securities 1,200,000 Total Asset $3,500,000 Total Liabilities and Equity $3,500,000 What is a net deposit drain and why is it of concern for the bank? Show the bank’s balance sheet if it uses stored liquidity to offset the expected drain.
13. If a bank has $4,000 of checkable deposits (DD), $3,000 in loans, and a required reserve ratio (rT) of 10 percent. The bank's excess reserves are A) $1,000. DD= 400o 3000 = 1oans B) $600. C) $1,400 D) $3,400

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