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- At a military base in Texas, Corporal Stan Moneymaker has been offered a wonderful savings plan. These are the salesperson’s words: “During your 48-month tour of duty, you will invest $200 per month for the first 45 months. We will make the 46th, 47th, and 48th payments of $200 each for you. When you leave the service, we will pay you $10,000 cash.” Is this a good deal for Corporal Moneymaker? Use the IRR method in developing your answer. What assumptions are being made by Corporal Moneymaker if he enters into this contract? ( please solve the ırr method not excel solution)Transaction One: Open a Bank and Accept Deposits Name your Bank Draw a T-Account Representing Deposits of $2 million Transaction Two: Grant a Loan The Reserve Requirement is 20% Customer A wants to borrow $1 million. Customer B wants to borrow $400,000. Customer C wants to borrow $300,000. Can you fulfill all three loan requests? Draw a T-Account Representing a bank that is fully “loaned up” (reduce the loan amount to Customer C if necessary) Transaction Three: Follow the Money Creation Process Customer A deposits his loan with his home bank, Bank of Taylor Draw a T-Account Representing this transaction for Bank of Taylor assuming they already have $1.5 million in deposits and loans in the amount of $700,000 Transaction Four: Calculate the Money Creation Effect What is the money multiplier rate in this example? If banks in this economy are always fully loaned up, calculate how much money was created in this economy from the original three loans made by your bank (the amount that…What is one strategy banks use to mitigate "interest rate risk" in mortgages lending? (note: interest rate risk refers to when interest rates increase) They increase the mortgage term They decrease the mortgage term They offer adjustable rate mortgages They adjust the size of the loan principal
- Diane initially deposited $11,000 into a money market account and made no additional deposits or withdrawals. When she closed the account in exactly one year, its value had grown to $11,125. Calculate the annual growth rate for the money market account. Round your answer to two places after the decimal. %Compounding: the accumulation of a sum of money when the interest earned on the sum earns additional interest. Because of compounding, small differences in interest rates lead to big differences over time. Assume that instead of spending $30,000 on your wedding, you only spend $5,000. You use the remaining $25,000 to buy stocks/bonds and you hold them for 40 years. Calculate the Future Value on $25,000: If your portfolio's rate of return is 8% (i = 0.08), Future Value = If your portfolio's rate of return is 6% (i = 0.06), Future Value = In a 200-word paragraph, please summarize the results of your calculations and list three things that you learned from this exercise.Question 15 Many credit card companies will let you determine your interest rate and your credit limit when they approve you for their card. True. False. Question 16 The interest rate a credit card company gives you when you first get your credit card can never be changed, even if your credit gets ruined and you don't make your credit card payments on time. True. False. Save and Quit Sign Your I should take any credit card I can get from a company regardless of terms and DELL %23 $4 % 7 8. 3. y e d g h a
- First America Bank's monthly payment charge on a 48-month, $19,000 loan is $508.26. The U.S. Bank's monthly payment fee is $517.70 for the same loan amount. What would be the APR for an auto loan for each of these banks? (Use Table 14.1.) Note: Round your final answers to the nearest hundredth percent. APR First America Bank between % and % U.S. Bank between % and %Fill in the blanks to complete sentence. 10. While the bank is issuing a guarantee, the principal will be asked to sign a ____________ to authorize the guarantor to debit the account with the cost of any payments under the guarantee.The central bank buys $10,000 worth of bonds in the open market from Elaine, who deposits the proceeds in her checking account at MSM Bank. The required reserve ratio is 5%. (a) What is the amount by which MSM Bank’s liabilities have changed? Explain. (b) Calculate the change in required reserves for MSM Bank. Show your work. (c) What is the dollar value of the maximum amount of new loans MSM Bank can initially make as a result of Elaine’s deposit? Explain. (d) Based on the central bank’s open-market purchase of bonds, calculate the maximum amount by which the money supply can change throughout the banking system. Show your work. (e) How will the change in the money supply in part (d) affect aggregate demand and the price level in the short run? Explain.
- A bond has a Macaulay duration of 10.00 and is priced to yield 8.0%. If interest rates go up so that the yield goes to 8.5%, what will be the percentage change in the price of the bond? Now, if the yield on this bond goes down to 7.5%, what will be the bond's percentage change in price? Comment on your findings. If interest rates go up to 8.5%, the percentage change in the price of the bond is nothing%. (Round to two decimal places.) If interest rates go down to 7.5%, the percentage change in the price of the bond is nothing%. (Round to two decimal places.) Comment on your findings. (Select the best answer below.) A. As interest rates decrease, the price of the bond decreases. As interest rates increase, the price of the bond increases. B. As interest rates increase or decrease, the price of the bond will always increase. C. As interest rates increase or decrease, the price of the bond remains the same. D. As interest rates…Suppose the value of a new financial security increases with time, such that one dollar of the financial currency at year 0 is worth V(t) = exp{2/t-0.15f} dollars at time t. If the interest rate is 10 percent, after how many years should the financial asset be sold in order to maximize the PDV of the sale? (NOTE: Write your answer in number format, with 2 decimal places of precision level; do not write your answer as a fraction. Add a leading zero and trailing zeros when needed. Use a period for the decimal separator and a comma to separate groups of thousands.)Diane initially deposited $10,500 into a money market account and made no additional deposits or withdrawals. When she closed the account in exactly one year, its value had grown to $10,900. Calculate the annual growth rate for the money market account. Round your answer to two places after the decimal.