Table 2First National BankAssetsLiabilities and Owners' EquityReserves$1,200Deposits$9,000LoansS৪,000Debt$800$800Capital (owners' equity) $200Short-term securitiesRefer to Table 2. The required reserve ratio is 6 percent and First National Bank sells $150 of its short-term securitiesto the Federal Reserve. This action willincrease First National's reserves by $150. Its excess reserves are $240.decrease First National's reserves by $150. Its excess reserves are $0.increase First National's reserves by $150. Its excess reserves increase by $150.increase First National's reserves by S150. Its total reserves increase by $150.both c and d above

An economy's money supply is influenced via open market operations, which are transactions in which…

First National Bank Assets Liabilities and Owners' Equity Reserves $1,200 Deposits $9,000 Loans S৪,000 Debt $800 Short-term securities $800 Capital (owners' equity) $200 Refer to Table 2. The required reserve ratio is 6 percent and First National Bank sells $150 of its short-term securities to the Federal Reserve. This action wili increase First National's reserves by $150. Its excess reserves are S240, decrease First National's reserves by $150. Its excess reserves are $0. increase First National's reserves by $150. Its excess reserves increase by $150. increase First National's reserves by $150. Its total reserves increase by $150. both c and d above

First National Bank Assets Liabilities and Owners' Equity Reserves $1,200 Deposits $9,000 Loans S৪,000 Debt $800 Short-term securities $800 Capital (owners' equity) $200 Refer to Table 2. The required reserve ratio is 6 percent and First National Bank sells $150 of its short-term securities to the Federal Reserve. This action wili increase First National's reserves by $150. Its excess reserves are S240, decrease First National's reserves by $150. Its excess reserves are $0. increase First National's reserves by $150. Its excess reserves increase by $150. increase First National's reserves by $150. Its total reserves increase by $150. both c and d above

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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Bank A receives $70 in deposits at 5% and, together with 40 in equity, makes a loan of $90 at 7%. The remaining of assets is G-Bond. We will ignore taxes for the moment. NIM=Profit/Interest revenue Bank A Loan 7% $90 G-Bond 5% ? Deposits 5% $70 Equity $40 Total Assets $? Total Equity and Deposit $110 Given G-bond’s interest rate is 5%, Profit is equal to $4.9 $3.8 $4.0 $2.9 $3.1 $3.3 $20 $10
Q.Capital Decimation Partners LLP just sold a CDS protecting $20,000,000 worth of bonds at a 500bps spread. What are the quarterly premium payments? A. $125,000 B. $250,000 C. $500,000 D. $750,000 E. $1,000,000
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Problem C: Liquidity RatiosABC has P400,000 cash, P200,000 short‐term investments, P500,000 receivables, and P900,000 inventories. It has trade payables ofP600,000 and short‐term loans of P900,000. It is planning to acquire another short‐term loan. However, the first loan requires ABCto maintain a minimum current ratio of 125%.Required:1. Current ratio before additional loan*2. Current ratio if ABC borrowed P300,000*3. Current ratio if ABC borrows P600,000*
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Debt: $69,000,000 book value outstanding. The debt is trading at 95% of book value. The yield to maturity is 10%. Equity: 1,900,000 shares selling at $36 per share. Assume the expected rate of return on Federated's stock is 19%. • Taxes: Federated's marginal tax rate is T_{c} = 0.21 . Suppose Federated Junkyards decides to move to a more conservative debt policy. A year later, its debt ratio is down to 16.50% (D/V= 0.1650). The pre-tax cost of debt has dropped to 9.6%. The company's business risk, opportunity cost of capital, and tax rate have not changed. Use the three-step procedure to calculate Federated's WACC under these new assumptions.
4. Assume that the same net amount of 2 million, but they are structure: following banks have the different due to the capital [10] Tanto Murity ABL 12 million 90 million 102 million Deposits Bank Capital Total Liabilities and Equity MCB 85 million 17 million 102 million Reserves Loan Total Assets 12 million 90 million 102 million Deposits Bank Capital Total Liabilities and Equity 100 million 02million 102 Reserves Loan Total Assets million Which Bank is more attractive for shareholders? Which bank is riskier in case of loan depreciation at15million? Show your calculations to support your suggestions.
Hunter plc requires advice on its debt collection policy. Its directors are considering two options for reducing bad debts and shortening the period of credit extended to its debtors. The current situation is as follows: Current policy Sales Annual expenditure on debt collection procedures £4,800,000 £180,000 Bad debt losses (% of sales) 2% Average collection period 120 days Cost of financing debtors 10% pa Option 1 involves offering a 2% discount for prompt payment. It is expected that this will not affect the level of sales but that half of the sales each year would be made at a 2% discount adding an extra £48,000 to the current annual expenditure on debt collection procedures. The positive effects of this option would be to reduce bad debts by 0.5% and reduce the average collection period by 30 days. Option 2 is to expand the credit control department to enable it to chase debts more…

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