Suppose a bank offered to make loans to potential borrowers without checking their credit history. What would be true of the types of borrowers they would attract compered with banks that did check credit history. Would such a bank charge the same interest rate on loans as banks that check credit history? Explain those with a reason in 4 lines.

Q: What are the main commercial services offered by banks? can you answer in your own words

A: The central bank of a country is the apex financial institution in the country and is responsible…

Q: The two most pressing demands for liquidity from a bank come from, first, customers withdrawing…

A: Liquidity in banking refers to the capacity or the ability of the banks to give cash to customers on…

Q: As a potential investor would you prefer to invest in a structured note? Why or why not?

A: Note: Since you have posted multiple independent questions in the same request, we will solve the…

Q: Explain the possible IFRS treatment of bank loans.

A: IFRS is international finance reporting standards will replace with Accounting standards 39.

Q: Why do federally guaranteed loans usually have the least risk for banks, List some popular…

A: Federal guaranteed loans are loans that are backed by the federal government, which means that the…

Q: Is the following statement true or false? Open-end loans are often called line-of-credit accounts. O…

A: A loan provided by a financial body to a borrower that has a pre-approved credit limit and can be…

Q: What are the possible arguments for setting up a firewall between investment banks and commercial…

A: At the time, improper banking activity–the overzealous commercial bank involvement in stock market…

Q: . What are some ways banks can state theircharges, and how should the cost of bankdebt be analyzed?…

A: APR is the annual percentage rate. APR is calculated by taking into consideration all other charges…

Q: Directions: The best way to do this case is to use relevant credit information and calculate some…

A: a. Return on Assets is calculated by the following formula = Net Income/Average Total Assets *100 b.…

Q: Suppose Beth comes into a large sum of money and decides to lend it out to earn interest on it.…

A: INTRODUCTION: A financial intermediary is a third party that creates an environment for multiple…

Q: The APR is the annual rate that is required by law to be disclosed on loan documents. The EAR…

A: preferred stock are the stock which has property of equity as well as debt.

Q: None

A: The linear discriminant model given is: Z=β1​X1​+β2​X2​+2.0X3​ We need to determine the values of…

Q: Which interest rate is used on very short term loans from one bank to another? A. PRIME INTEREST…

A: The banks lend money to the general public, and can also lend money to one another (between banks),…

Q: Why do commercial banks, like Westpac and ANZ, engage in credit risk transformation? O a. The…

A: Credit risk transformation refers to the process through which banks and other financial…

Q: You will discuss credit from the lenders point of view. What factors do lenders consider when making…

A: A credit score is a numerical representation of a person's creditworthiness and indicates how well…

Q: Why are credits and debits different for banks compared for personal finance usage?

A: In personal account, all expenses, assets, and losses will be debited. All incomes, liabilities, and…

Q: A firm wants to open a new coal mine. The price of coal is very volatile and the projected profits…

A: The calculation of present value is based on the concept of time value of money. As per the concept…

Q: Why are the banks reluctant to lend, and what should be done to increase bank lending?

A: Banks generally borrow and lend cash in the interbank loaning market so as to oversee the liquidity…

Q: In managing credit risk for banks what are the two main concerns that banks have when lending money?…

A: Credit risk: It is the risk involved in receiving the interest and principal payments from the…

Q: is a financial product that allows an individual to lend their money to a bank A and be paid an…

A: A savings account is a financial product that allows an individual to lend their money to a bank and…

Q: Why would a bank sell a package (portion) of its loans? A) to decrease liquidity B) to increase the…

A: Securitization  is a process wherein individual loans, debts, etc., that involve a payment stream…

Q: What are the advantages and disadvantages of direct lending for the bank? How are banks reducing the…

A: Direct lending refers to a type of lending that is provided directly by the lender, such as a bank,…

Q: When both deposit and loan interest rates increase at the same speed in the market, a bank tends to…

A: When both deposit rates and lending rates increase the bank tends to make profit out of this. Always…

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.