Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
13.
![Scenario
Borrowing Method
Frayer Bank typically has an abundance of funds in its accounts, but out of nowhere,
several investors come to the bank looking to borrow a total of $45 million in funds that
Bank Capital
the bank simply does not have. The bank wants a temporary source of funds for two
Bond Issuances
weeks and doesn't want to borrow from the federal funds market or a source outside of
the United States.
Eurodollar Borrowing
Federal District Banks
Flow Financial Bank wants to temporarily sell $100 million worth of its Treasury bills, with
an agreement to buy them back in one year for $102 million.
Federal Funds Market
Repurchase Agreements
First Guaranty Bank wants to borrow funds to purchase a $22 million building for its new
branch location and wants to issue long-term securities to cover the financing of the new
branch location.
Diligence Bank has a shortage of funds and wants a temporary source of funds for two
days to make up the difference. They have great relationships with banks outside of the
United States and want to borrow funds from Deutsche Bank in Germany.
True or False: The majority of all United States bank liabilities are made up of sources other than deposit accounts.
True
False](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7bd2aaa7-3491-4b3f-b4ef-5cb5f3905f5b%2F437548d1-6c77-4709-902f-d4375f97864d%2F6n8xh9m_processed.png&w=3840&q=75)
Transcribed Image Text:Scenario
Borrowing Method
Frayer Bank typically has an abundance of funds in its accounts, but out of nowhere,
several investors come to the bank looking to borrow a total of $45 million in funds that
Bank Capital
the bank simply does not have. The bank wants a temporary source of funds for two
Bond Issuances
weeks and doesn't want to borrow from the federal funds market or a source outside of
the United States.
Eurodollar Borrowing
Federal District Banks
Flow Financial Bank wants to temporarily sell $100 million worth of its Treasury bills, with
an agreement to buy them back in one year for $102 million.
Federal Funds Market
Repurchase Agreements
First Guaranty Bank wants to borrow funds to purchase a $22 million building for its new
branch location and wants to issue long-term securities to cover the financing of the new
branch location.
Diligence Bank has a shortage of funds and wants a temporary source of funds for two
days to make up the difference. They have great relationships with banks outside of the
United States and want to borrow funds from Deutsche Bank in Germany.
True or False: The majority of all United States bank liabilities are made up of sources other than deposit accounts.
True
False
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