When the central bank lowers the required reserve ratio, the banks ability to make loans and the money supply Select one: remain constant decreases Ob decrease decreases Son Oc increase: increases O d. increase: remain constant
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- Making changes to a firm’s credit policy involves trade-offs. Assuming that all other factors remain constant, which of the following are outcomes expected to result from an increase in a firm’s cash discount? Check all that apply. An increase in the cost of the discounts given An increase in the firm’s bad-debt expenses An increase in the firm’s credit sales, a speeding up of customer payments, and a reduction in the firm’s receivables investment An increase in the creditworthiness of the firm’s customersBanks use gap analysis to measure interest rate risk in their balance sheets. If firm XYZ is said to have a positive gap, this means: Group of answer choices C. Rate-sensitive assets exceed rate-sensitive liabilities B. Long-term assets are funded with short-term liabilities D. Rate-sensitive assets equal rate-sensitive liabilities A. Liabilities reprice before assets1. In a spiderplot, the most sensitive factor is the one with: a. the highest Y-intercept value b. the highest X-intercept value c. the most positive slope value. d. the highest absolute slope value 2. Equivalence of cash flows is NOT affected by: a. Timing of the cash flow b. Magnitude of the cash flow c. Interest rate. d. Point of view used 3. A Php 1,000,000 loan has a nominal interest rate of 10% per year compounded. quarterly. If this amount is to be paid oft quarterly over 5 years, how much will be the monthly amount due? a. 1,000,000 (A/P, 10%, 5) b. 1,000,000 (A/P, 2.5%, 20) c. 1,000,000 (A/P, 3.33%, 20) d. 1,000,000 (A/P, 5%, 20) 4. A bank advertises mortgages at an interest rate of 2% per month. What is the effective annual interest rate? Select the closest value. a. 1% b. 13% c. 24% d. 27% 5. Which of the following is the most useful if we want to measure the effect of uncertainty in parameter estimates? a. Sensitivity Analysis b. Basic Economic Study Methods c. Payback…
- A bank wants to implement a loan pricing model and has to look at several variables to consider. Please select the variable that is incorrectly described. a. A profit margin to provide the bank with an adequate return on capital. b. Risk premium to counter the effect of default risk. c. Cost of funding that include the cost of bonds issued. d. Operating costs that include the cost of interest paid to depositors.If banks suddenly start to pay interest on all demand deposits, their interest rate margin would: a) become larger b) become smaller c) be unaffectedGive typing answer with explanation and conclusion When a bank increases its fed funds sold, its deposit balance in the Fed will _________ ; when a bank's deposit balance in the Fed increases, the bank has increased its fed funds______ Group of answer choices increase; purchased increase; sold decrease; purchased decrease; sold
- Fractional reserve banking refers to a banking system in which bank loans are less than bank reserves. bank deposits are less than bank reserves. bank reserves are less than total deposits. bank reserves are only a fraction of required reserves.Inflation O a. Results from too little money being issued. O b. Requires that people hold less money tolmake transactions. O c. Is the rate at which prices rise over time. O d. Is an increase of money in circulation.Regarding the following statements about credit fixed income, identify who is correct (select all that apply): a. Meeyeon: "Credit spreads tighten when the economy is strong, and there is a continued positive outlook." b. Andrew: "Subordinated debentures are riskier for investors than senior debt." c. Greg: "The G-spread only measures the credit spread between a bond and a government curve over one point of time." d. Yuting: "Investment-grade credit never defaults." (only a and b is incorrect)
- What is not an advantage of a Treasury (T) Note? Select one: a. Extremely liquid security. b. Loss of potential purchasing power (inflation > yield). c. An investor’s capital is secure. d. Better returns than a bank savings account.1 What is the Advantage and Disadvantage of Liquidity management under reserve shortfalls based on the below 4 points1? securities sale 2. reduce loans 3. emergency borrowing from CB 4. borrowings from other banks1. Credit spreads least likely depend on which of the following: A. Market supply B. Market demand C. Financial markets D. Inflation