3. Uses of commercial bank fundsWhich of the following are ways that commercial banks use the funds they receive? Check all that apply.Provide working capital loans to support business that don't want to add debt to their balance sheet but still need large amounts of capitalfor major purchases.Provide term loans to support business that don't want to add debt to their balance sheet but still need large amounts of capital for majorpurchases.Provide working capital loans to support business' ongoing operations.Engage in repurchase agreements.True or False: The major use for bank funds is real estate loans.TrueFalse

Solution- (1)- The funds received by commercial banks are typically wont to lend and thereby earn…

Which of the following are ways that commercial banks use the funds they receive? Check all that apply. O Provide working capital loans to support business that don't want to add debt to their balance sheet but still need large amounts of capital for major purchases. O Provide term loans to support business that don't want to add debt to their balance sheet but still need large amounts of capital for major purchases. O Provide working capital loans to support business' ongoing operations. O Engage in repurchase agreements. True or False: The major use for bank funds is real estate loans. O True O False

Which of the following are ways that commercial banks use the funds they receive? Check all that apply. O Provide working capital loans to support business that don't want to add debt to their balance sheet but still need large amounts of capital for major purchases. O Provide term loans to support business that don't want to add debt to their balance sheet but still need large amounts of capital for major purchases. O Provide working capital loans to support business' ongoing operations. O Engage in repurchase agreements. True or False: The major use for bank funds is real estate loans. O True O False

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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Select TWO true statements about money.a. Base money is equal to cash plus commercial bank reserves with the central bankb. Cash is a liability of the central bankc. If a commercial bank makes a loan and credits the borrower's current account, then base money increasesd. Commercial bank reserves with the central bank appear as a liability in their balance sheets
Describe 3 investment products that corporations can use to raise money from investors. Explain the characteristics of each product and the priority of their investors to get money back in case of bankruptcy. Describe with examples how banks help create money in the financial system
The financial markets play an important role in channeling funds from savers to borrowers. Which of the following illustrates this function of financial markets? Investors purchase assets like real estate and gold from other investors. Investors purchase capital goods which are used in production by borrowers. Investors deposit funds into interest-bearing accounts which are then loaned to borrowers. Investors purchase securities that are issued by firms and governments.
Financial markets and intemediaries provide financing for business. They channel savings to real investment. That much should be loud and clear from Sections 2.1 and 2.2 of this chapter. But there are other functions that may not be quite so obvious. Explain the Functions of financial markets and financial institutions in detail. (2
Explain why very small to medium-size enterprises (SMEs) might face problems in obtaining appropriate sources of finance. In your answer pay particular attention to problems and issues associated with: Uncertainty concerning the business; Assets available to offer as collateral or security; and Potential sources of finance for very new SMEs excluding sources from capital markets. I need a detailed response to this question.
Our textbook claims that one of the key services banks provide is maturity intermediation: what exactly does this mean? (Choose an answer from the list below; only one is correct.) Reference: Chapter 11 and/or Chapter 1 Banks borrow money from their younger customers and lend it to their older customers. Banks gather small deposits and use them to make large investments, allowing small investors to collectively buy large assets. Banks are funded with deposits that they promise to return on demand but use them to make long-term loans, which creates a mismatch in the maturities of their assets & liabilities.
A common problem facing any business entity is the debt versus equity decision. When funds are required to obtain assets, should debt or equity financing be used? This decision also is faced when a company is initially formed. What will be the mix of debt versus equity in the initial capital structure? The characteristics of debt are very different from those of equity as are the financial implication of using one method of financing as opposed to the other. Cherokee Plastics Corporation is formed by a group of investors to manufacture household plastic products. Their initial capitalization goal is $50,000,000. That is, the incorporators have decided to raise $50,000,000 to acquire the initial assets of the company. They have narrowed down the financing mix alternatives to two: All equity financing $20,000,000 in debt financing and $30,000,000 in equity financing No matter which financing alternative is chosen, the corporation expects to be able to generate a 10% annual return, before…
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Secondary Intermediaries are called as such because they depend heavily on other financial intermediaries like commercial banks to loanable funds. Included in this category are finance companies, mortgage banks, and real estate investment trusts. It is true or false?
Banking may be subdivided into at least three categories of banks. Match the definitions with the appropriate name. 1. I. A bank that specializes in retail or consumer banking in a local market 2. II. A bank that engages in a complete array of wholesale commercial banking activities and usually also provides retail banking services 3. III. A bank that is located in a financial center and relies on nondeposit or borrowed sources of funds for a significant portion of its liabilities O Money center bank, super-regional bank; community bank O Super-regional bank, money center bank, community bank O Community bank; super-regional bank; money center bank Community bank; money center bank; super-regional bank Money center bank; community bank; super-regional bank
a) One of the biggest problems for any economy is to figure out how to get or transfer money from people or firms who want to save (savers) to people or firms who want to borrow (investors). • Explain how financial markets can help to solve this problem efficiently. • Discuss how financial markets function and which tools they can offer to solve this problem. • Discuss how financial systems are of crucial significance to adequate capital formation, which is indispensable to a speedy economic growth and development. b) Analyze the relationship of financial development and economic growth/development. In other words, discuss how financial, especially capital, markets help economic growth and development.
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