Chapter 6, Problem 3.1C

What is the main reason lenders pay borrowers' property taxes through a pre-paid escrow account? It prevents a tax lien from being applied to the home. The tax lien would be senior to the mortgage lien. It prevents the borrower from refinancing with another lender because they would lose all of their escrow funds. It allows the lender to earn interest on the pre- paid tax money as itsits in the account. It allows the lender to take advantage of corporate tax deductions.

Where a financial institution makes a loan commitment, the borrower, in drawing down on their loan commitment, causes increased cash flow needs by the DI to fund the loan commitments. There are three ways a DI can offset the effect of Asset-side liquidity risk such as drawing down of a loan commitment in all of the following sitiuations Except: a. Reduce excess cash reserves to minimum levels required to meet reserve requirements based on the decision made by management independant of regulatory requirements. b. Reduce balance sheet items such as retain earnings to the meet the minimum required capital levels. c. Taking offsetting measures such as borrowing funds or even purchasing funds on the money market. d. Reducing liquid type assets on their balance sheet such at T-bills by selling them.

Explain the importance of the Hamada equation.

Jerry spends his days originating loans in the primary mortgage market. He originates them, but the financing comes from a lender that Jerry partners with. This is because Jerry doesn't have funds of his own to lend. What job does Jerry most likely have? private lender mortgage banker credit union associate mortgage broker

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Your sister and her fiancé are planning on getting engaged (and later married) in the future. Wanting to start saving up for the wedding costs, they ask you having $60,000 saved four years from now. They also would like to withdraw $15,000 in a year to pay for the engagement rings. help them invest their money in the hopes of Besides their initial deposit, they also plan to make another deposit in three years as they are expected to receive an $8,000 settlement from a class-action lawsuit by then. There are one-year and two-year investments available for each year as well as a special three-year investment that becomes available in a year, shown in the diagram below. One-year investments return 2.5%, two-year investments return 6%, and the three-year investment return 10%. Formulate as a linear program using the variables that are listed on the diagram and solve to minimize the initial deposit your sister and her fiancé must make. Deposit (Xo) Present Хо1 Withdrawal Xo2 ($15,000) Year…

A company in Wisconsin wants to export cold-pressed lemon oil to Lithuania for human consumption or usage.  They have contacted your organization for export assistance.     The lemon oil is inspected and packaged in bottles for human consumption, all in Wisconsin.  Each bottle of 4 fl ozs. costs $5.00. The firm needs the information below to help them evaluate the requirements involved in exporting this product to Lithuania . In terms of the US' HS Code for a product of this type, it would be best fit the description of essential oils of lemon which is in "Chapter 33 - Essential Oils and Resinoids; Perfumery, Cosmetic or Toilet Preparations."  Its Schedule B Number is 3301.13.0000.   1. Presume it is an eligible product for import into Lithuania .  Determine the import tariffs and value-added taxes imposed by Lithuania for an imported product of this type.  2. Provide a summary of the import documents required for packaged products for human consumption that the firm should check upon.…

The Northwoods General Store in Vermont sells a variety of outdoor clothing items and equipment and several food products at its modern but rustic-looking retail store. Its food products include salmon and maple syrup. The store also runs a lucrative catalog operation. One of its most popular products is maple syrup, which is sold in metal half-gallon cans with a picture of the store on the front. Maple syrup was one of the first products the store produced and sold, and it continues to do so. Setting up the syrup-making equipment to produce a batch of syrup costs $450. Storing the syrup for sales throughout the year is a tricky process because the syrup must be kept in a temperature-controlled facility. The annual cost of carrying a gallon of the syrup is $15. Based on past sales data, the store has forecasted a demand of 7,500 gallons of maple syrup for the coming year. The store can produce approximately 100 gallons of syrup per day during the maple syrup season, which runs from…

VitaLife is a nutritional supplements company with operations in several countries across the world. The Latin America and Caribbean operations are headed by one of VitaLife's Vice Presidents, Mrs. Michelle Perez. Reporting directly to Mrs. Perez is Mr. Lorenzo Lucas, Head of Caribbean operations, and Mr. Manuel Gonzalez, Head of Latin America operations. Mr. Roger Hanson, Commercial Manager of the Caribbean reports directly to Mr. Lucas, who communicates regularly with Mr. Gonzalez. VitaLife's sales team in Jamaica is comprised of four representatives, all of whom report directly to the supervisor, Mrs. Andrea Wilson, who in turn reports directly to Mr. Hanson. Each sales representative is provided with an I Pad loaded with presentation slides for use when communicating with the pharmacists that they ought to visit daily. On a monthly basis the sales representatives provide their supervisor with vital information on challenges and opportunities realized when working with the…