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2 years ago

What is a step a bank can take to protect itself from loan defaults which can lead to recessions?

1 answer:

5 0

Diversifying its loans is a step a bank can take to protect itself from loan defaults which can lead to recessions.

By opting to diversify their loan portfolios or to maintain a larger percentage of their assets in bonds and reserves, banks can safeguard themselves against these risks. The full sum of the new deposits can be lent out by the bank. - Only the amount of the bank's excess reserves may be lent. - Only 25% of the deposits deposited by clients are lent by banks. In banking, asset/liability management is also employed. A bank is required to charge interest on loans as well as pay interest on deposits. Bankers monitor the net interest margin, or the difference between interest received on loans and interest paid on deposits, to control these two factors.

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The Wall Street Journal reported the following spot and forward rates for the Swiss franc ($/SF):Spot...........................

Gnoma [55]

Answer:

The Wall Street Journal Reports

a. The Swiss franc was selling at a premium in the forward market.

b. The 30-day forward premium was: $0.0049.

c. The 90-day forward premium was: $0.0099.

d. Dollars to receive from a 90-day forward contract is $95,310.

Explanation:

a) Data and Calculations:

Spot and forward rates for the Swiss franc ($/SF):

Spot............................................ $0.9432

30-day forward.......................... $0.9481

90-day forward.......................... $0.9531

180-day forward........................ $0.9594

Premium:

30-day forward.......................... $0.9481

Spot............................................ $0.9432

Premium = $0.0049

90-day forward.......................... $0.9531

Spot............................................ $0.9432

Premium = $0.0099

180-day forward........................ $0.9594

Spot............................................ $0.9432

Premium = $0.0162

Dollars to receive from a 90-day forward contract is $95,310 ($0.9531 * SF 100,000)

6 0

3 years ago

Haft Construction Company determines that 54,000 pounds of direct materials are needed for production in July. There are 3,200 p

alexandr402 [8]

Answer:

cost of direct materials purchases 160,800

Explanation:

pounds required for production 54,000

desired ending inventory 2,800

total needs 56,800

beginning inventory (3,200)

units to be purchased 53,600

cost per unit of direct materials 3

cost of direct materials purchases 160,800

<u>Notes:</u>

The pounds for production and the ending inventory are the raw materials demand.

The beginning inventory is a portion we already have, so we need to purchase less.

Then, we multiply the pounds to be purchased by their cost to get the total cost for direct materials

3 0

3 years ago

The purpose of a statement of retained earnings is to: __________.

marusya05 [52]

Answer:

To determine the closing balance of retained earnings

Explanation:

First and foremost, retained earnings are an important part of the shareholders' equity. In a bid to ascertain the correct position of total shareholders' equity at year-end, it is important that a statement of retained earnings reconciling the opening retained with net income and dividends declared during the year is prepared.

The balance at the end of the year is the total accumulated earnings which have not been distributed to shareholders as dividends or which may be used to finance projects that increase shareholders' wealth

4 0

3 years ago

The valuation calculating the present value of a future cash flow to determine its value today is called __________ valuation.

nydimaria [60]

Answer:

Discounted cash flow(DCF).

Explanation:

This is explained to be an investment analysis model which is seen to calculate the value of investment on the basis of its future value. Thus evaluation model is seen to be discounted back to a present value in which time value of money is been used as a factor and is been put into consideration. It is also explained that investment’s worth is equal to the present value of all projected future cash flows. Cases directs us to see that boards are seen to subtract the amount spent on the investment from the present value of future cash flows to calculate the net present value of the investment. Therefore, they can easily sum how much the investment will make in today’s dollars and compare it with the cost of the investment.

3 0

3 years ago

In a matrix organization, each employee reports to a functional and a(n) __________ manager.

Fofino [41]

The answer is project. <span>In a matrix organization, each employee reports to a functional and a(n) project manager. you can look it up on quizlet.</span>

7 0

3 years ago