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2 years ago

Explain how banks have transformed their commercial lending business from asset transformation to brokerage services

1 answer:

6 0

Asset transformation by financial intermediaries is the purchase of a primary asset or securities and their transformation into other assets in terms of risk and maturity.

A type of transformation where banks use deposits (mobilized funds) to generate income by pooling deposits to provide loans. More precisely, asset transformation is the process of converting bank liabilities (deposits) into bank assets (loans). Deposits are inherently subject to withdrawal by customers (depositors) at any time or as set out in the deposit contract/agreement. Loans are bank assets because they represent money that the bank lends and expects to receive back in the form of repayment of principal and interest. As such, banks perform asset transformation by providing long-term and short-term loans, with the interest differential being their transformation returns. Banks and other financial institutions usually perform asset transformation by offering their customers various financial products on both sides of the balance sheet, such as deposits, investment and loan products, etc.

Learn more about risk and maturity.

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First National Bank charges 13.6 percent compounded monthly on its business loans. First United Bank charges 13.9 percent compou

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Answer:

First National EAR 14.48%

First United EAR 14.38%

Explanation:

Calculation to determine Calculate the EAR for First National Bank and First United Bank.

Using this formula

EAR = [1 + (APR / m)]m − 1

Let plug in the formula

First National EAR = [1 + (.136 / 12)]12 − 1

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First National EAR 14.48%

First United EAR 14.38%

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3 years ago

In a cohesive group, group members have a degree of dependence on the group. A. True B. False

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It is true that members in a cohesive group have a degree of dependence on the group.

<h3>What is cohesive group?</h3>

A cohesive group is one whose members are very positive in their feeling towards the group and are strongly motivated to retain their membership in the group.

There cannot be group cohesion if the members do not wish to belong to the group or do not find the motivation to belong to the group.

Hence, It is true that members in a cohesive group have a degree of dependence on the group.

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