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3 years ago

Repurchase agreements are usually used by banks that:

Business

1 answer:

svp [43]3 years ago

4 0

Answer:

The correct option is C

Explanation:

Repo stands for the Repurchase agreement, which is an agreement that is form or kind borrowing which is short- term in nature for the dealers in the government securities.

Under the case of repo, the dealer sells or sold the securities of government to the investors, mostly on the basis of overnight and then they bought them back at the higher price.

But when the agreement is used by the banks which need or require the cash for a very short time of period .

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You are attempting to value a call option with an exercise price of $109 and one year to expiration. The underlying stock pays n

Ivenika [448]

Answer:

The value of the call option today is $14.29

Explanation:

The two-state stock pricing model is one that prices are based on the assumption that there is no arbitrage profit opportunity as well as the fact that the call option's value will be the present value(PV) of the expected future winnings for long call.

Now, value of the call option if the prices go up will be;

142 - 109 = $32

While if the prices go down, it will be;

76 - 109 = -$33

The call option in this case can only be utilized when the market value exceeds the exercise price.

Therefore, the expected winnings value after one year will be;

Value after one year = (32 × 0.5) + (0 × 0.5)

Value after one year = $16

We used 0 in the multiplication because the call wouldn't be utilized for when the prices go down.

one year from now the long call can be expected to earn $16 .

Thus, today the present value of this amount will be the price of the call option if we take into cognizance that here will be no arbitrage profit opportunity.

With risk-free rate of interest is 12%, we have;

PV = 16/1.12 = $14.29

3 0

3 years ago

What will happen to the equilibrium quantity and equilibrium price of potatoes if the income of potato consumers increases (assu

Elodia [21]

Answer:

Equilibrium quantity and price will decrease

Explanation:

Inferior goods are the products or services whose demand increases with an increase in price. An Inferior good contracts a normal product whose demand falls with a rise in price. Should consumer's incomes increase, the demand for inferior products and services will decrease.

If potatoes are inferior goods, an increase in incomes will result in a decrease in their demand. The equilibrium quantity will decrease. If and a new higher-yielding variety of potato plant is developed, it will create competition for the inferior potatoes. With an increase in income, consumers tend to prefer 'perceived' high-quality and more costly products. The new higher-yielding variety will be demanded more, which will result in a decline in prices for the inferior potatoes.

4 0

3 years ago

During the month of March 2017, Weimar World, a tax-preparation service, had the following transactions. * Billed $496,000 in re

Vadim26 [7]

Answer:

A. $302,000

Explanation:

The computation of the net income under accrual basis accounting is shown below:

= Billed in revenues on credit - incurred expenses

= $496,000 - $194,000

= $302,000

The prepaid expenses and the received amount would not be considered in the computation part. Hence, ignored it

Only revenues on credit and incurred expenses are considered in the computation part. No other item values would be taken.

8 0

3 years ago

Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2019, current

AlekseyPX

Answer: $‭412,600‬

Explanation:

AFN = Increase in assets - Increase in Liabilities - Addition to Retained Earnings

Increase in Assets

= 5,000,000 * 15%

= $750,000

Increase in Liabilities

Only use Accruals and Accounts Payable

= (450,000 + 450,000) * 15%

= $135,000

Additional to Retained Earnings

= After tax Profit

= 9,200,000 * 4%

= $368,000

Addition to retained earnings = 368,000 * ( 1 - payout ratio)

= 368,000 * ( 1 - 45%)

= $202,400‬

Additional Funds Needed (AFN) = 750,000 - 135,000 - 202,400

= $‭412,600

8 0

4 years ago

Use the information presented in Midwestern Mutual Bank's balance sheet to answer the following questions.

ratelena [41]

Answer:

Answer for task 1: Increase

Answer for task 2: debt

Answer for task 3: -13.33

Answer for task 4: -14.00

Answer for task 5: reserve requirement

Explanation:

Task 1:

In the given question, the owner has borrowed $100 supplement to their existing reserves. Since the owner has borrowed, the value of debt would increase.

Task 2:

Leverage ratio before borrowing:

Leverage ratio = $\frac{Total assets}{Capital}$

Leverage ratio = $\frac{200 + 800+1000}{-150}$

Leverage ratio = -13.33

The leverage ratio before borrowing is - 13.33

Task 3:

Leverage ratio after borrowing:

Leverage ratio = $\frac{Total assets}{Capital}$

Leverage ratio = $\frac{2000 + 100}{-150}$

Leverage ratio = -14.00

The leverage ratio after borrowing is - 14.00

Task 4:

This would also bring the leverage ratio from its initial value of -13.33 to a new value of -14.00.

Task 5:

Which of the following do bankers take into account when determining how to allocate their assets? Check all that apply.

The option is "b"

When determining how to allocate their assets bankers take into account the reserve requirement.

3 0

4 years ago