Assume the required reserve ratio is 12 percent and that the commercial banking system has $110 million in excess reserves. The
1 answer:
You might be interested in
Answer:
answer for the question:
(Related to Checkpoint 18.2) (Estimating the cost of bank credit) Paymaster Enterprises has arranged to finance its seasonal working-capital needs with a short-term bank loan. The loan will carry a rate of 13 percent per annum with interest paid in advance (discounted). In addition, Paymaster must maintain a minimum demand deposit with the bank of 10 percent of the loan balance throughout the term of the loan. If Paymaster plans to borrow $90 comma 000 for a period of 2 months, what is the annualized cost of the bank loan?
is given in the attachment.
Explanation:
