Answer:
Commercial banks, required reserve, loans, deposits, create.
Explanation:
The main function of commercial banks is to accept deposits and then to lend the same money (minus required reserves) back out. Banks make a profit by charging a higher interest rate on loans than the interest rate they pay on deposits. Through the loan process, banks are actually able to create money.
The major function of commercial banks is
1. Accepting deposits from people and business organzations.
2. Giving loans to Customers to be paid at a specific period of time at an agreed interest rate.
Required reserve is the minimum amount of money which in required for a commercial Bank to hold/save out of every deposit. If the required reserve is 10% of every deposit, a customer customer deposited $100. The required will be $10 which the bank will hold. The remaining $90 is the balance which banks can loan out to Customers.
Commercial Banks make profit by charging a higher interest rate on loan and lower interest rate on deposits. For example: 7.5% interest rate on loan and 2.5% interest rate on deposits. The 5% difference is the bank Profit.
Answer:
1 +1R4= {(1 +1R3)(1 + E(4r1) +L4)}1/4
1.0500 = {(1.0475)^3(1 + 0.0525 +L4)}1/4
(1.0500)^4= (1.0475)3^(1 + 0.0525 +L4)
(1.0500)^4/(1.0475)^3= 1 + 0.0525 + L4
(1.0500)4/(1.0475)^3-1.0525
L4= .0050358564 = 0.504%
Answer:
$88,450 should be included in the current assets section of Janson’s December 31, 2021, balance sheet
Explanation:
Current Assets: The current assets are those assets which are converted into cash within one year.
Examples - Accounts receivable, inventory, prepaid insurance, cash, etc.
The computation of the total current assets is shown below:
= Accounts receivable + Inventory + Prepaid insurance + Short term investment
= $14,000 + $40,000 + $3,650 + $30,800
= $88,450
The amount of prepaid insurance which is given in the question is for two years. We have to compute for one year so we divide the total amount by number of years
= $7,300 ÷ 2 years
= $3,650
Answer:
losing money
Explanation:
Helps save you from the out of pocket expense if something bad were to happen.
For example if your roof was damaged by a natural disaster it could cost thousnads of dollars out of a persons pocket.
Insurance will pay the cost to repair it allowing you to be protected from losing money.
In order to properly tackle this problem, we must understand the relationship between the nominal annual rate and real (effective) annual rate.
To do this:
-First you take the nominal rate, divide by the number of times it's compounded (converted) per year.
-Then, add one to that number, and raise that number to the power of how many times you compound per year.
Here is the method in practice:
First 3 Years:
Nominal rate= 2% ÷ 12 times/yr = 0.001667
Effective rate = 1.001667 ^12 = 1.020184
Next 2 Years (Discounting)
3% ÷ 2/yr = .015
1.015 ^ 2 = 1.061364
Next 4 years (Interest)
.042 ÷ .5 (once every 2 years) = .084
1.084 ^ (1/2) = 1.041153
The last 3 years are already expressed as an effective rate, so we don't need to convert them. The annual rate is:
1.058
I kept the 1 in the numbers (1.058 instead of 5.8% for example) so that it's easier to find the final number
Take every relevant number and raise it to the power of the number of years it's compounded for. For discounting, raise it to a negative power.
First 3 years: 1.020184 ^ 3 = 1.061784
Next 2 years: 1.030225 ^ -2 = .942184
Next 4 years: 1.041163 ^ 4 = 1.175056
Last 3 years: 1.058 ^ -3 = .84439
Multiply these numbers (include all decimals when you do this calculation)
1.062 * .942 * 1.175 * .844 = .992598
This is our final multiplier to find the effect on our principal:
.992598 * 2,480 = 2461.64
Answer is 2461.64
