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defon
3 years ago
10

Suppose that as a result of a housing price​ decline, the value of the​ bank's securitized assets falls by an uncertain​ amount,

so that these assets are now worth somewhere between 25 and 45. Call the securitized assets​ "troubled assets." The value of the other assets remains at 50. As a result of the uncertainty about the value of the​ bank's assets, lenders are reluctant to provide any​ short-term credit to the bank.
Business
1 answer:
neonofarm [45]3 years ago
4 0

Answer:

<em>Recapitalization will be a better policy than buying the troubles assets because, buying troubled assets will at most case provide a bank liquidity  but not necessarily a positive capital.</em>

Explanation:

<em>From the question, we recall the following,</em>

<em>The firm has three assets which are 50 of untroubled assets, 25 of troubled assets and 25 of treasury bonds</em>

The Securitized assets will be now 50-25= 25

The value other assets will remain at= 50

The Treasury bonds will be 50-25=25

The Short term credit will remain at= 80

The Capital will be =20  

Securitized assets. 25. Short term credit 80

Other assets.=50 and capital= 20

The Treasury bonds=25

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Answer:

a. Project Low because its expected rate of return is higher than its WACC

Explanation:

Weighted Average Cost of Capital WACC determines firms cost of capital. It includes all sources of finance which are included in firm capital structure. The expected rate of return is the rate at which a project is able to generate return or benefits. For any project to be beneficial, its expected return should be higher than its WACC. We will select project Low because its expected rate of return is higher than its WACC.

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3 years ago
The __________ market consists of individuals and organizations that want goods and services in order to produce goods and servi
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The correct answer is the consumer market
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If Norman invested $100,000 for 3 years at 12%, how much interest on interest will he earn? (Do not round intermediate calculati
Scrat [10]

Answer:

$224.64

Explanation:

Norman invested $100,000, Interest rate 12%, Period 3 years

In compound account, the interest earned by the end of the year qualifies to earn interest. At the end of the period, the interest is added to the principal and earns interest as well.

The interest that Norman earned in the first year was added to the principal amount in the second year, meaning that interest earned some interest in the second and their year of investment. The same happened to the interest earned in the second year.

To calculate the interest earned by the interest, we take the amount after three years, minus the principal amount, minus the simple interest for the three years.

Interest on interest will be the Future value- principal amount- Simple interest.

The amount after three is the compounded value after three years.

compound amount formula FV=  PV × (1+r)n

Future value  of $100,00 @ 12% after 3 years will be

=5000 x (1+12/100) 3

=5000 x (1+0.12)3

=5000 X (1.12)3

=5000 x 1.404928

=7,024.64

The simple interest earned in the three years equal

Interest = principal x rate x duration

12/100 x 5000 x 3

=0.12 x 5000 x 3

=600 x 3

=$1800

Interest on interest will be :

=$7,024.64 - $5,000- $1,800

=$224.64

7 0
2 years ago
Maben Company was started on January 1, Year 1, and experienced the following events during its first year of operation: Acquire
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Answer:

Total Assets $84,800

Explanation:

Calculation for Maben TOTAL ASSETS

1 Cash increased $ 32,000

2 Cash increased $ 38,000

3 Cash increased by cash revenue $ 50,000

4 Cash decreased by expenses paid ($ 46,000)

5 Cash decreased by the amount of dividend ($ 1,200)

6 Cash received from issue of stock $ 22,000

7 Cash paid to reduce liability ($10,000)

8 Does not have effect on Total Assets $ -

9 It will not be considered for accounting $ -

TOTAL ASSETS $ 84,800

Therefore the amount of total assets that Maben would report on the December 31, Year 1, balance sheet will be the amount of $84,800.

6 0
2 years ago
Alex is injured and rushed to Care Hospitals for treatment. He spent 69 minutes at the hospital out of which he filled a form fo
ollegr [7]

Answer:

23.19%

Explanation:

Data given in the question

Spending minutes in the hospital = 69

Queue time = 20 minutes

Form filling time = 21 minutes

Doctor treatment time = 16 minutes

Payment time = 12 minutes

So, by considering the above information, the service cycle efficiency is

Service cycle efficiency = Doctor Treatment time ÷ Total time spent in the hospital

= 16 minutes ÷ 69 minutes

= 23.19%

8 0
3 years ago
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