1) Banks hold excess and secondary reserves toA) reduce the interest-rate risk problem.
2) Which of the following statements most accurately describes the task of bank asset management?
b. Banks seek to have the highest liquidity possible subject to earning a positive rate of return on their operations.
3) The goals of bank asset management include
d. purchasing securities with high returns and low risk.
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Bonus interest is it's name
Answer: Commodity, because it was backed by a valuable good.
Explanation:
In the Prisoner of War camp in question, the prisoners had come up with a trade system where they used paper money that was backed by cigarettes. This made that paper money a commodity because it was backed by a valuable good in the camp which was cigarettes.
Commodity money such as this one used to be widely used by nations as their currency would be backed by valuable metals such as gold and silver.
Answer: = $2,731.14
Explanation:
First find the annual payment.
The payment will be constant so is an annuity.
Present Value of an Annuity = Payment * Present Value Interest Factor of an annuity
4,000 = Payment * PVIFA( 3 periods, 5%)
4,000 = Payment * 2.7232
Payment = 4,000 / 2.7232
Payment = $1,468.86
This annual Payment is divided into an interest component and a component going towards principal repayment.
Interest component = 5% * 4,000
= $200
Amount going to principal = 1,468.86 - 200
= $1,268.86
Amount of Principal Outstanding = 4,000 - 1,268.86
= $2,731.14
Answer:
D: The accept/reject decision depends on the firm's risk-adjustment policy. If Norris' policy is to increase the required return on a riskier-than average project to 3% over rs, then it should reject the project
Explanation:
Please refer the complete question:
Which of the following statements is correct?
a. The project should definitely be accepted because its expected return (before any risk adjustments) is greater than its required return.
b. The project should definitely be rejected because its expected return (before risk adjustment) is less than its required return.
c. Riskier-than-average projects should have their expected returns increased to reflect their higher risk. Clearly, this would make the project acceptable regardless of the amount of the adjustment.
d. The accept/reject decision depends on the firm's risk-adjustment policy. If Norris' policy is to increase the required return on a riskier-than-average project to 3% over rS, then it should reject the project.
e. Capital budgeting projects should be evaluated solely on the basis of their total risk. Thus, insufficient information has been provided to make the accept/reject decision.
