"question 1: a bank with a two-year investment horizon has issued a one-year certificate of deposit for $50 million at an intere
st rate of 2 percent. with the proceeds, the bank has purchased a two-year treasury note that pays 4 percent interest. what risk does the bank face in entering into these transactions? what would happen if all interest rates were to rise by 1 percent? question 2: why do you think that u.s. banks are prohibited from holding equity as part of their own portfolios?"
Explanation: Bank is faced with the risk of monetary value of Treasury note may fall. After one year, the bank must make sure that the funds are available at hand. funds made available by banks are being sold at the end of the first year.With the fall in value, there might be a capital loss which is a risk that may occur.
The bank will need to absorb a capital loss peradventure if the value of asset drops . Then capital loss could be greater than 2%, given that the value of asset fall further below.
Meaning, the case will again be the same, if the interest rate increased by 1%..
if all interest rates were to rise by 1 percent? there shall be no effect on Profits.
The bank faces the risk that the short-term interest rate will increase (Rise) before the second year, this will increase the amount of interest the bank has to pay on the CD but there will be no changes in the interest income that the bank receives from the Treasury.
Annual income of bank = Annual interest on Treasury note = $50000000 * 4% = $2000000
Annual expense of bank = Annual interest on CD= $50000000 * 2% = $1000000
Annual Profit for Bank = $2000000 - $1000000 = $1000000
3. If all interest rate rises by 1% then:
Annual income of bank = Annual interest on Treasury note = $50000000 * 5% = $2500000
Annual expense of bank = Annual interest on CD= $50000000 * 3% = $1500000
Annual Profit for Bank = $2500000 - $1500000 = $1000000
Although Otome and Kazuki aren't a couple, they hang out with each other constantly and get along very well. In fact, Kazuki believes that as long as things proceed as they currently are, the two of them will eventually be together as a couple, <u>and get married</u>.
Director: Takashi Nishikawa
Script: Takashi Nishikawa (ep 1)
Storyboard: Takashi Nishikawa (ep 1)
Original creator: CARN (manga)
Character Design: Takashi Nishikawa
Animation Director: Takashi Nishikawa (ep 1)
Key Animation: Takashi Nishikawa (ep 1)
Okino Kazuki is a normal student who is happy with his staid life. There are two important girls in his life: his sister, Rinka, and childhood friend Sakuragi Otome. His elder by one year, Otome is a beauty and the dream of every guy in school. Although Otome and Kazuki aren't a couple, they hang out with each other constantly and get along very well. In fact, Kazuki believes that as long as things proceed as they currently are, the two of them will eventually be together as a couple, and even marry. However, Kazuki's faith is shattered one day when he receives a DVD.
Donor contributions to fund a resident camp program.
The American Institute of Certified Public Accountants (AICPA) Audit and Accounting Guide, Health Care Organizations, states that when the donor restriction expires (i.e. no more in existence), all net assets that temporarily restricted has to be reported as net assets released from restrictions on the statement of operations. This will then increase the net asset.
Therefore, it only donor contributions to fund a resident camp program that can increase the net asset since there is no temporary restriction on it.