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GuDViN [60]
2 years ago
8

A bank has the following balance sheet: SETS RETURN % MILLION $ LIABILITIES COST % MILLION $ Cash 0.00 35 Fixed-rate Deposits 3.

5 290 Securities 4.00 300 Variable-rate Deposits 2.00 260 Short-term loans 6.00 225 Fed funds 2.50 75 Long-term fixed rate Loans 6.75 250 Long-term Debt fixed rate 5.50 150 EQUITY 35 Total 810 Total 810 If the spread effect is zero and all interest rates increase 60 basis points, the bank's NII will change by ________over the year. Group of answer choices $700,000 -$1,140,000 $1,140,000 $0 -$700,000
Business
1 answer:
snow_tiger [21]2 years ago
7 0

Answer:

$1,140,000

Explanation:

Calculation to determine what the bank's NII will change by

First step is to calculate the bank's one-year repricing gap

Using this formula

Repricing gap=RSAs - RSLs

Where,

RSAs =Securities+Short-term loans

RSLs =Variable-rate Deposits+Fed funds

Let plug in the formula

($ Million)

Repricing gap=[$300 + $225] - [$260 + $75]

Repricing gap=$190

Now let calculate what the bank's NII will change by

Using this formula

Change in bank's NII=Repricing gap*Interest rates

Let plug in the formula

Change in bank's NII=$190,000,000*0.0060

Change in bank's NII =$1,140,000

Therefore If the spread effect is zero and all interest rates increase 60 basis points, the bank's NII will change by $1,140,000

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Rom4ik [11]

Answer:

shutdown -h +15 It is time for a shutdown!

Explanation:

shutdown -h +15 It is time for a shutdown!

5 0
3 years ago
Division A manufactures an aircraft engine component with unit variable product cost of $38 and market price of $50. Division A
olya-2409 [2.1K]

Answer:

The maximum transfer price would be $50.

Explanation:

The maximum transfer price is nothing but the market price for the product , which is the most simple way to derive a transfer price . Here by selling the components of aircraft engines at market price, there are very good chances of high profits to be earned. So the maximum transfer price should be $50.

7 0
3 years ago
You produce a glittering crystal substance, Dementia, which looks just like a diamond, but is much cheaper. It soon takes over 7
Stells [14]

Answer:

substitute goods

Explanation:

Substitute goods -

It refers to the cheaper and better quality goods and services , which can be used in place of another product , is referred to as a substitute goods .

These goods can be better than the other one , as the goods might be easily available , lesser price , better quality , more durable , and hence has more demand by the consumers .

Hence , from the given scenario of the question ,

The correct answer is substitute goods .

3 0
3 years ago
Pacific Packaging's ROE last year was only 3%; but its management has developed a new operating plan that calls for a debt-to-ca
Natalka [10]

Answer: 12.53%

Explanation:

EBIT = $780,000

Interest = $470,000

EBT = EBIT - Interest

= $780,000 - $470,000

= $310,000

Net Income = EBT - Tax

= $310,000 - (35% × $310,000)

= $310,000 - (0.35 × $310,000)

= $310,000 - $108,500

= $201,500

Total assets turnover ratio = 2.8

Total assets = $10,000,000/2.8

= 3,571,429

Debt ratio = 55% = 0.55

Debt/Total asset = 0.55

Debt/3,571,429 = 0.55

Debt = 0.55 × 3571429

= 1,964,286.4

Equity = 0.45 × 3571429

= $1607143.5

Return on equity = Net income/Equity

= $201,500/$1,607,143.5

= 0.1253

= 12.53%

The company's return on equity will be 12.53%.

6 0
2 years ago
Exercise 23-4 Turney Company produces and sells automobile batteries, the heavy-duty HD-240. The 2017 sales forecast is as follo
mrs_skeptik [129]

Answer:

\left[\begin{array}{cccccc}&Q1&Q2&Q3&Q4&Total\\$Sales&5,100&7,100&8,100&10,100&30,400\\$Ending Inventory&2,840&3,240&4,040&2,550&-\\$Producction Needs&7,940&10,340&12,140&12,650&43,070\\$Beginning&(2,040)&(2,840)&(3,240)&(4,040)&-\\$Punits to be produced&5,900&7,500&8,900&8,610&30,910\\\end{array}\right]

Explanation:

\left[\begin{array}{cccccc}&Q1&Q2&Q3&Q4&Total\\$Sales&5,100&7,100&8,100&10,100&30,400\\$Ending Inventory&2,840&3,240&4,040&2,550&-\\$Producction Needs&7,940&10,340&12,140&12,650&43,070\\$Beginning&(2,040)&(2,840)&(3,240)&(4,040)&-\\$Punits to be produced&5,900&7,500&8,900&8,610&30,910\\\end{array}\right]

ending inventory

Q1 = q2 sales x 40% = 7,100 x 40% = 2,840

Q2 = q3 sales x 40% = 8,100 x 40% = 3,240

Q3 = q4 sales x 40% = 10,100 x 40% = 4,040

Q4 = q1 next year x 40%

next year will be 25% than q1 of current year

Q4 = Q1 sales x 1.25 x 40% = 2,550

beginning of Q1 is a given 2,040. Then:

ending of Q1 = beginning of Q2 (when a quarter ends, another begins)

ending of Q2 = beginning of Q3

ending of Q3 = beginning of Q4

The sales plus the desired ending inventory will be all the units needed for the period.

Our beginning inventory subtract out productions needs, as those units are already in stock, we don't need to produce them.

6 0
2 years ago
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