Answer:
Midwestern Mutual Bank's Balance Sheet
Equity:
Owners' Equity - $100
Liabilities:
Deposits $1,200
Debts $200
Total - $1,400
Equity and Liabilities = $1,500
Assets:
Reserves - $150
Loans $600
Securities $750
Total Assets - $1,500
a) If a new customer adds $100 to his account, this would increase the loans account with $100 and the deposits account with $100.
b) The leverage ratio is the measure of the bank's core capital to total assets.
Old leverage ratio = 100 / 1500 x 100% = 6.67%
The new leverage ratio is 100 / 1600 x 100% = 6.25%.
c) The intended goal of capital requirement is protect the interests of those who hold equity in the bank.
Explanation:
Banks are highly leveraged. This means that they usually maintain high leverage ratios. The liabilities are always much compared to the capital.
Leverage ratio is the ratio of a bank's core capital (shareholders equity) to its total assets.
This is why the Federal Reserve introduces capital requirements for banks. This tries to protect shareholders' equity that is usually written down when leverage ratios increase. This is because the capital portion of assets to which the debts are tied can be written down, but the debts cannot.
Answer: A. the 99 principle
Explanation:
This strategy, often called "charm pricing," involves using pricing that ends in "9" and "99."
With charm pricing, the left digit is reduced from a round number by one cent. We come across this technique every time we make purchases but don’t pay attention. For example, your brain processes $3.00 and $2.99 as different values: To your brain $2.99 is $2.00, which is cheaper than $3.00.
How is this technique effective? It all boils down to how a brand converts numerical values. In 2005, Thomas and Morwitz conducted research they called "the left-digit effect in price cognition." They explained that, “Nine-ending prices will be perceived to be smaller than a price one cent higher if the left-most digit changes to a lower level (e.g., $3.00 to $2.99), but not if the left-most digit remains unchanged (e.g., $3.60 to $3.59).”
Answer: a) $18,605
Explanation:
The amount he can borrow today will be an amount that when grown at a rate of 7.5% per year will equal $20,000 in a year.
20,000 = Amount + ( Amount * rate * time)
20,000 = Amount + (7.5% * Amount)
2,000,000 = 1.075 * Amount
Amount = $18,605
Answer:
Instructios are listed below.
Explanation:
Giving the following information:
Hubbard Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During January, the kennel budgeted for 2,100 tenant-days, but its actual level of activity was 2,060 tenant-days.
Wages and salaries:
Fixed= $ 2,300
Variable= $ 7.20
Estimated Wages and Salaries= 2,300 + 7.2*2,100= $17,420
