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AVprozaik [17]
2 years ago
9

"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?"
Business
2 answers:
Misha Larkins [42]2 years ago
7 0

Answer:

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%..

Lynna [10]2 years ago
6 0

Answer:

Answer: Annual Profit for Bank  = $1000000

               if all interest rates were to rise by 1 percent? there shall be no effect on Profits.

Explanation:

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.

2.

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

Hence, there shall be no effect on Profits.

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Thrifty Co. reported net income of $573,650 for its fiscal year ended January 31, 2020. At the beginning of that fiscal year, 10
Xelga [282]

Answer:

a. The basic earnings per share of common stock for year ended January 31, 2020 is $3.56 per share

b. If Thrifty Co.’s preferred stock were convertible into common stock, it would be required to calculate Dluted EPS.

Explanation:

a. In order to calculate the BEPS we would have to use the following formula:

BEPS = Net income available to common stockholders / Weighted Avg. no. of common stock

Net income available to common stockholders=$573,650

Weighted Avg. no. of common stock = 100,000 + (30,000 x 3/12)

Weighted Avg. no. of common stock = 107,500

BEPS = Net income available to common stockholders / Weighted Avg. no. of common stock

BEPS = $573,650 / 107,500

BEPS= $3.56 per share

b. If Thrifty Co.’s preferred stock were convertible into common stock, it would be required to calculate Dluted EPS.

5 0
2 years ago
For her homework, Annie has added the picture of a fruit in a document. She wants to enhance it to give a cut-out look. Which fe
Alona [7]

Answer:

Obvious answer could be clip art since it’s a small part of something bigger. It could also be shapes but if she wants it to actually look like fruit then she’d use clip art. (Four years of digital design)

Explanation:

3 0
2 years ago
Many manufacturers have quality control programs that include inspection of incoming materials for defects. Suppose a computer m
zimovet [89]

Answer:

Explanation:

There are total 5 batches and two boards are selected from each batch for inspection.

Let the boards are numbered from 1 to 5.

If the selected boards are 1 and 2, then it is represented in pair as (1, 2).

If the selected boards are 1 and 3, then it is represented in pair as (1, 3).

Similarly, other pairs can be obtained.

a) Let X be the number of defective boards observed among the two inspected.

If the boards 1 and 2 are the only defective boards in a lot of five, then

(1,2),x=2; (1,3),x=1; (1,4),x=1; (1,5),x=1;

(2,3),x=1; (2,4),x=1; (2,5),x=1;

(3,4),x=0;\ (3,5),x=0;\ (4,5),x=0.(3,4),x=0; (3,5),x=0; (4,5),x=0.

P(X=0)=  3/10 =0.3

P(X=1)={6 \over 10}=0.6P(X=1)=  6/10 =0.6

P(X=2)={1 \over 10}=0.1P(X=2)=  1/10 =0.1

b)

x                  0               1                    2

p(x)            0.3           0.6                0.1

​

​μ  X  =0⋅0.3+1⋅0.6+2⋅0.1=0.8

σ  X ² =(0−0.8)²  ⋅0.3+(1−0.8)²  ⋅0.6+(2−0.8)² ⋅0.1=0.36

μₓ=0.8, σX  =0.6

 

​

5 0
2 years ago
Northwest Catering owns and operates several restaurant services in Oregon, Washington, and Idaho. One restaurant chain has expe
Tcecarenko [31]

Answer:

1.3 million  Impaired asset is the determined amount

Explanation:

Asset impaired as the estimated fair value cash flows is lower than book value

Impairment loss = Fair value - Book value  

= 3.0 million - 4.3 million

= 1.3 million Impaired asset

An impaired asset is an asset that has a market value less than the value which was disclosed on the organisation balance sheet. When an asset is said to be impaired, it will need to be written down on the company's balance sheet to its current market value.

7 0
2 years ago
Peppercorn Inc. has outstanding nonconvertible preferred stock​ (cumulative) that pays a quarterly dividend of​ $1.00. If your r
Morgarella [4.7K]

Answer:

Quarterly dividend = $1.00

Required rate of return per annum = 8% = 0.08

Quarterly rate of return = 0.08/4 = 0.02

Current market price = <u>Quarterly dividend</u>

                                      Quarterly required rate of return

                                   = $1.00

                                       0.08

                                   = $12.5      

The amount to pay for 1,000 shares = $1.25 x 1,000 = $12,500

                                                                                                                                                                                                                                                                                                                                                                                                                                                       

Explanation:

The current market price is calculated as quarterly dividend paid divided by quarterly required rate of return. Then, we will multiply the current market price by the number of shares in order to determine the total amount to pay for the shares.

5 0
2 years ago
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