3. Practical exercises (30 marks) 3.1 (5 marks) The National Wealth Bank determines from an analysis...
should this bank charge on its depu 3.2 (5 marks) Ms. Hoa asks for a VND 1.5 billion loan for one year. The bank tells her that they will give her VND 1,405 billion immediately and deduct VND 195 million in interest up front. What is the effective rate of interest on this loan? The Fale Bank has determined that its marginal cost of raising funds is 4,5 has also determined that its
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3.1 (5 marks) A bank has a listed prime rate of 7%. They have estimated that the marginal cost of raising funds is 5%, their default risk premium on a loan is 1.5% and that they want a profit margin of 2%. They have also estimated that the term risk premium is .5%. What is the interest rate this bank will charge if they use the cost plus pricing model? 3.2 (5 marks) A borrower has asked for a...
Module Code: LCBS5009R 2. Cesim Bank has $20 million in cash and a $180 million loan portfolio. The assets are funded with demand deposits of $18 million, a $162 million certificate of deposit and $20 million in equity. Remember: a certificate of deposit (CD) is a savings certificate with a fixed maturity date and a specified fixed interest rate. It can be issued in any denomination aside from minimum investment requirements. A CD restricts access to the funds until the...
Student Name: Q1. (15 points) Bank Profits: Bank A has deposit liabilities of $200 million. It keeps the minimum cash reserves required by law of 20 % and holds an additional 10% of minimum cash reserves. Now the lending- borrowing transactions are taking place and the funds lent out from one bank are returned to the banking system in the form of new deposits to another bank. For example, Bank A keeps its minimum required reserves and lends the excess...
First National Bank of Bannerville has posted interest revenues of $75 million and interest costs from all of its borrowings of $45 million. (1) If this bank possesses $800 million in total earning assets, what is First National’s net interest margin? (2) Suppose the bank’s interest revenues and interest costs double, while its earning assets increase by 40 percent. What will happen to its net interest margin?
4- Assume that you can borrow $175,000 for one year from a local commercial bank a. The bank loan officer offers you the loan if you agree to pay $16,000 in interest plus repay the $175,000 at the year. What is the percent interest rate or effective cost? discount loan at 9 percent interest. What is the percent interest rate or effective cost? c. Which one of the two loans would you prefer? 5- Assume that the interest a. If...
Background Sarah Saver goes to Fancy National Bank and deposits $1,000 that she earned from her summer job. She now has a checking account with a balance of $1,000 from which she can write checks. Fancy National Bank has a 10 percent reserve requirement. The bank will put $100 in its vault and lend out the rest to people who need loans. If you recall from the lesson, fractional reserve banking is a banking system in which only a fraction...
Onshore Bank has $39 million in assets, with risk-adjusted assets of $29 million. Core Equity Tier 1 (CETI) capital is $1,350,000, additional Tier I capital is $550,000, and Tier II capital is $438,000. The current value of the CET1 ratio is 4.66 percent, the Tier I ratio is 6.55 percent, and the total capital ratio is 8.06 percent. Calculate the new value of CETI, Tier I, and total capital ratios for the following transactions. c. a. The bank repurchases $119,000...
This is one full study question. Is someone able to answer the following components of the question for me? a,b,c,d Kira is 32 years of age and works full time for a manufacturing company as a supervisor. She earns $4,200 a month, net. She has no other sources of income. Her employer offers her benefits, including a Group RRSP. The employer matches 50% of her RRSP contribution, which is 10% of her monthly take home pay. As a result of...
Sue will need $120,000 to refurbish her house at the comer of a main road into a cake shop in 5 years. She has a saving account which earn 3.47% p.a. compounding quarterly and she is able to deposit $800 into that account at the end of each month for 5 years. a) Will Sue have enough money after 5 years? If not, how much is in short? Show all calculations. (4 marks) b) Even if Sue may not have...