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Axle Bank reported an ROE of 16% and an ROA
of 1.32%. What is the equity multiplier? How well
capitalized is this bank?
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- Given the following financial data for Bank of America (2020): Net Income $17,894Total Assets $2,832,182Total Liabilities $2,559,258 The equity multiplier is? Round answer to two decimal place.Suppose that a firm begins at time t=1 with a capital stock of K(1)= 200,000 and, in addition to replacing any depreciated capital, is planning to invest in new capital at the rate I(t)=50,000t*-3/2 for the forseeable future. Find the planned level of capital stock T years from now. Will this firm’s capital stock grow without bound as T -> ∞ ? Explain using a graph.With reference to what is referred to in Economics as 'the Circular Flow ofIncome', discuss the functions performed by Commercial Banks and Investment 1Banks
- Jemisen National Bank has identified that it holds $44 thousand in rate-sensitive assets and $58 thousand in rate-sensitive liabilities for the next three month period. The bank's initial spread is 1.99%. What is the bank's three month funding GAP? Round your final answer to the nearest dollar (Ex. $0).Effects on shares and financial markets is a macroeconomic issue that was brought about by the impact of COVID-19. What government policy should be implemented to fix this issue?The Based on the following equations Saving (S)= 0.2Y Investment(1)= - 30r + 740, Money Supply(Ms)= 4000 Transaction Demand for Money(L 1) = 0.15Y Speculative demand for money (L2) =-20r+3825. The simple investment multiplier is
- Daniel is considering selling two stocks that have not fared well over recent years. A friend recently informed Daniel that one of his stocks has a special designation, which allows him to treat a loss up to $54,000 on this stock as an ordinary loss rather than the typical capital loss. Daniel figures that he has a loss of $64,800 on each stock. If Daniel’s marginal tax rate is 35 percent and he has $129,600 of other capital gains (taxed at 15 percent) Required: What is the tax savings from the special tax treatment?There is a recent issuanceof asignificant number of treasury sharesat a higher interest rate. How wouldthis affect businesses: A. Individuals and businesses are encouraged to save, hence businesses will expect lower demand and lower prices.B. Individuals and businesses are encouraged to save, hence businesses will expect higher demand and lower prices.C. Individuals and businesses are encouraged to spend, hence businesses will expect lower demand and lower prices.D. Individuals and businesses are encouraged to spend, hence businesses will expect higher demand and higher prices.D3) Why would banks use more equity to invest in their assets, knowing that it would scare off a lot of shareholders? What is wrong with this statement? Do they usually start using equity as investments when they can not use anymore money from depositors which forces them to use it? Are banks allowed to hold equity has an investment? One of your fellow students was specifically looking at the Equity Multiplier calculated from the Balance Sheet from your assignment for this week, which went up by a lot in only one year between 2019 and 2020. Why do you think this happened? "Bank equity capital is a source of funding for asset growth and also function to provide confidence for bank creditors that they will get their funds back."
- Predict what will happen to stock prices after amonetary easing. Explain your predictionHow would each of the following scenarios affect a firm's cost of debt, r d (l - t), t=tax rate; its cost of equity, rs; and its WACC? Indicate with an increase (I), a decreease (D), or no change (N) whether the factor would raise, lower, or have an indeterminate effect on the item in question. Assume for each answer that other things are held constant, even though in some instances this would probably not be true. rd (1-t) rs WACC 1) The corporate tax rate is lowered. 2) The Federal Reserve tightens credit. 3) The firm uses more debt; that is, it increases its debt ratio 4) The dividend payout ratio is increased.Given the following financial data for Bank of America (2020): Net Income $17,894Total Assets $2,832,182Total Liabilities $2,559,258 The return on equity (ROE) is? Round answer to three decimal place. Do not use a dollar sign.