Answered: Explain as to why people prefer to keep…

Explain as to why people prefer to keep their savings in a bank though there are other opportunities where return on investment is higher than bank deposits.

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter7: International Arbitrage And Interest Rate Parity

Section: Chapter Questions

Problem 1SBD

See similar textbooks

Related questions

Q: Why some entrepreneurs are hesitant to avail of commercial bank loans? (b) Why some of them resort…

A: To start a business, some amount of capital is needed beyond the owner's capital. Commercial…

Q: What are the factors that make a person choose a bank? What are people looking for in a banking…

A: Bank is referred as the financial institution, which accepts the monetary deposits from the people…

Q: What type of loan/s these banks offer? Explain how they use this type of loan among their clients

A: Loans are the debt form that is incurred by an individual or entity. The lender of the loan is…

Q: The following shows the balance sheet for a bank. The manager wants to get an idea about the…

A: The technique used by the banking sector to assess the interest rate risk and the liquidity risk of…

Q: Why is it important to choose checking and savings account that suits you best?

A: A checking account is that account which is for day to day spending. This is the account where the…

Q: How to increase ROA and ROE in a rural bank? Explain thoroughly

A: Ratio analysis: Ratio analysis is a tool that establishes a relationship between the different…

Q: What is the difference between Investment Banks and regular Banks? explain one small paragraph.

A: Introduction: Investment banks are those banks that are specialize in providing institutional bodies…

Q: Why do community banks not want Wal-Mart to be in the banking business? What are the possible…

A: The world's largest retailer, Walmart is an American multinational company. It operates a chain of…

Q: The ABC Bank takes funds from depositors and gives out commercial, housing and car loans. Now,…

A: Hedge funds: It is an investment fund of liquid assets that are pooled together to employ different…

Q: What are the major expenses associated with making consumer loans? What is the average size of…

A: A Consumer Loan is a loan that banks provide to consumers in order for them to purchase domestic…

Q: Why Central banks requires banks to hold that amount of money? explain ?

A: Banks accept public deposits and lend that amount as loan to individual and companies at a higher…

Q: nvestigate the procedures in your financial institution or a bank of your choice, in granting credit…

A: A financial institution exists to provide consumers, corporations, or both with a wide range of…

Q: If Steve can't decide what bank to take a loan from, what banking service would make a bank a better…

A: 0% Financing represents the discounted finance or loan that is provided to the customers at a…

Q: what are the disadvantages and advantages of big banks and small banks?

A: Answer:

Q: Consider a failing bank. How much is a deposit of $300,000 if the CDIC uses the payoff method? The…

A: According to tax laws government's rights and executive power within the country are defined in a…

Q: Discuss using figures how Bank Overdraft will affect the preparation of Bank Reconciliation…

A: Bank reconciliation statement is a kind of statement prepared in order to reconcile the balances…

Q: why do banks consider interest on loans to be important?

A: Bank is defined as the financial institution, which accepts the deposits from public as well as…

Q: Banks improves the liquidity of the bank by

A: The correct answer is c. Generating additional income from investment

Q: A person opening a regular savings account would expect to be able to deposit and withdraw funds as…

A: Savings Account is an account that is used by people to build a habit of savings. In Savings account…

Q: Why are credits and debits different for banks compared for personal finance usage?

A: In personal account, all expenses, assets, and losses will be debited. All incomes, liabilities, and…

Q: What bank regulation is designed to reduce adverse selection problems for deposit insurance? Will it…

A: Banks are the financial institutions that are involved in providing financial services to their…

Q: a. Based on the EAR (or EFF%), which bank should you use? b. Could your choice of banks be…

A: Answer 1. Compounded annually: It means that the interest is compounded at the end of the year.…

Q: What is the primary asset of any bank? Select an answer: checking and savings accounts investments…

A: Primary Assets - For a Bank, assets are kind of financial instruments that banks is holding or where…

Q: Consider a failing bank. How much is a deposit of $300,000 if the CDIC uses the payoff method? The…

Q: What’s the difference between a commercial bank and an investment bank?

A: A financial institution that provides services such as accepting the deposits and providing the loan…

Q: Which of the following is NOT an advantage of depositing funds into a bank account (compared to…

A: Depositing funds with the banks is considered the safest investment and due to less risk it fetches…

Q: s decreasing provisions for bad debts and loan a good recommendation for a bank

A: Loan loss provisions enable banks to recognize an estimated loss from a particular loan portfolio in…

Q: What are bank assets used for?

A: Standard Disclaimers“Since you have posted a question with multiple subparts, we will solve first…

Q: According to the FDIC, they would like to see fewer banks in the future. What will be the outcome…

A: FDIC mentions in its latest report that they will see lesser banks in the future , the explanation…

Q: Depositing money into a commercial bank is investing in a

A: Step1: Commercial banks form part of an organized money market. Commercial banks deals in money and…

Q: Typically, you will receive a very low-interest rate on money you deposit in a bank. Interest rates…

A: A business loans are loans that is intended primarily for business reasons. As with all loans, it…

Q: Suppose you are working in a bank that encourages customers to save money for their future. Your…

A: Answer: There are various types of account that are opened by bank and the same depend on the size…

Q: What are the different types of deposit accounts and loans offered to customers by any one…

A: SOLUTION PRIMARILY , BANKS OFFERS TWO TYPES OF DEPOSIT ACCOUNTS .THESE ARE DEMAND DEPOSIT LIKE…

Q: Match up the following statements and answers. An answer may be used more than once. Whose…

A: An asset is classified in two parts current and non current. Current part is realizable within a…

Q: How will you deal with the below mentioned situation if you are branch manager of the Bank. A…

A: Fixed Deposit is a saving instrument service provided by banks for both short and long terms. The…

Q: Why is there a need for banking regulations to regulate savings and the lending of money by…

A: Banks are one of the most important financial institutions. Banks play an integral role when it…

Q: Bank can be a source of short-term funding in terms of credit card applications. These fundings on…

A: Credit cards are issued by banks to individuals with good credit score. The individual to whom the…

Question

Explain as to why people prefer to keep their savings in a bank though there are other opportunities where return on investment is higher than bank deposits.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

What are the advantages and disadvantages of direct lending for the bank? How are banks reducing the effect of the disadvantages?
What are the advantages and disadvantages of direct lending for the bank?
Why are some entrepreneurs hesitant to avail of commercial bank loans? Why do some of them resort to social bricolage, in terms of financing their business?
Why are credits and debits different for banks compared for personal finance usage?
(a) Why some entrepreneurs are hesitant to avail of commercial bank loans? (b) Why some of them resort to social bricolage, in terms of financing their business?
Compared to other depository financial institutions, credit unions Group of answer choices charge lower rates on loans. pay higher interest on savings. All are true are run to benefit their members.
In managing credit risk for banks what are the two main concerns that banks have when lending money? Name them, and explain what these are, then give an overview of the tools banks use to mitigate credit risk.
how banks can improve their services like deposits ?
Depositing money into a commercial bank is investing in a a.secondary market. b.subprime market. c.predatory lending market. d.primary market.
What is funding practices in commercial bank ,give me some examples of funding practices of bank that can cause bank failures by illiquidity in order to make me see a clearer picture.
Why is it important to choose checking and savings account that suits you best?
How can I calculate using a financial indicator, which of the companies has the greatest possibility of obtaining more money borrowed from a bank?