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- If the Fed buys loans from banks, what is the impact on the Loanable Funds Market? A) Decreases the supply of loanable funds and lowers the interest rate. B) Increases the supply of loanable funds and lowers the interest rate. C) Decreases the supply of loanable funds and raises the interest rate. D) Increases the supply of loanable funds and raises the interest rate.If the bank decides to cut down on interest expenses by reducing its dependence upon borrowed funds, what policy must the bank follow?Why is credit risk management important and what are the features of a loan or debt instrument it determines? What is the difference between a spot loan and revolving loan? What is loan commitment? What are the different rates that have replaced LIBOR and in what countries/economic blocs are they used in? What are the borrower and market specific factors that impact the return on a loan for a financial institution? Are higher interest rates a restrictive or stimulative form of monetary policy and explain your answer?
- What risks might commercial bank operations face by funding long-term loans such as mortgages to borrowers (often at fixed interest rates) with short-term deposits from savers? What steps could the financial institution take to reduce these risks?Which interest rate is used on very short-term loans from one bank to another? A. Prime interest rate B. Commercial paper rate C. Treasury bill rate D. Fed funds rateAssume that the government sets a binding price ceiling on the interest rate that banks charge on loans.Explain carefully the impact of this policy on the financial market
- What risks might commercial banks face if they use short-term deposits from savers to pay for long-term loans, like mortgages, that often have fixed interest rates? What could the financial institution do to lower these risks?The discount rate is O the interest rate commercial banks charge each other for overnight loans. the interest rate the Federal Reserve charges member banks for loans from the Fe the interest rate consumers with good credit pay for bank loans. O the interest rate the Federal Reserve charges consumers for short term loans.There has been concerns among businesses that the recent reductions in the NIPR has not led to significant decreases in bank lending rates. What do you think could be accounting for this? What additional measures can policy-makers undertake to reduce the Cost of borrowing in the country?
- Which of the following would increase a bank’s Net Interest Margin, assuming all else stays the same? Choose Two an increase in the interest rate on its loans companies paying off some of their loans and the bank using the funds to purchase Treasury bonds customers switching a portion of their time deposits to demand deposits the bank issues additional equity and keeps the funds in cash an increase in the federal funds rate assuming the bank borrows more in the federal funds market than it lendsa bank that makes most of its long term loans at fixed interest rates is reducing ceedit risk and increasing interest rate risk increasing credit risk and reducing interest rate risk reducing both interest rate and credit risk increasing both interest rate and credit riskWhich of the following is not a way in which banks lend short-term unsecured loans? a. Through a guaranteed credit line that has a commitment fee for any unused amount for the year b. Through credits cards lines with a certain credit limit c. By sending the amount earned from trust and investment products offered by the bank d. By lending a single date maturity loan to a debtor