The rate on a 3 month Treasure Bill is less than 1%. While the rate for a 10 year business loan could be 5% or more. Explain 3 reasons why banks hold substantial amounts of 3 month treasuries despite their much lower rate.
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- The prime interest rate is the rate that banks charge their best customers. Based on the nominal interest rates and inflation rates in Table 19.10, in which of the years would it have been best to be a lender? Based on the nominal interest rates and inflation rates in Table 19.10, in which of the years given would it have been best to be a borrower?A fixed-rate mortgage has the same interest rate over the life of the loan, whether the mortgage is for 15 or 30 years. By contrast, an adjustable-rate mortgage changes with market interest rates over the life of the mortgage. If inflation falls unexpectedly by 3, what would likely happen to a homeowner with an adjustable-rate mortgage?Please no written by hand solution 1 a) Assuming that Stanbic Bank has branches A, B, C D etc. and it receives a deposit of 50,000 Shs from a particular person. It then removes a cash ratio of 15%. Explain how Stanbic Bank will create credit among her different branches. b) As a student of macroeconomics, what do you think, the government will do to achieve the forecasted drops in inflation rates. c) Discuss the major effects of taxes on the performance of our economy d) Advise the government on some of the major guiding principles they should follow when introducing a tax system e) Discuss the factors that limit the process of credit creation in any country Kindly please do not use GOOGLE ( No Copy and Past)
- Please do both question Question 1 Simple Interest of $234.3 is owed on a loan of $575 after four years and four months. What is the annual inerest rate? {Enter the value of the interest rate below and round your answer to one decimal point eg. X.X} Question 2 If you put $800 in a bank today that pays (a) 8% interest per year, how much money could be withdrawn 17 years from now? (Round your answer to the nearest dollar) $ (b) 8% simple interest per year, how much money could be withdrawn 17 years from now? (Round your answer to the nearest dollar) $4.In 2020, interest rates were 9.2% and the rate of inflation was 11%. What was the realinterest rate in 2020? How would the purchasing power of your savings have changed overthe year?Which lending agreement represents the highest real rate of return for a bank when it lends its money to a customer? A) a nominal interest rate of 11% with 5% inflation B) a nominal interest rate of 19% with 15% inflation C) a nominal interest rate of 8% with 1% inflation D) a nominal interest rate of 12% with 7% inflation
- The economic of quarter illegal currently has a level of M2 $100000. If saving is 20000 dollars and money market fund is 10000$ What is the level of M1 in the economy.If the inflation rate is 8% and cost of money is 12%, what interest rate will take care of the inflation and the cost of money ?X Corp would like to borrow from Y Corp. The risk free rate is 6% with current inflation rate of 2%. In the following year the inflation rate will increase by 1%. How much is the interest rate that Y should impose to X? A• 4% B• 6% C• 5% D• 7%
- . The rate of ______ is the ______ paid for using someone else’s ______, which is a _____ to consumers for earlier availability of durable goods such as cars, and a ______ to suppliers for capital investments nominal interest; money; cost; price; cost nominal interest; price; money; cost; cost real interest; price; money; cost; cost real interest; money; cost; price; costIf the rate of inflation is 5.7 %, what nominal interest rate is necessary for you to earn a 2.2 % real interest rate on yourinvestment?1. You deposit $5000 in the bank for one year. CASE 1: inflation = 0%, nom. interest rate = 20% CASE 2: inflation = 10%, nom. interest rate = 30% a. In which case does the real value of your deposit grow the most? Assume the tax rate is 15%. b. In which case do you pay the most taxes? c. Compute the after-tax nominal interest rate, then subtract off inflation to get the after-tax real interest rate for both cases.