Why do banks hold reserves? How do banks decisions on reserves affect the money supply?

Q: How does the cost of commercial paper compare with the cost ofshort-term bank loans? With the cost…

A: Commercial paper: It could be a generally utilized sort of short-term, unsecured debt security…

Q: Explain in detail the function played by the money market in the financial market.

A: Money market is a type of market which involves trading in short-term debt financial instruments.

Q: The Money Markets is different from the Capital Markets. What are the financial instruments traded…

A: Money Market : Money market is the financial market where the instruments that have a short term…

Q: Describe the Federal Reserve Banking System. Which is the most vital? Which is less important? Why?

A: This question explains about the Federal Reserve Banking System is a system of banks run by the…

Q: What is the Federal Reserve System and how is a bank's balance sheet formed?

A: It tells about the Federal Reserve System and how is a bank's balance sheet formed:

Q: money markets? Would you classify this as a financial market, financial instrument or financial…

A: Explain your understanding of money markets?  Trading in extremely short-term debt assets is known…

Q: How does a bank try to achieve the best possible risk adjusted return on its overall loan portfolio?

A: The possibility of a loss arising from a borrower's inability to repay a loan or meet legally…

Q: fiat

A: Fiat standard or Fiat money issued by the government & has no back up of a physical commodity.…

Q: Bank capital has no effect on the liquidity activities of banks. Do you agree and why

A: Introduction: Liquidity management of banks are nothing but estimating banks often on their…

Q: What is the term of interest on bank overdraft?

A: On basis of creditworthiness, a bank allows a person to draw excess money from his account…

Q: What are the implications of the transformation function for the liquidity position of the bank?

A: Answer: Introduction: Liquidity is nothing but the ability of the bank to turn money into cash and…

Q: what is MORATORIUM” IN BANKING? explain.

A: During a moratorium period, your lender will calculate the interest on your loan using the notion of…

Q: Why do managers of financial institutions care so muchabout the activities of the Federal Reserve…

A: SOLUTION:- Federal reserve system is main body or authority in of the U.S. which takes care of the…

Q: Explain the concept of liquidity risk in banking. Why is it important to control liquidity risk?

A: Liquidity refers to the ability of a bank to meet its cash and collateral obligations without…

Q: How does the Fed manage money?

A: The monetary policy of the Federal Reserve System controls the amount of money in circulation. It…

Q: WHAT ARE THE TYPES OF BANK MANAGEMENT?

A: Bank management is used to govern the different concerns that are associated with the bank to…

Q: risk

A: Introduction: Banks & other financial institution play an important role in the economic…

Q: What are the most important Cash Outflows from Financing Activities? Check All That Apply Issuing…

A: Issuing Bonds: Cash inflow - Financing activity   Issuing Stocks: Cash inflow - Financing activity…

Q: Which one of the following assets is not considered as cash equivalent? Guaranteed investment…

A: Cash equivalents are form of liquid and current assets which can be converted into cash into short…

Q: What is the Federal Reserve? What are the Fed’s three tools for controllingthe money supply?

A: Federal Reserve is considered to be the Central Bank of America. It is also known as the Federal…

Q: What are the sources and uses of Bank funds?

A: Whatever wealth in a bank's possession is referred to as bank funds. Bank funds primarily comprise…

Q: What is the normal balance for bank overdraft and why?

A: Overdraft is the facility provided to the company to use the bank’s money when the company is out of…

Q: What is importance of federal reserve system and explain how banks balance sheet are formed with…

A: Federal Reserve System was created on 23 December 1913, which is the central banking…

Q: How has technology changed the way target cash balances are set?

A: Introduction: Usually for a particular point of time, a target cash balance represents the optimal…

Q: Explain the role of the banks in the financial system.

A: As the financial system’s key component, banks helpful in allocating the funds from the savers to…

Q: What is bank resolution?

A: Resolution takes place on the identical time whilst the authorities decides that the economic…

Q: How does a firm’s ability to borrow affect its optimal holdings of cash and securities?

A: In a regular course of business, every business entity enjoys benefit of credit from each other…

Q: what are treasury notes?

A: Treasury notes: Treasury notes are interest-bearing securities with a static maturity of not fewer…

Q: How could the cash budget be used when the terms of a bank loan are negotiated?

A: Cash Budget: Cas budget is a tool, which designates the amount of accessible cash is suitable or…

Q: interest

A: There are several methods used by the central banks in order to control the money supply. It is for…

Q: How does the financial system function and why does a financial crisis occur ?

A: Financial system is a full mechanism of movement of funds. Investors invest their money in firms and…

Q: risk transformtion in banks

A: Risk is a term that is used for defining the uncertainty arising in the future from changes in…

Q: Examine the role of bank credit in financing of working capital. What are the types of bank credit?

A: In order to conduct the business activity successfully funds are required, these funds are invested…

Q: To what extent does Money Market contribute to financial markets, and how

A: INTRODUCTION : Traders in financial instruments may participate in the market. It is possible to…

Q: What is the prime rate and how is it used by financial institutions?

A: Prime rate : Prime rates is the rate charged by the commercial banks on the customers that are…

Q: What are conventional monetary tools used by central banks?

A: The three conventional monetary policy tools which are used by the central banks are the discount…

Q: Explain the Currency crisis, Banking Crisis and Foreign Debt Crisis

A: In the world of finance, we often see or hear about one crisis or the other. The 2008 financial was…

Cash budget

A cash budget is an estimate of an organization's cash flow for the future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future. If cash receipts are insufficient to cover future expenses, an organization may plan to obtain funds from other sources. After estimating the sales, purchase, and capital expenditure budgets for the year, management develops a cash budget. These budgets are created to ensure that an organization's cash flow is managed. It is important to note that only cash transactions are recorded when actual cash enters and exits an organization.