Why lenders assume no risk in granting loan to the government though the return of this type of loan is minimal?

Q: Could Visa have accomplished its funding goals throughshort-term or long-term debt financing…

A: There are two types of funding: Short-term financing Long-term financing A company requires good…

Q: Which innovation has caused the most trouble for financial institutions that issue residential…

A: Answer: The correct answer is option A. Securitization.

Q: Governments are prevented from borrowing unlimited funds through the enforcement of debt limits.…

A: Debt limit refers to the limit on the debt that a government can borrow. It shows the limits of…

Q: Which of the following is true of an unsecured loan? A. They are exclusively for cars, houses, and…

A: Loan can be defined as money that somebody lends other person in exchange of some interest that is…

Q: Do you think that removing the impediments to a nationwide banking system will be beneficial to the…

A: Nationwide banking system refers to the process of providing financial services to the customers of…

Q: Which of the following is a reason that banks may favor fee compensation over balance compensation?…

A: In order to increase their deposits and use them for loan, banks usually prefer fee compensation…

Q: What is adverse selection?  Why does it predict that lenders will prefer to arrange loans through a…

A: The loan is the funds that a borrower takes from the lender at a certain rate of interest for a…

Q: Briefly explain mortgage securitization and how it contributed to the economic crisis.

A: Mortgage securitization is the process of converting the loan into investment as purchasing the bond…

Q: We think of banks as being interest rate intermediaries. That is, the borrow cheaply, and then lend…

A: Following are the types of risk faces by banking industry other than interest rate:

Q: What would these securities be called and what does the Bank need to do to ensure the loan monies…

A: Loans refer to the agreement between the borrower and the bank or financial institution for…

Q: Collateral does not reduce the risk of a loan per se, because A. it is not part of the loan…

A: Collateral = It refers to asset, being pledged by bank against the loan given to its customer in…

Q: Assume that the government sets a binding price ceiling on the interest rate that banks charge on…

A: A price ceiling is a mandate that the price charged on certain goods or products may not rise or…

Q: what is ADVANTAGES AND DISADVANTAGES OF THIS MORATORIUM FOR THE BANKS AND BORROWERS? provide…

A: A moratorium is a temporary cessation of activity until future circumstances necessitate its lifting…

Q: What contingencies are commonly found in permanent or take-out loan commitments? Why are they used?…

A: The contingencies found in permanent or take-out loan commitments and their use are as follows: A…

Q: Describe a short-term financing option and discuss the advantages and disadvantages.  Is there a…

A: Short term financing: Any loan that is obtained for a short period of time is Short Term financing.…

Q: If the national debt increases, is it true that we need not worry about the debt as long as the…

A: National debt is the amount of money owed by the government. The government takes national debt in…

Q: Would you not agree that the financial institutions and federal authorities are equally to blame for…

A: Lending to subprime borrowers is more likely to default than lending to prime borrowers. In the…

Q: Why would lenders, in general, tend to set loan maturities (not amortization, but when the loan…

A: Loan Maturity: The time period for which a loan is extended is known as the loan period.  The date…

Q: what is the impact on the Loanable Funds Market

A: Loan-able funds are the amount or the funds available in the loan market for the borrowers. These…

Q: What are the main differences between ARMs and FRMs loans? You need to highlight the differences in…

A: Loan which are provides to the borrower either in Adjusted Rate of Mortgage or Fixed Rate of…

Q: How does the cost of costly trade credit generally compare withthe cost of short-term bank loans?

A: Costly trade credit imply companies that make payments after the discount period as they forego the…

Q: Show that the Ricardian Equivalence does not necessarily hold if the assumption of perfect credit…

A: Ricardo's equivalence is an economic theory that states that funding government spending from…

Q: Explain Issuance of loans to unworthy entities with examples

A: Issuance of loan to unworthy entities means granting of loans to the entities having a poor…

Q: The prime interest rate Multiple Choice is lower than the federal funds rate because it is the rate…

A: PRIME RATE: It is lending rate used by banks at which they lend to customers.

Q: Why can’t bank lend without a written loan policy? Explain in detail.

A: Lending procedure: There are certain steps that are followed in the procedure. this includes the…

Q: Why would a bank sell a package (portion) of its loans? A) to decrease liquidity B) to increase the…

A: Securitization  is a process wherein individual loans, debts, etc., that involve a payment stream…

Q: Why will bank never opt for the rejection of payment of LC to exporters bank?

A: A Letter of Credit or Credit Letter refers to a assurance letter given by the bank to its buyer that…

Q: nt stud

A: Introduction : In simple words, student loans refers to the amount borrowed by individuals to…

Q: If a person charges interest on a loan transaction equivalent to the inflation rate than will it be…

A: Time value of the money is the value of the money which a person must use in order to know how much…

Q: What are spontaneous sources of short-term financing and unsecured sources of short-term loans

A: The source of funds which are having a zero cost is termed as a spontaneous source of funds. It is…

Q: Based on the functions of the banking system, give reasons why governments bail out banks during an…

A: In the period of an economic crisis if the banks are creating vast losses and at risk of failure the…

Q: Which of the following is the function of the financial market ? Select one :  a .  It decides the…

A: The financial system is the most important factor in economic transformation. Finance helps bridge…

Q: What concerns are there regarding the Paycheck Protecting Program and the Main Street Lending…

A: Paycheck Protecting Program: It is the program launched to protect the salary of employees being…

Q: How do adverse selection and moral hazard affect the bank lending function? And How can minimise…

A: A Moral hazard occurs when one party tends to behave in the riskiest manner if it is protected…