Personal Finance (MindTap Course List)
13th Edition
ISBN: 9781337099752
Author: E. Thomas Garman, Raymond Forgue
Publisher: Cengage Learning
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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.
Which of the following is not a way in which banks lend short-term unsecured loans?
Through credits cards lines with a certain credit limit
Through a guaranteed credit line that has a commitment fee for any unused amount for the year
By sending the amount earned from trust and investment products offered by the bank
By lending a single date maturity loan to a debtor
Which interest rate does not typically move with the bank rate? the rate on loans negotiated by credit unions the rate on mortgages the rate on personal credit lines the rate on credit cards the rate on loans secured by financial assets
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- Using T-accounts, show what happens to checkabledeposits in the banking system when the Fed lends$1 million to the First National Bankarrow_forwardWhich interest rate is used on very short term loans from one bank to another? A. PRIME INTEREST RATE B.TREASURY BILL RATE C. COMMERCIAL PAPER RATE D. FED FUNDS RATEarrow_forwardWhich 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 ratearrow_forward
- What are the different types of deposit accounts and loans offered to customers Bank Nizwa in Oman? How will it benefit the account holders and borrowers?arrow_forwardSuppose you go to your local bank, intending to buya certificate of deposit with your savings. Explain whyyou would prefer this to offering a loan, at an interestrate that is higher than the rate the bank pays oncertificates of deposit (but lower than the rate the bankcharges for car loans), to the next individual who entersthe bank and applies for a car loanarrow_forwardPaying bills through online banking on their due dates is an acceptable way to maintain excellent credit ratings with the credit bureau. True or falsearrow_forward
- Suppose a bank offered to make loans to potential borrowers withoutchecking their credit history. What would be true of the types ofborrowers they would attract compered with banks that did checkcredit history. Would such a bank charge the same interest rateon loans as banks that check credit history? Explain those with areason in 4 lines.arrow_forwardInvestigate the procedures in your a bank of your choice, in granting credit cards and the possible benefits and drawbacks to the institution of this instrument.arrow_forwardBank Muscat advances secured and unsecured loans to their customers. If Bank Muscat is issuing secured loans, identify which one of the following is the reason for bank to issue secured loan? a. To increase interest on loans by the banks b. To sell the collateral in the event of non-refund of the loan c. To have long standing relationship with customer d. To reduce the loan amount and time periodarrow_forward
- Describe your findings and indicates the maximum amount of bank borrowing that is needed from the following statements.arrow_forwardNote the following information. A line of credit is an agreement between a bank and a borrower by which the borrower can borrow any amount of money (up to a mutually agreed-upon maximum) at any time, simply by writing a check. Typically, monthly simple interest payments are required, and the borrower is free to make principal payments as frequently or infrequently as he or she wants. Usually, a line of credit is secured by the title to the borrower's house, and the interest paid to the bank by the borrower is deductible from the borrower's income taxes.James and Danna Wright did not have sufficient cash to pay their income taxes. However, they had previously set up a line of credit with their bank. On April 15, they wrote a check to the Internal Revenue Service on their line of credit for $10,352. The line's interest rate is 4.125%. (Round your answers to the nearest cent.) (a) Find the size of the required monthly interest payment.$ (b) The Wrights decided that it would be in their…arrow_forwardWhat steps are used to calculate the average daily balance? Many credit cards charge an 18%-24% annual interest. Do you think this is fair? Do you think this is a justifiable rate? Should rates be lower for certain age groups or individuals or for different types of credit cards or for different income levels and if so why or why not? Defend your answer.arrow_forward
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