You secure a new job as a tutor at the 10 Minute School. At the end of the month, you receive a salary of 15,000 taka in cash. You open a new savings account in Dutch Bangla Bank Limited (DBBL) and deposit the 15,000 taka along with 10,000 taka, which you had saved up earlier. a) If the DBBL maintains a CRR of 20%, how will it respond to the new deposit and what changes will take place in DBBL's balance sheet? b) Ifevery time the bank makes a loan, the loan results in a new savings account in a different bank equal to the amount of the loan, by how much could the total money supply increase due to your initial deposit?

You secure a new job as a tutor at the 10 Minute School. At the end of the month, you receive a salary of 15,000 taka in cash. You open a new savings account in Dutch Bangla Bank Limited (DBBL) and deposit the 15,000 taka along with 10,000 taka, which you had saved up earlier. a) If the DBBL maintains a CRR of 20%, how will it respond to the new deposit and what changes will take place in DBBL's balance sheet? b) Ifevery time the bank makes a loan, the loan results in a new savings account in a different bank equal to the amount of the loan, by how much could the total money supply increase due to your initial deposit?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Please provide working to the solution for the question below: You have just graduated and need money to buy a new car. Your rich Uncle Chan will lend you the money so long as you agree to him back within four years, and you offer to pay him the rate of interest that he would otherwise get by putting his money in a savings account. Based on your earnings and living expenses, you think you will be able to pay him RM5,000 in one year, and then RM8,000 each year for the next three years. If Uncle Chan would otherwise earn 6% per year on his savings, how much can you borrow from him?
Starting next year, you will need $5,000 annually for 4 years to complete your education. (One year from today you will withdraw the first $5,000.) Your uncle deposits an amount today in a bank paying 7% annual interest, which will provide the needed $5,000 payments. How large must the deposit be? Do not round intermediate calculations. Round your answer to the nearest cent. $ b. How much will be in the account immediately after you make the first withdrawal? Do not round intermediate calculations. Round your answer to the nearest cent.
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You opened a savings yesterday by depositing $10,000. You would like to be able to withdraw $2,000 per year for each of the next 4 years of college and still have $3,000 left in the account when you graduate. What interest rate does this account need to earn?
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Starting next year, you will need $15,000 annually for 4 years to complete your education. (One year from today you will withdraw the first $15,000.) Your uncle deposits an amount today in a bank paying 5% annual interest, which will provide the needed $15,000 payments. How large must the deposit be? Do not round intermediate calculations. Round your answer to the nearest cent. $ How much will be in the account immediately after you make the first withdrawal? Do not round intermediate calculations. Round your answer to the nearest cent. $
You want to invest $18,000 and are looking for safe investment options. Your bank is offering you a certificate of deposit that pays a nominal rate of 6% that is compounded semiannually. What is the effective rate of return that you will earn from this investment?
You have the chance to buy a guaranteed promissory note for $850. The note pays $1,000 in 15 months (i.e., exactly 456 days). You have $850 in a bank account that pays a 7% nominal rate compounded daily. Which is a better investment, the note or the bank account? Answer this question using three approaches: (1) compare your future value if you buy the note versus leaving your money in the bank; (2) compare the PV of the note with your current bank balance; and (3) compare the effective rate or return on the note with that of the bank account.

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