Finance assignment 10-1

Finance assignment 10-1 - 2 Money, Banking, and Financial...

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2 Money, Banking, and Financial Markets Professor Doug Smith, DBA Commercial Bank Concept Questions Assignment 10-1 Jamie Hinson November 25, 2007
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Question one on page 527 asks to create a balance sheet for a typical bank, showing its main liabilities (sources of funds) and assets (uses of funds). According to Jeff Madura, author of Financial Markets and Institutions , a bank’s assets consist of cash, loans, securities, federal funds sold (loaned out), repurchase agreements, Eurodollar loans, and fixed assets. The liabilities and stockholders’ equity consists of demand deposits, savings deposits, time deposits, money market deposit accounts, federal funds purchased (borrowed), other short-term funds borrowed, and long-term debt stockholders’ equity. Question two asks what the four major sources of funds for banks are. What alternatives does a bank have if it needs temporary funds? What is the most common reason that banks issue bonds? The four major sources of funds are transaction deposits, savings deposits, time deposits, and money market deposit accounts. An alternative that banks have if they need temporary short-term funds is federal funds rate, borrowing from the Federal Reserve banks, repurchase agreement (repo), and Eurodollar borrowings. The most common reason that banks issue bonds is, “like other corporations, banks own some fixed assets such as land, buildings, and equipment.
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Finance assignment 10-1 - 2 Money, Banking, and Financial...

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