the most common type of discount lending, FITB credit loans, are intended to help healthy banks with short-term liquidity problems that often result from temporary deposit outflows.

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Answer 1

The most common type of discount lending, FITB credit loans, are intended to help healthy banks with short-term liquidity problems resulting from temporary deposit outflows.

FITB credit loans are a popular form of discount lending designed to assist financially sound banks during periods of short-term liquidity challenges, often caused by temporary deposit outflows. When depositors withdraw funds from their bank accounts in large numbers, it can create a liquidity gap for the bank. To bridge this gap and maintain their day-to-day operations, banks can turn to FITB credit loans.

These loans are provided at a discount rate, meaning that the bank borrowing the funds receives the full loan amount while agreeing to repay a slightly higher amount at a future date. The difference between the loan amount and the repayment amount represents the interest earned by the lender, making it an attractive option for both parties.

FITB credit loans are generally preferred for healthy banks as they are more likely to have the ability to repay the borrowed amount promptly. Moreover, the short-term nature of these loans means that they are usually repaid relatively quickly, further reducing the risks associated with discount lending.

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Related Questions

A compound consisting of carbon and hydrogen consists of 67.90%
carbon by mass. If the compound is measure to have a mass of 37.897
Mg, how many grams of hydrogen are present in the compound?

Answers

Given that the compound consists of 67.90% carbon by mass and has a total mass of 37.897 Mg, we can calculate the mass of hydrogen in the compound.

Let's assume the mass percentage of hydrogen in the compound is denoted by "y." According to the law of constant composition, the sum of the mass percentages of carbon and hydrogen is equal to 100.

Mass% of Carbon + Mass% of Hydrogen = 100

Since the mass percentage of carbon is 67.90%, we can calculate the mass percentage of hydrogen as follows:

Mass% of Hydrogen = 100 - 67.9

Mass% of Hydrogen = 32.1

Therefore, the compound contains 32.1% of hydrogen by mass.

Next, we can calculate the mass of hydrogen present in the compound using the following formula:

Mass of hydrogen = Percentage of hydrogen x Total mass of the compound / 100

Substituting the given values, we find:

Mass of hydrogen = 32.1 x 37.897 Mg / 100

Now, we need to convert the mass from megagrams (Mg) to grams:

Mass of hydrogen = 32.1 x 37.897 Mg x 10^6 g / 100

Calculating this expression, we find:

Mass of hydrogen = 12.159 grams

There are 12.159 grams of hydrogen present in the compound.

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