The risk that a bank will receive less interest from a lending product than it originally anticipated is known as interest rate risk. Hence, Option (A) is correct.
Interest rate risk refers to the potential for a bank to receive less interest from a lending product than it initially expected due to changes in interest rates.
When a bank lends money, it typically sets an interest rate based on current market conditions.
However, if interest rates decrease, borrowers may have an incentive to refinance their loans at lower rates, resulting in the bank receiving less interest income than anticipated.
Conversely, if interest rates increase, borrowers may be less likely to borrow, which can also lead to lower interest income for the bank.
Thus, interest rate risk is a significant concern for banks as it can impact their profitability and overall financial performance.
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The risk that a bank will receive less interest from a lending product than it originally anticipated is known as __________.
a)interest rate risk
b)operational risk
c)prepayment risk
d)market risk
Pumpkin Corporation purchased land on January 1, 20X6, for $50,000. On July 15, 20X8, it sold the land to its subsidiary, Spice Corporation, for $70,000. Pumpkin owns 80 percent of Spice's voting shares. Based on the preceding information, what will be the worksheet consolidating entry to remove the effects of the intercompany sale of land in preparing the consolidated financial statements for 20X8?
a. Gain on Sale of Land 20,000
Land 20,000
b. Gain on Sale of Land 16,000
Land 16,000
c. Land 16,000
Gain on Sale of Land 16,000
d. Land 20,000
Gain on Sale of Land 20,000
Answer:
a. Gain on Sale of Land 20,000
Land 20,000
Explanation:
The Gain on Sale of land account should be debited by the gain received to remove the effects from the statements as the account had been credited.
The Land account should likewise be credited as the gain had been debited to it. Crediting it would therefore remove the effects of the sale of the land.
Difference = 70,000 - 50,000
= $20,000
Suppose the real rate is 3.2 percent and the inflation rate is 4.8 percent. What rate would you expect to see on a Treasury bill
Answer:
The rate that can be expected on a Treasury bill is 5.41%.
Explanation:
As per Fisher's equation:
Nominal rate = (1 + Real rate) * (1 + Inflation rate) - 1
Nominal rate = (1 + 0.0365) * (1 + 0.017) - 1
Nominal rate = 5.41%
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The total amount paid by a borrower to a lender for the use of credit?
Answer:
Finance charge
Explanation:
The finance charge represents the total of all costs associated with borrowing money. It includes charges such as the interest, penalties, application fee, insurance on the loan, and any other fees that a lender may impose on the borrower.
While interest is the cost of borrowing money, it is not the only fee for a borrower to obtain credit. The finance charge allows lenders to make profits on the funds they extend to borrowers.
What type of inventory does paint that has been colored but not yet put into cans represent for a paint company
Answer:
Work in process inventory
Explanation:
Work in process inventory is made up of those goods that are partially completed in the production process.
The various stages inventory goes through are raw material inventory, work in process inventory, and finished goods inventory.
When some work has already been done on the raw material but it is not ready to leave the production process this is work in process.
This is exemplified in the given scenario where paint has been colored but not yet put into cans.
Given a prior forecast demand value of 1,100, a related actual demand value of 1,000, and a smoothing constant alpha of 0.3, what is the exponential smoothing forecast value
Answer:
1,030
Explanation:
Calculation for what is the exponential smoothing forecast value
Exponential smoothing forecast value = 1,000 + 0.3 x (1,100-1,000)
Exponential smoothing forecast value = 1,000 + 0.3 x (100)
Exponential smoothing forecast value = 1,000 + 30
Exponential smoothing forecast value= 1,030
Therefore the exponential smoothing forecast value will be 1,030
The __ tests various scenarios by entering spreadsheet data to recalculate formulas and see the impact of proposed changes
Answer:
What-if Analysis
Explanation:
The what-if analysis is the process for value changes that shows how those changes would impact the formulas in the given sheet. It comprises of the scenarios, goal seek and the data tables
In this test if the data is entered so it again calculated the formulas in order to see the changes made in the given sheet
Hence, the same is to be considered
During 2009, the U.S. federal government shut off the water to a huge section of farmland in the California Central Valley to save the endangered Delta smelt fish. As a result of that action, 600,000 of acres of good farmland turned into desert land, about 20,000 farm jobs were lost, and almost 1,000 farmers were put out of business. Conclusion: This is a good example of government trying to create a positive externality.
a. True
b. False
Answer:
false
Explanation:
A good has positive externality if the benefits to third parties not involved in production is greater than the cost. an example of an activity that generates positive externality is research and development. Due to the high cost of R & D, they are usually under-produced. Government can encourage the production of activities that generate positive externality by granting subsidies.
The actions of the government had negative effects on third parties (farmers and businesses). This is an example of negative externality
A good has negative externality if the costs to third parties not involved in production is greater than the benefits.
The image shows a performance graph.
A graph titled Relationship between Anxiety and Performance. X axis is labeled Anxiety with an arrow pointing right labeled None at left and Extreme at right. Y axis is labeled performance with an arrow pointing up labeled Poor at bottom and Excellent at top. A line forms an arch starting at Poor/none at left, rising to excellent in the middle, and ending at poor/extreme at right.
Which is the best interpretation of the graph?
A small amount of anxiety is not enough to help students perform better on a test.
The higher a student’s anxiety, the greater the probability of a good test score.
A small amount of anxiety can help students perform better on tests.
The higher a student’s anxiety, the lower the likelihood of overcoming it.
please answer correctly ..... or my face will look like this 0-0 and then i will say bruhhh
Answer:
C.
Explanation:
just got it right on Edge
Considering the available options and the graph image, the best interpretation of the graph is that "a small amount of anxiety can help students perform better on tests."
This is evident in the fact that at the middle of anxiety rating, that is where there is the highest performance.
While at the lowest and highest anxiety level, the performance was at a lower level.
Hence, in this case, it is concluded that the correct answer is option C. "A small amount of anxiety can help students perform better on tests."
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Macroeconomic indicators (measuring output, income, prices, and unemployment)
Lee purchased stock with an initial share price of $32, and sold it when the share price was $50. While he owned the stock, he earned $2 in dividends. What was his total percentage return on the investment
Answer: 66.7%
Explanation:
His return on the stock is;
= (New price - Old price + dividends) / Old price
= (50 - 32 + 2) / 32
= 20/ 32
= 66.7%
A stock has an expected return of 13.2 percent, the risk-free rate is 8.5 percent, and the market risk premium is 10 percent. What must the beta of this stock be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer: 47% or 0.47
Explanation:
From the question, we are told that the stock has an expected return of 13.2 percent, the risk-free rate is 8.5 percent, and the market risk premium is 10 percent.
We should note that the expected return is calculated as:
= Risk free rate + beta × market risk premium
Therefore,
13.2% = 8.5% + beta × 10%
0.132 = 0.085 + beta × 0.1
Beta = (0.132 - 0.085) / 0.1
Beta = 0.047 / 0.1
Beta = 0.47
Beta = 47%
Mason buys real estate for $1,937,000 and lists ownership as follows: Mason and Dana, joint tenants with the right of survivorship. Mason dies first, when the real estate is valued at $2,518,100. How much is included in Masons gross estate if Mason and Dana are (a) brother and sister and (b) husband and wife
Answer:
a. $2,518,100
b. $1,259,050
Explanation:
The computation is shown below:
a. As a brother and wife whole amount is to be involved i.e. $2,518,100 in the gross estate
b. And as a husband and wife only half amount of real estate is involved as Mason is died
So the half amount would be
= $2,518,100 ÷ 2
= $1,259,050