Business, 11.03.2020 04:31 Bwinig2021

Last year, Myron purchased a $10,000 certificate of deposit with a 3% rate of interest from his bank. The government reported that prices, on average, have fallen by 5% during the current year. Which of the following can be concluded as a result of this transaction?

Answers: 3

Show answers

Answers

Answer from: minideeri

Myron gains,the bank loses

Explanation:

A certificate of deposit (CD) is a product offered by banks and credit unions that provides an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period of time.

Therefore, since the period is predetermined and the rate is fixed for that period, any drop in interest rate during the duration of the deposit to the time of maturity will be a loss to the bank.

Hence, The government reported that prices, on average, have fallen by 5% during the current year will be unfavorable to the bank.

Answer from: lawanda90303

Myron gains while the bank loses.

Explanation:

The real interest rate obtained by Myron = nominal interest rate - inflation rate

since the inflation rate was negative (deflation), then the real interest rate increased:

real interest rate = 3% - -5% = 8% (a double - results in a +)

On the other hand, the real interest rate paid by the bank also increased by 5%, since a bank deposit is similar to loaning money to the bank. The bank lost money with this transaction but it will gain money form the loans it made to other clients since the real interest rate that they charge will also increase by 5%.

Answer from: Quest

Secured loans are protected by collateral security. examples: title loans where the borrower uses the car title as collateral security interest rates are lower and repayments are longer therefore risk is low as a collateral security is given as guarantee to the bank in case of failure to pay the loanunsecured loans are not protected by collateral security but it is given on the creditworthiness of the borrower, trusting that she/he will pay on time. examples; payday loans is a short term loan where the borrower lends money from the bank and pays is back when the borrower receives his/her wages.interest rates are high and repayments are shorter. but the risk is high as no collateral security is given as a guarantee to the bank for payment of the loan

Answer from: Quest

Potato flew around my room before you came

Another question on Business

Business, 22.06.2019 02:40

Which critical success factor improves with reduced cycle time, better quality standards, and improved efficiency when an is is implemented?

Answers: 3

Answer

Business, 22.06.2019 06:30

73. calculate the weighted average cost of capital (wacc) based on the following information: the equity multiplier is 1.66; the interest rate on debt is 13%; the required return to equity holders is 22%; and the tax rate is 35%. (a) 15.6% (b) 16.0% (c) 15.0% (d) 16.6% (e) none of the above

Answers: 2

Answer

Business, 22.06.2019 12:00

Areal estate agent is considering changing her cell phone plan. there are three plans to choose from, all of which involve a monthly service charge of $20. plan a has a cost of $.42 a minute for daytime calls and $.17 a minute for evening calls. plan b has a charge of $.52 a minute for daytime calls and $.15 a minute for evening calls. plan c has a flat rate of $80 with 275 minutes of calls allowed per month and a charge of $.38 per minute beyond that, day or evening.a. determine the total charge under each plan for this case: 150 minutes of day calls and 70 minutes of evening calls in a month. (do not round intermediate calculations. round your answer to 2 decimal places. omit the "$" sign in your response.)c. if the agent will use the service for daytime calls, over what range of call minutes will each plan be optimal? (round each answer to the nearest whole number.include the indifference point itself in each answer.)d. suppose that the agent expects both daytime and evening calls. at what point (i.e., percentage of total call minutes used for daytime calls) would she be indifferent between plans a and b?

Answers: 1

Answer

Business, 22.06.2019 20:10

With signals from no-claim bonuses and deductibles, a. the marginal cost curve for careful drivers lies to the left of the marginal cost curve for aggressive drivers b. auto insurance companies insure more aggressive drivers than careful drivers because aggressive drivers have a greater need for the insurance c. the market for car insurance has a separating equilibrium, and the market is efficient d. most drivers pay higher premiums than if the market had no signals

Answers: 1

Answer

You know the right answer?

Last year, Myron purchased a $10,000 certificate of deposit with a 3% rate of interest from his bank...

Questions