Hello, I would actualy need help with all of these examples, could we work on it together,please?

Or could you show me the calculations and results?

2)The followings are recent balance sheet accounts for Prime National Bank.

Assets:

Cash assets$17 m.

Loans secured by real estate $40 m.

Commercial loans$45 m.

Government securities owned $16 m.

Goodwill $5 m.

Bank fixed assets $15 m.

Total assets$138 million

Liabilities:

Demand deposits $50 m.

Time & savings deposits $66m.

Federal funds purchased $15 m.

Trust-preferred securities $2m.

Owners? capital$5m.

Total liabilities and owners? capital: $138 m.

Note: The bank has loan-loss reserves of $10 million.

c. Calculate the Tier 1 Ratio based on the information provided and the risk-adjusted assets estimate from Part b.

d. Calculate the Total Capital Ratio based on the information provided and the risk-adjusted assets estimate from Part b. (Total capital = Tier 1 plus Tier 2.)

e. What actions could the bank management team take to improve the bank?s Tier 1 and Total Capital ratios?

3-Go to the Federal Reserve Bank of St.Louis Web site, www.stlouisfed.org and click on the Research & Data tab. Click on FRED Economic Data. Find the current size of the M1 money supply and the annual gross domestic product (GDP), and then calculate the velocity of money.

4-You have been asked to assess the impact of possible changes in reserve requirement components on the dollar amount of reserves required. Assume the reserve percentages are set at 2 percent on the first $50 million of traction account amounts, 4 percent on the second $50 million, and 10 percent on transaction amounts over $100 million. First National Bank has transaction account balances of $100 million, while Second National Bank?s transaction balances are $150 million and Third National Bank?s transaction balances are $250 million.

a.Determine the dollar amounts of required reserves for each of the three banks.

b. Calculate the percentage of reserves to total transactions accounts for each of the three banks.

c.The Central Bank wants to slow the economy by raising the reserve requirements for member banks. To do so, the reserve percentages will be increased to 12 percent on transaction balances above $100 million. Simultaneously, the 2 percent rate will apply on the first $25 million. Calculate the reserve requirement amount for each of the three banks after these changes have taken place.

d. Show the dollar amount of changes in reserve requirement amounts for each bank. Calculate the percentage of reserve requirement amounts to transaction account balances for each bank.

5-The SIMPLE financial system has these relationships: The ratio of reserves to total deposits is 12 percent, and the ratio of non-checkable deposits to checkable deposits is 40 percent. In addition, currency held by the nonbank public amounts to 15 percent of checkable deposits. The ratio of government deposits to checkable deposits is 8 percent, and the monetary base is $300 million.

a. Determine the size of the M1 money multiplier and the size of the money supply.

b. If the ratio of currency in circulation to checkable deposits were to drop to 13 percent while the other ratios remained the same, what would be the impact on the money supply?

c. If the ratio of government deposits to checkable deposits increases to 10 percent while the other ratios remained the same, what would be the impact on the money supply?

6-Assume two banks, A and Z, exist in the banking system. Bank A receives a primary deposit of $600,000, and it must keep reserves of 12 percent against deposits. Bank A makes a loan in the amount that can be safely lent.

a.Show what Bank A?s balance sheet of assets and liabilities would look like immediately after the loan.

b. Assume that a check is drawn against the primary deposit made in Bank A and is deposited in Bank Z. Show what the balance sheet of assets and liabilities would look like for each of the two banks after the transaction has taken place.

c.Assume that Bank Z makes a loan in the amount that can be safely lent against the funds deposited in its bank from the transaction described in (b). Show what Bank Z?s balance sheet of assets and liabilities would look like after the loan.

7-A nation?s gross domestic product (GDP) is $600 million. Its personal consumption expenditures are $350 million, and government expenditures are $100 million. Net exports of goods and services amount to $50 million.

a-Determine the nation?s gross private domestic investment.

b-If imports exceed exports by $25 million, how would your answer to (a) change?

8-Inflation is expected to be 3 percent over the next year. You desire an annual real rate of return of 2.5 percent on your investments.

a.What nominal rate of interest would have to be offered on a one-year Treasury security for you to consider making an investment?

b. A one-year corporate debt security is being offered at 2 percentage points over the one-year Treasury security rate that meets your requirement in (a). What would be the nomi- nal interest rate on the corporate security?

9-Assume that the interest rate on a one-year Treasury bill is 6 percent. and the rate on a two-year Treasury note is 7 percent.

a.If the expected real rate of interest is 3 percent, determine the inflation premium on the Treasury bill.

b.If the maturity risk premium (MRP) is expected to be zero, determine the inflation premium on the Treasury note.

c.What is the expected inflation premium for the second year?

10-You are planning to invest $2,500 today for three years at a nominal interest rate of 9 percent with annual compounding.

a.What would be the future value (FV) of your investment?

b.Now assume that inflation is expected to be 3 percent per year over the same three-year period. What would be the investment?s FV in terms of purchasing power?

c.What would be the investment?s FV in terms of purchasing power if inflation occurs at a 9 percent annual rate?

11-Assume you are planning to invest $5,000 each year for six years and will earn 10 percent per year. Determine the future value (FV) of this annuity if your first $5,000 is invested at the end of the first year.

12-Use a financial calculator or table to answer the following questions.

a. What would be the future value (FV) of $19,378 invested now if the money remains deposited for eight years, the annual interest rate is 18 percent, and interest on the investment is compounded semiannually?

b. How would your answer for (a) change if quarterly compounding were used?

13-A credit card advertisement states that the annual percentage rate (APR) is 21 percent. If the credit card requires quarterly payments, what is the effective annual rate (EAR) of interest on the loan?

14-Determine the annual payment on a $500,000, 12 percent business loan from a commercial bank that is to be amortized over a five- year period.

15- How did the U.S. government respond to the perfect financial storm? Briefly explain.

16-Assume JP Morgan has a choice between two deposit accounts. Account A has an annual percentage rate of 7.55 percent but with interest compounded monthly. Account B has an annual percentage rate of 7.45 percent with interest compounded quarterly. Which account provides the highest effective annual return?

a.Account A

b.Account B

c.Both provide the same effective annual return.

d.We don't have sufficient information to make a choice.

17-Assume that you can borrow $175,000 for one year from a local commercial bank.

a.The bank loan officer offers you the loan if you agree to pay $16,000 in interest plus repay the $175,000 at the end of one year.What is the percent interest rate or effective cost?

b.As an alternative you could get a one-year, $175,000 discount loan at 9 percent interest.What is the percent interest rate or effective cost?

c.Which one of the two loans would you prefer?

BUS 205 Principles of Finance Spring 2017 Take Home Final PLEASE SHOW ALL YOUR WORK 1Assume that a country estimates its M1 money supply at $20 million. A broader measure of the money supply, M2, is $50 million. The country's gross domestic product is $100 million. Production or real output for the country is 500,000 units or products. a. Determine the velocity of money based on the M1 money supply. b. Determine the velocity of money based on the M2 money supply. c. Determine the average price for the real output. a) ANS: The basic formula is: GDP = Money Supply * Velocity of Money. We need to find Velocity of Money, so We rewrite it as = V= GDP/M1 (MS) V= 100,000,000/20,000,000 V=5 b) ANS: V= GDP/M2 (MS) V= 100,000,000/50,000,000 V=2 c) M*V=P*T P=(M*V)/T P=(20,000,000*5)/ 500,000 P=200 2The followings are recent balance sheet accounts for Prime National Bank. Assets: Cash assets $17 m. Loans secured by real estate $40 m. Commercial loans $45 m. Government securities owned $16 m. Goodwill $5 m. Bank fixed assets $15 m. Total assets $138 million Liabilities: Demand deposits $50 m. Time & savings deposits $66m. Federal funds purchased $15 m. Trustpreferred securities $2m. Owners' capital $5m. Total liabilities and owners' capital: $138 m. Note: The bank has loanloss reserves of $10 million. a. Calculate the equity capital ratio. a) ANS: Basic Equity Capital Ratio= Equity Capital/ Total Assets = 3.62% Basic Equity Capital Ratio = 5,000000/138,000000= 3.62% (0.03623) Adding Trustpreffered securities to Equity Capital: Adjusted Equity Capital Ratio= Equity Capital/ Total Assets = 5.07% Adjusted Equity Capital Ratio= 5,000,000+2,000,000=7,000,000/138,000,000=5.07% (0.05072) Deducting intangible Goodwill from Total Assets and Owners Capital: Tangible Equity Capital Ratio= Tangible Capital/ Tangible Assets= 1.50% Tangible Equity Capital Ratio= 5,000,0005,000,000/133,000,000 b. Riskadjusted assets are estimated using the following weightings process: cash and government securities = .00; real estate loans = .50; commercial and other loans = 1.00. Calculate the riskadjusted assets amount for the bank. Risk category Amount Weight Weighted amount ANS: Cash Assets 17.00 0.00 Government securities owned 16.00 0.00 Loans secured by Real estate 40.00 0.50 20.00 Commercial loans 45.00 1.00 45.00 = Loans secured by RE + Commercial loans 65.00 Riskadjusted assets are 65.00 c. Calculate the Tier 1 Ratio based on the information provided and the riskadjusted assets estimate from Part b. TIER 1 Ratio= Tier 1 Capital/Riskadjusted assets = 3.08% d. Calculate the Total Capital Ratio based on the information provided and the risk adjusted assets estimate from Part b. (Total capital = Tier 1 plus Tier 2.) e. What actions could the bank management team take to improve the bank's Tier 1 and Total Capital ratios? Total Capital Ratio= Tier 1 + Tier 2 Capital/Riskadjusted assets= 3.08% 3Go to the Federal Reserve Bank of St.Louis Web site, www.stlouisfed.org and click on the Research & Data tab.Click on FRED Economic Data.Find the current size of the M1 money supply and the annual gross domestic product (GDP), and then calculate the velocity of money. 4You have been asked to assess the impact of possible changes in reserve requirement components on the dollar amount of reserves required. Assume the reserve percentages are set at 2 percent on the first $50 million of traction account amounts, 4 percent on the second $50 million, and 10 percent on transaction amounts over $100 million. First National Bank has transaction account balances of $100 million, while Second National Bank's transaction balances are $150 million and Third National Bank's transaction balances are $250 million. a.Determine the dollar amounts of required reserves for each of the three banks. b. Calculate the percentage of reserves to total transactions accounts for each of the three banks. c.The Central Bank wants to slow the economy by raising the reserve requirements for member banks. To do so, the reserve percentages will be increased to 12 percent on transaction balances above $100 million. Simultaneously, the 2 percent rate will apply on the first $25 million. Calculate the reserve requirement amount for each of the three banks after these changes have taken place. d. Show the dollar amount of changes in reserve requirement amounts for each bank. Calculate the percentage of reserve requirement amounts to transaction account balances for each bank. 5The SIMPLE financial system has these relationships: The ratio of reserves to total deposits is 12 percent, and the ratio of noncheckable deposits to checkable deposits is 40 percent. In addition, currency held by the nonbank public amounts to 15 percent of checkable deposits. The ratio of government deposits to checkable deposits is 8 percent, and the monetary base is $300 million. a.Determine the size of the M1 money multiplier and the size of the money supply. b.If the ratio of currency in circulation to checkable deposits were to drop to 13 percent while the other ratios remained the same, what would be the impact on the money supply? c. If the ratio of government deposits to checkable deposits increases to 10 percent while the other ratios remained the same, what would be the impact on the money supply? 6Assume two banks, A and Z, exist in the banking system. Bank A receives a primary deposit of $600,000, and it must keep reserves of 12 percent against deposits. Bank A makes a loan in the amount that can be safely lent. a.Show what Bank A's balance sheet of assets and liabilities would look like immediately after the loan. b. Assume that a check is drawn against the primary deposit made in Bank A and is deposited in Bank Z. Show what the balance sheet of assets and liabilities would look like for each of the two banks after the transaction has taken place. c.Assume that Bank Z makes a loan in the amount that can be safely lent against the funds deposited in its bank from the transaction described in (b). Show what Bank Z's balance sheet of assets and liabilities would look like after the loan. 7A nation's gross domestic product (GDP) is $600 million. Its personal consumption expenditures are $350 million, and government expenditures are $100 million. Net exports of goods and services amount to $50 million. aDetermine the nation's gross private domestic investment. bIf imports exceed exports by $25 million, how would your answer to (a) change? 8Inflation is expected to be 3 percent over the next year. You desire an annual real rate of return of 2.5 percent on your investments. a. What nominal rate of interest would have to be offered on a oneyear Treasury security for you to consider making an investment? b. A oneyear corporate debt security is being offered at 2 percentage points over the one year Treasury security rate that meets your requirement in (a). What would be the nomi nal interest rate on the corporate security? 9Assume that the interest rate on a oneyear Treasury bill is 6 percent. and the rate on a two year Treasury note is 7 percent. a. If the expected real rate of interest is 3 percent, determine the inflation premium on the Treasury bill. b. If the maturity risk premium (MRP) is expected to be zero, determine the inflation premium on the Treasury note. c. What is the expected inflation premium for the second year? 10You are planning to invest $2,500 today for three years at a nominal interest rate of 9 percent with annual compounding. a. What would be the future value (FV) of your investment? b. Now assume that inflation is expected to be 3 percent per year over the same threeyear period. What would be the investment's FV in terms of purchasing power? c. What would be the investment's FV in terms of purchasing power if inflation occurs at a 9 percent annual rate? 11Assume you are planning to invest $5,000 each year for six years and will earn 10 percent per year. Determine the future value (FV) of this annuity if your first $5,000 is invested at the end of the first year. 12Use a financial calculator or table to answer the following questions. a. What would be the future value (FV) of $19,378 invested now if the money remains deposited for eight years, the annual interest rate is 18 percent, and interest on the investment is compounded semiannually? b. How would your answer for (a) change if quarterly compounding were used? 13A credit card advertisement states that the annual percentage rate (APR) is 21 percent. If the credit card requires quarterly payments, what is the effective annual rate (EAR) of interest on the loan? 14Determine the annual payment on a $500,000, 12 percent business loan from a commercial bank that is to be amortized over a five year period. 15 How did the U.S. government respond to the perfect financial storm? Briefly explain. 16-Assume JP Morgan has a choice between two deposit accounts. Account A has an annual percentage rate of 7.55 percent but with interest compounded monthly. Account B has an annual percentage rate of 7.45 percent with interest compounded quarterly. Which account provides the highest effective annual return? a. Account A b. Account B c. Both provide the same effective annual return. d. We don't have sufficient information to make a choice. 17-Assume that you can borrow $175,000 for one year from a local commercial bank. a.The bank loan officer offers you the loan if you agree to pay $16,000 in interest plus repay the $175,000 at the end of one year.What is the percent interest rate or effective cost? b.As an alternative you could get a one-year, $175,000 discount loan at 9 percent interest.What is the percent interest rate or effective cost? c.Which one of the two loans would you prefer?