Where do financial institutions obtain funds for making loans? How are the interest rates for loans determined?

Question:

Where do financial institutions obtain funds for making loans? How are the interest rates for loans determined? Are the interest rates the same for all borrowers? Why or why not?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Personal Finance

ISBN: 978-0132994347

5th edition

Authors: Jeff Madura

See More Books

Question Posted: Oct 13, 2015 05:22 AM

See More Questions

True or False: 1. Financial institutions can create money by making loans. 2. If you go into a bank and borrow $1,000, the bank probably will simply add $1,000 to your checking account at the bank,...
In the fall of 20X1, eight wealthy businesspeople from the same ethnic background formed a committee (CKER committee) to obtain a radio license from the Canadian Radio- Television and...
In the fall of Year 5, eight wealthy business people from the same ethnic back ground formed a committee (CKER committee) to obtain a radio license from the Canadian Radio-Television and...
The accompanying table shows data from the World Bank, World Development Indicators, for real GDP per capita (2010 U.S. dollars) in France, Japan, the United Kingdom, and the United States in 1960...
Upward and Onward, Inc., a 501(c)(3) organization that provides training programs for welfare recipients, reports the following income and expenses from the sale of products associated with the...
CAPITAL BUDGETING CRITERIA Your division is considering two projects. Its WACC is 10%, and the projects after-tax cash flows (in millions of dollars) would be as follows: 0 2 $20 $6 $10 $10 $5 $20...
Lowering the thickness of an expensive blow-molded container. Refer to the Quality (March 2009) study of a plant that produces a high-volume, blow-molded container, Exercise 13.33 (p. 13-41). Recall...
Interact CaseFASAB. Examine the Federal Accounting Standards Advisory Boards Web site at www.fassab.gov and prepare a brief report about its mission and structure and compile a list of organizations...
Consider Derek's budget information: materials to be used, $65,300; direct labor, $199,700; factory overhead, $403,000; work in process inventory on January 1, $188,100; and work in progress...
Q1 -Hi Can you write 3 things or more you learned about this chapter Chapter9 Learning Objectives After reading and studying this chapter, you should be able to do the following: 9.1 Differentiate...
What is a risk premium? Who might take advantage of it?
What effect would a general change in current interest rates have on you as a depositor or borrower?
Brockman Pickle Company produces gourmet dill pickles. Selected results from the most current year were as follows: Sales revenue .......$3,600,000 Operating income ..... 540,000 Average total assets...
The adjusted trial balance section of Menlo Company's worksheet shows a $\$ 1,500$ debit balance in utility expense. At the end of the accounting period the accounting manager accrues an additional...
Identify each of the 10 amount columns of the worksheet and indicate to which column the adjusted balance of the following accounts would be extended: a. Accounts Receivable b. Accumulated...
Using the data from Table 3.3, show the effect on world output if each country moved toward specialization in the production of its comparative-disadvantage good. TABLE 3.3 Comparative Advantage as a...
The Professional Winner was RJ Andrews from Info We Trust, for the video Are Gazelles Endangered? (a) Watch this video. What data are this video conveying? (b) You can interact with the data and...
(a) Draw a simplified ray diagram showing the three principal rays for an object located outside the focal length of a converging lens. (b) Is the image real or virtual? (c) Is it upright or...
Discuss how the only form of control (statistical procedures) will be used in this scenario. Develop a hypothetical research scenario that would necessitate the use of a Predictive Design. The...
To balance the chemical equation SiH3 + O2 SiO2 + HO, you could introduce coefficients a, b, c, d and write aSiH3 + bO2 cSiO + dHO then write linear equations for each element. The equation for Si...
For the two-state, two-action Markov decision process with transition matrices and per period reward function as below, consider the finite horizon problem with time horizon $T=4$ and terminal...
Boulder, Inc., exports chairs to Europe (invoiced in U.S. dollars) and competes against local European companies. If purchasing power parity exists, why would Boulder not benefit from a stronger euro?
Toyota Motor Corp. measures the sensitivity of its exports to the yen exchange rate (relative to the U.S. dollar). Explain how regression analysis could be used for such a task. Identify the expected...
Cieplak, Inc. is a U.S.-based MNC that has expanded into Asia. Its U.S. parent exports to some Asian countries, with its exports denominated in the Asian currencies. It also has a large subsidiary in...
Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a five - year period. His annual pay raises are determined by his division s...
Consider a 5 year debt with a 15% coupon rate paid semi-annually, redeemable at Php1,000 par. The bond is selling at 90%. The flotation cost is Php50 per bind. The firm's tax bracket is 30%.
A project will generate annual cash flows of $237,600 for each of the next three years, and a cash flow of $274,800 during the fourth year. The initial cost of the project is $749,600. What is the...

Where do financial institutions obtain funds for making loans? How are the interest rates for loans determined?

Question:

Step by Step Answer:

Financial institutions obtain funds for loans by accepting deposits from i...View the full answer

Personal Finance

Students also viewed these Corporate Finance questions