Consider a failing bank. How much is a deposit of $300,000 if the CDIC uses the payoff method? The purchase-and-assumption method? Which method is more costly to taxpayers?Using the payoff method, the $300,000 deposit is worth $(Round to the nearest dollar)Using the purchase-and-assumption method, a deposit of $300,000 is worth $ (Round to the nearest dollar)Which method is more costly to taxpayers?Select the best answer:A. The payoff method is more costly, since taxpayers will only pay $0.10 on the dollar.B. The purchase and assumption method is more costly, because depositors receive the full value of their deposits.C. The purchase and assumption method is more costly, because depositors will refuse to keep account balances in excess of $100,000 in a single bank.D. The payoff method is more costly, since the cost to insure the fund will be lower.

Deposit insurance helps in protecting the savings of the depositors in case the financial…

Consider a failing bank. How much is a deposit of $300,000 if the CDIC uses the payoff method? The purchase-and-assumption method? Which method is more costly to taxpayers? Using the payoff method, the $300,000 deposit is worth $ (Round to the nearest dollar) Using the purchase-and-assumption method, a deposit of $300,000 is worth $ (Round to the nearest dollar) Which method is more costly to taxpayers? Select the best answer: OA. The payoff method is more costly, since taxpayers will only pay $0.10 on the dollar. OB. The purchase and assumption method is more costly, because depositors receive the full value of their deposits. OC. The purchase and assumption method is more costly, because depositors will refuse to keep account balances in excess of $100,000 in a single bank. OD. The payoff method is more costly, since the cost to insure the fund will be lower.

Consider a failing bank. How much is a deposit of $300,000 if the CDIC uses the payoff method? The purchase-and-assumption method? Which method is more costly to taxpayers? Using the payoff method, the $300,000 deposit is worth $ (Round to the nearest dollar) Using the purchase-and-assumption method, a deposit of $300,000 is worth $ (Round to the nearest dollar) Which method is more costly to taxpayers? Select the best answer: OA. The payoff method is more costly, since taxpayers will only pay $0.10 on the dollar. OB. The purchase and assumption method is more costly, because depositors receive the full value of their deposits. OC. The purchase and assumption method is more costly, because depositors will refuse to keep account balances in excess of $100,000 in a single bank. OD. The payoff method is more costly, since the cost to insure the fund will be lower.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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. Consider a failing bank. How much is a deposit of$290,000 worth to the depositor. if the FDIC uses thepayoff method? The purchase-and-assumption method?Which method is more costly to taxpayers?
What are the major flaws with NPV? What are the major flaws with IRR? If you are going to a bank and trying to get a loan, which is the best method to use (NPV, IRR, Payback period)?
If the bank decides to cut down on interest expenses by reducing its dependence upon borrowed funds, what policy must the bank follow?
What risks might commercial banks face if they use short-term deposits from savers to pay for long-term loans, like mortgages, that often have fixed interest rates? What could the financial institution do to lower these risks?
A commercial bank in Barbados faces serious liquidity problems; however, they have an asset that has the required value to meet their debt obligations. However, due to poor economic conditions, they may not get a buyer in time to purchase such an asset at their preferred price, so they may end up losing money for selling that asset lower than their preferred price, or if they choose not to sell the asset, they will not be able to meet their financial obligation. Which of the following strategy is best suited to manage the bank’s liquidity risk? Select one: a. Interest rate swaps b. Stress Tests c. Diversifying d. Hedging
In certain scenerios, some companies may choose to finance with a bank loan specifically because of the deductibility of interest. It could lower their taxable income enough (assuming it is not a corporation at the current 21% flat rate) to put them in a lower tax bracket. This means they could end up paying less money after interest and taxes are paid. It is interesting that bank interest could be utilized as a cash flow strategy! Do you think this is something many finance managers may consider?
Hello, Can you explain step by step question #1 and 2, what it means and how to solve it. Thank You 1. Explain how an ordinary annuity is involved when you take out an auto loan from a bank? 2. Explain why the last payment in an amortization schedule might differ from the other payments?
If the Fed buys loans from banks, what is the impact on the Loanable Funds Market? A) Decreases the supply of loanable funds and lowers the interest rate. B) Increases the supply of loanable funds and lowers the interest rate. C) Decreases the supply of loanable funds and raises the interest rate. D) Increases the supply of loanable funds and raises the interest rate.
The purpose of the inflation premium is to maintain the purchasing power of money while it is loaned to someone else. TTrueFFalse What kind of problem bad credit risks people pose to financial intermediaries ? AMoral hazard BNone of the above CAdverse Selection DFree-riding
The ABC Bank takes funds from depositors and gives out commercial, housing and car loans. Now, instead of keeping the housing and car loans on its books, it sells them to a hedge fund. However, the borrowers still make payments to ABC Bank which then remits the payments to the hedge fund. The bank receives a fee from the hedge fund for servicing the loans. Discuss two (2) advantages to ABC Bank from switching its housing and car loans business to the fee-based income model of banking instead of earning an interest spread (difference in interest between what the bank charges its customers and pays its depositors).
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