FINE 442 Study Guide - Final Guide: Interest Rate Risk, Monetary Policy Of The United States, United States Treasury Security

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14 Apr 2015
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Because if the bank borrows too frequently from the fed, the fed may restrict its ability to borrow in the future. The rank from most to least liquid: (c ), ( b ), (a ) , (d ). 3. no, because the bank president is not managing the bank well. The fact that the bank has never incurred costs as a result of a deposit outflow means that the bank is holding a lot of reserves that do not earn any interest. Thus, the bank"s profits are low, and stock in the bank is not a good investment: no. When you turn a customer down, you may lose that customer"s business forever, which is extremely costly. Instead, you might go out and borrow from other banks, corporations, or the fed to obtain funds so that you can make the customer"s loan. Alternatively, you might sell negotiable cds or some of your securities to acquire the necessary funds.

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