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Modern Bank RealBank Assets Liabilities Assets Liabilities Base Money 80 Payable on demand 200 Base Mone ? 100 Payable on demand X Loans Loan 120 S 150 Based on the information on the above Balance Sheets for Modern Bank and RealBank, what should be the missing value of X? 200 250 Ο Ο Ο Ο 100 150 Which of the following is a typical characteristic of money market instruments A

Finance Sep 04, 2020
  1. Modern Bank RealBank Assets Liabilities Assets Liabilities Base Money 80 Payable on demand 200 Base Mone ? 100 Payable on demand X Loans Loan 120 S 150 Based on the information on the above Balance Sheets for Modern Bank and RealBank, what should be the missing value of X? 200 250 Ο Ο Ο Ο 100 150

  2. Which of the following is a typical characteristic of money market instruments A. Low coupons B. Low default risk OC. High returns D. Low liquidity
    The term structure of interest rates assumes the securities represented on a yield curve have the same: A. level of liquidity B. maturity OC. credit rating D. issuer
    Identify the type of security trading in the money market that does not carry a contingent liability. O A. Debentures B. Promissory notes OC. Bank-endorsed bills D. Bank-accepted bills

Expert Solution

  1. Based on the information on the above balance sheet for Modern Bank and Real Bank , the missing value of X is :-

    Answer :- 250

    Explanation :- X is liabilities of Real bank ( Payable on Demand ) which should be equal to Assets of RealBank :-

    = Base money + loans

    = 100 + 150

    = 250

    So the value of X is 250.

  2. 1 . answer is option b

    Money market instruments have very low default risk .default risk is low because only the most credit worthy institutions can participate in the money markets

    2. Answer is option c

    yield curve is a line that plots yields (interest rates) of bonds having equal credit rating at different maturity periods

    3. Answer is option b

    Promissory note does not carry contigent liablity

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