A Smart,Awan & Baxter (Text,chapter 2)outline Two Types of Investor

question 10

Essay

a Smart,Awan & Baxter (text,chapter 2)outline two types of investor - current and prospective.Briefly describe two general types of information they are interested in,and what they use the information for.
b The text (in chapter 2)further outlines three general types of information needs for managers.Briefly describe these three,and how managers would use this information.
c Creditors are interested in solvency and security.Briefly define and explain these in relation to creditors' needs.

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Definitions:

Negative Excess Reserves

A situation where banks have less reserves than the required minimum, often indicating liquidity problems within the banking system.

Liquidity Trap

A condition where the effectiveness of monetary policy in spurring economic growth is diminished due to high rates of savings and low interest rates.

Reserve Requirement

Central bank regulations that set the minimum amount of reserves that must be held by a commercial bank, not to be loaned out or spent.

Time Deposits

Time Deposits are bank deposits with a fixed term or period of maturity, during which withdrawal entails a penalty, usually offering higher interest rates than savings accounts.