When a Bank in Need of Funds for a Few

question 9

Multiple Choice

When a bank in need of funds for a few days sells some of its government securities to a corporation with a temporary excess of funds and then buys them back shortly thereafter, this is a

• A)federal funds loan.
• B)loan through the Federal Reserve's lending facility.
• C)repurchase agreement.
• D)commercial paper transaction.

Understand the concept of solvency and profitability in businesses.

Ability to analyze financial statements to assess a company’s financial health.

Know how to calculate key financial ratios and understand their implications.

Understand the components and preparation of an income statement.

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Definitions:

Target Profit

The expected profit levels set by management for a specific period, guiding pricing and sales strategies.

Income Statement

An account documenting an organization's economic activity, showing income, outlays, and net gains or deficits over a distinct timeframe.

Net Operating Income

This refers to a company's income after all operating expenses, but before interest and taxes, are subtracted from total revenue.

Contribution Format

An income statement format that separates fixed costs from variable costs, making it easier to see the contribution margin.