Table 13-1 -In Table 13-1,suppose That $20,000 in New Deposits Is Received

question 89

Multiple Choice

Table 13-1

-In Table 13-1,suppose that $20,000 in new deposits is received by the bank.If there were no other changes in the balance sheet,then the bank would be in a position to make new loans in the amount of

• A)$17,000.
• B)$15,000.
• C)$21,000.
• D)$8,000.

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Definitions:

Compounded Monthly

Interest calculated on the initial principal and also on the accumulated interest of previous periods, with the process happening every month.

Compounded Semi-annually

Interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods, applied twice a year.

Equivalent Cash

A term typically used to describe a sum of money that has the same value as another form of financial instrument or asset.

Compounded Semi-annually

Involves the calculation and addition of interest to the principal sum twice per year.