Tom Draws a Check, on His Account in State Bank

question 15

Multiple Choice

Tom draws a check, on his account in State Bank in New York, payable to Digital Media, Inc., in San Francisco. Digital deposits the check in its ac¬count at First National Bank. First National deposits the check in the Federal Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank sends the check to State Bank.


-Refer to Fact Pattern 17-2.Digital's bank is

• A)the cashing bank.
• B)the depositary bank.
• C)the intermediary bank.
• D)the payor bank.

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Definitions:

Capital

Funds or assets that are used for investing in business operations to generate profitable returns.

WACC

Stands for Weighted Average Cost of Capital, a calculation of a firm's capital cost that weights each category of capital proportionately.

Capital Components

The elements that make up a company's capital structure, including equity, debt, and any hybrid securities.

Calculate

To determine the amount or number of something mathematically.