The Existence of Banks

question 34

Multiple Choice

The existence of banks:

• A)increases the severity of the trade-off between rate of return and liquidity.
• B)decreases the severity of the trade-off between rate of return and liquidity.
• C)has no effect on the trade-off between rate of return and liquidity.
• D)decreases both the rate of return and the liquidity of its customers' assets.

Apply the properties of normal distributions to solve problems.

Recognize the definitions and implications of specific terms related to normal distributions, such as mean, standard deviation, and variance.

Understand the concept and computation of quartiles within the context of the normal distribution.

Identify the characteristics that define a continuous random variable.

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Definitions:

Discontinued Item

A component of a company's operations that has been disposed of or is held for sale, and its earnings are separated out on the income statement.

MACRS

Modified Accelerated Cost Recovery System, a method of depreciation for tax purposes in the United States that allows faster write-offs of assets.

Straight-Line

A method of calculating depreciation of an asset, which allocates an equal amount of depreciation to each year of the asset's useful life.

Sum-Of-Years' Digits

A depreciation method that accelerates the expense recognition, using a decreasing fraction of years remaining over the sum of the years' digits.