Show the immediate impact of this transaction on the balance

Assignment Help Financial Management
Reference no: EM131907161

Suppose that JP Morgan Chase sells a $100 million Treasury bill to the US Federal Reserve

a. Show the immediate impact of this transaction on the balance sheet of the Fed and on the balance sheet of JP Morgan Chase.

Note: Write out your answer in terms of the change in the balance sheet due to this transaction, as discussed in class.

b. Assume that before selling the T-bill, JP Morgan Chase had no excess reserves. Suppose that the required reserve ratio is 20%. Also assume that JP Morgan Chase makes the maximum loan it can from the funds acquired by selling the T-bills.

Show the effect of this transaction by listing the change in the balance sheet. Note that you are now looking at the change in the balance sheet after making the loan has been made.

c. Now suppose that whoever took out the loan in part b) writes a check for this amount and that the person receiving the check deposits it in Wells Fargo Bank.

Show the effect of these transactions on the balance sheets of JP Morgan Chase and Wells Fargo after the check has been cleared.

Reference no: EM131907161

Questions Cloud

What is the price of a ten year zero at a rate of monthly : What is the price of a 10 year zero at a rate of 12% monthly, quarterly, and semi-annually?
What is the market penetration rate : 1. What is the market penetration rate based on potential customers? 2. What is Allison's unit market share (based on stalls cleaned)?
Write an algorithm in pseudocode for cmac : Write an algorithm in pseudocode to solve the fourth birthday problem. Write an algorithm in pseudocode for HMAC. Write an algorithm in pseudocode for CMAC.
Write algorithm pseudocode to solve second birthday problem : Write an algorithm in pseudocode to solve the first birthday problem. Write an algorithm in pseudocode to solve the second birthday problem (in general form).
Show the immediate impact of this transaction on the balance : Show the immediate impact of this transaction on the balance sheet of the Fed and on the balance sheet of JP Morgan Chase.
Normal distribution with a mean : For a normal distribution with a mean of 147 and a standard deviation of 45, what is the Z value (distance from the mean)
What price would you expect to be able to sell a share : Suppose instead you plan to hold the stock for one year. What price would you expect to be able to sell a share of Acap stock for in one year?
Linear programming problem : a. Formulate this problem as a linear programming problem
What is the probability that students have social security : In a class of 100 students, what is the probability that two or more students have Social Security Numbers with the same last four digits?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd