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What is a banking system in which banks are only allowed to loan out some of their assets?
Fractional reserve system
How do you find the required reserve ratio?
the portion of a deposit that a bank must keep on hand
Why did congress sell off the helium reserve?
Congress decided to sell off the helium reserve primarily due to the Helium Privatization Act of 1996, which aimed to reduce the federal government's role in the helium market and eliminate the financial burden of maintaining the reserve. The act mandated the sale of the reserve's helium assets to pay off the government’s debt incurred from the reserve's operations. Additionally, the privatization was intended to promote a more efficient market for helium, allowing private entities to manage and supply the resource. The sale was also driven by concerns about the reserve's declining relevance and the changing dynamics of helium supply and demand.
How is income distributed?
it is printed by the federal reserve, sent to banks who remove old, worn out bills for exchange, and circulated when you cash a check, or withdraw from savings. then you spend it.
What does the US money supply consist of?
The US money supply consists of various components that represent the total amount of money available in the economy. It includes physical currency, such as coins and paper bills, as well as demand deposits held in checking accounts. The Federal Reserve categorizes the money supply into different measures, primarily M1, which includes cash and checking deposits, and M2, which encompasses M1 plus savings accounts, time deposits, and other near-money assets. These components help gauge economic activity and influence monetary policy.
Purpose of the legal reserve?
The legal reserve is designated as the set amount of federal deposits utilized as safe and secure assets created to meet liquidity requirements for the U.S. Federal Bank.
Who will receive the bailout money?
Nobody would receive the bailout money directly/Freely. The US Federal Reserve plans at buying illiquid securities from the banks & other financial institutions that are in trouble now. They would be buying assets like MBS (Mortgage Backed Securities), CDO's (Collateralized Debt Obligations) etc The proportion in which each banks assets would be bought by this bailout plan would be decided by the plan coordinators. The proceeds of this asset buying by the reserve (Cash) would be used by these banks and financial institutions to meet their liquidity needs and to infuse further liquidity into the economy. The Fed Reserve would sell these assets at a later point of time once the economy stabilizes and repay the Treasury.
What does a bank do when it cant satisfy the reserve requirement?
When a bank cannot meet its reserve requirement, it may seek to borrow funds from other banks or financial institutions, typically through the Federal Reserve's discount window. Alternatively, the bank might sell assets or securities to raise the necessary cash. If the shortfall persists, it could lead to regulatory scrutiny and potential penalties, impacting the bank's operations and financial stability. Ultimately, failing to satisfy reserve requirements can undermine customer trust and the overall health of the banking system.
Define capital reserve?
Capital reserve is the amount created to increase in market value of assets at the time of revaluation of assets.
Where is the 700 billion where did it go specifically?
The purpose of the bailout was to purchase bad assets, reduce uncertainty regarding the worth of the remaining assets, and restore confidence in the credit markets. The federal reserve is buying illiquid assets from large banks & financial institutions.
Are investments current assets?
If investments made for short term securities then it is current assets other wise non-current assets.
What are non earning asset?
other assets and investment securities
What does Assets Under Custody mean?
AUC is the value of assets held under custody by a "custodian of securities".
What are the constituents of primary reserve?
Primary reserves typically consist of liquid assets that banks hold to meet immediate withdrawal demands and regulatory requirements. These include cash, deposits with central banks, and highly liquid securities such as government bonds. The primary reserves ensure that financial institutions maintain sufficient liquidity to manage day-to-day operations and uphold confidence among depositors.
What are the several categories on non current assets and the method of accounting for each categories?
Non-current assets are those that a company intends to keep longer than 12 months. These include investments and fixed assets. Investments include items such as trading securities, avaialable-for-sale securities, and held-to-maturity securities. Fixed assets includes items such as buidlings, land, and equipment
Why does Marketable securities located on a balance sheet?
Marketable securities are assets of company which can be converted immediately to acquire cash as and when needed.
What assets are easily convertable into cash among current assets and liquid assets?
Marketable securities are those assets which can easily convert to cash when the need arise to convert them.
