Fractional Reserve Research Paper

The Fed also acts as a bank for banks. What are the three activities the Fed undertakes when it acts as a bank for banks? Hint: What are the activities the Fed does for banks that are similar to the activities a bank does for its customers? (3 points) The three activities of the Fed are, holding deposits for the bank, lending money to the bank, clearing checks between banks. These activities are to some degree very similar to what bank does to customers, because for banks, it lends money to customers in order to earn interest income.

The Fed also acts as a bank for banks. What are the three activities the Fed undertakes when it acts as a bank for banks? Hint: What are the activities the Fed does for banks that are similar to the activities a bank does for its customers? (3 points) The three activities of the Fed are, holding deposits for the bank, lending money to the bank, clearing checks between banks. These activities are to some degree very similar to what bank does to customers, because for banks, it lends money to customers in order to earn interest income.

First, loans, leases and mortgages are transformed to tradable instruments through securitization. Second, their funding is conducted in capital markets with commercial papers and repos. In this case, savers direct their money to money market funds instead of depositing at traditional banks. The whole process is performed in several steps through a chain of non-bank financial intermediaries in contrast to a single bank in traditional credit intermediation. Moreover, the process is performed in a strict and sequential order and each step is conducted by a specific entity (a shadow bank).

The capital business sector is the business sector for securities, where organizations and the legislature can raise long haul stores. The capital business sector incorporates the stock exchange what 's more, the security market. Money related controllers, for example, the U.S. Securities and Exchange Commission, direct the capital markets in their individual nations to guarantee that financial specialists are ensured against extortion. The capital markets comprise of the essential business sector, where new issues are appropriate to financial specialists, and the optional business sector, where existing securities are exchanged. (n.d.).

Firstly, it is viewed as bond on the deposit of gold silver which held by several ulama, as historically the connection between the gold and silver with paper money through the relation of debt between Central Bank and the money holders is convincing. The Central Bank is required for the exchange of debts and the full back up of the currency issued. Secondly, it is view as suftaja, the substitution for the gold and silver values, to which the paper money itself have the characteristics representative of the physical precious metal as the Islamic Development Bank viewed that the currency is seen as the metal it is based on. However, the equality of the paper money with gold and silver can only be acceptable if it entirely backed up by the precious metals, to which the Central Bank have to holds a fully reserve of it in order for the money justification to be

It customarily involves various types of contract, such as, mandate, loan for use, depositum and deposit-taking. The parties to the bank-customer relationship may, depending on the circumstances, fulfil the role of either debtor or creditor. The bank becomes the owner of money that is deposited or paid into the customer’s account. The customer retains a claim or personal right against the bank. This is known as commixtio, whereby the consumer loses ownership of money deposited into the bank because that deposit mixes with other money of different customers.

Leela Crosby and Alysha Shroff I did the questions and Alysha did the vocabulary ACTIVITY 1 Bond- a certificate issued by a government or a public company promising to repay borrowed money at a fixed rate of interest at a specified time. Capital Gains- a profit from the sale of property or of an investment. Capital Goods- goods that are used in producing other goods, rather than being bought by consumers. Capital Loss- is the result of selling an investment at less than the purchase price or adjusted basis. Common Stock- shares entitling their holder to dividends that vary in amount and may even be missed, depending on the fortunes of the company.

The purpose of bank reconciliation is to compare the balance on the bank statement with the accounting records. Bank reconciliation is the “process needed to identify errors, irregularities, and adjustments needed to the Cash account.” (K Wainwright, S. 2012). What are the reasons for differences between the cash reported in the accounting records, and the cash balance in the bank statements? Some of the reasons for differences between the cash reported in the accounting records and the cash balance in the bank statement are: 1. “Deposits in transit are receipts entered on company records but not pro¬cessed by the bank, and (2) outstanding checks are written checks that have not cleared the bank.”(K Wainwright, S. 2012).

Traditional 401ks and IRAs don’t accept physical gold, but they do accept gold stock, bonds and mutual funds. These are generally paper-class assets that are subject to losing all their value in certain economic conditions. That’s why harvard Gold and economy Observer recommends establishing a self-directed 401k and IRA, which you must set up with a custodian. It’s important to choose a custodian that meets your risk tolerance level. That means finding out about each custodian’s fee structure, transportation strategy and lag time.

Equally important, there is no industry to replace them as the key performer in creating our economies multiplier effect. Moreover, I would frame them as an industry that measures their success by ROA and ROE, metrics that is influenced by their ability to buy deposits and sell loans. I could give full SWOT analysis of the banking industry; however I would run out of room. Banks utmost strength is that bank lending has been a significant driver of GDP growth and employment. They are a conduit for social and economic policy.

An illusionist economy, it is essential to the modern, prosperous economy. This illusion is given through the issuing of credit. Credit is issued through banks in the form of loans, be it for a house, car, or even your groceries. Larger loans usually require a large application, and long time commitment, while the smallest loans are given based off of your reputation. As Americans, we simply call them credit cards or credit lines.