Purchase Solution

Loaning versus investing available funds

Not what you're looking for?

Ask Custom Question

In recent years banks have shown a greater tendency to loan out available funds rather than invest them. What impact, if any, does this have on the effectiveness of monetary policy actions taken by the Federal Reserve? Why do you suppose that the banks are under-going this change?

Purchase this Solution
Solution Summary

This solution helps explore why banks loan rather than invest their available funds.

Solution Preview

Hello,

The best way to answer this question is by quickly examining the prevailing federal rate. This has been declining over the years, making previously coveted securities like government bonds to be the in-thing when it came to investing.

As a result of this, banks have in the recent years been loaning out available funds since the ...

Purchase this Solution
Free BrainMass Quizzes
Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

View More Free Quizzes
Related BrainMass Solutions

  • Governmental financial statement information

    For Investing activities, the owners are investing in the business and financial future of their company. Purchasing property, plant, or equipment or loaning excess funds to another business would both be investing activities.

  • Advantages and Disadvantages of Company stock Versus Funds

    246557 Mutual funds verses company stock investments What are the advantages and disadvantages of investing in mutual funds verses your company's stock for retierment investing funds?

  • Taking a company public

    In addition, some families are limited to the AMOUNT of funds available for investing versus the amount of funds available for paying bills.

  • Comparing the Potential Returns of Investing in Stock

    in bank CDs versus stock to support their children's future college education.

  • Monetary policy

    The Fed uses open market operations, adjustment of the federal funds rate, and changes to reserve requirements, which is the percentage of deposits that banks must keep on hand, rather than loaning out.

  • Benefits of the international capital markets

    Why would an organization consider investing short term funds overseas? what techniques are available to multinational firms to speed up their cash collection activities.

  • Foreign stock risks in terms of exchange versus country or sovereign risk

    426190 Foreign stock risks in terms of exchange versus country or sovereign risk Foreign stocks may present a risk. Explain those risks in terms of exchange versus country or sovereign risk.

  • Human Capital versus Human Resources

    Resource is the total means available for economic and political development, such as mineral wealth, labor force and armaments. An available supply that can be drawn on when needed. Resources are limited.

  • Statement of Cash Flows (Indirect Method) for Millco

    Cash from Investing - cash used for investing in assets, as well as the proceeds from the sale of other businesses, equipment, or other long-term assets. Cash from Financing - cash paid or received from issuing and borrowing of funds.

View More Related Solutions