FIN610 Week 5 Problems 1 and 2

Please complete problems 1 and 2. I have attached the formula for the assignment.

Problem

1

)

1

20

Module Five Homework Assignment

Student’s Name:

Problem 1 (from Chapter 1

0

A financial manager is attempting to decide whether to use EDT or wire transfer but must first calculate the minimum balance to transfer. Using the data provided below, calculate the TBAL.

Numbers of days saved

Annual investment opportunity cost rate, k

10%

Bank’s earnings credit rate, ecr

8%

Required reserve rate, rr

12%

Wire transfer cost

$

20

EDT cost

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0.25

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Problem 2

Module Five Homework Assignment

Numbers of days saved 1

Annual investment opportunity cost rate, k

0

Required reserve rate, rr

Wire transfer cost 20
EDT cost 0.25

Problem 2 (from Chapter 10)

Now, let’s assume that the bank’s ECR = 0 in Problem 1.Using the data in Problem 1 (listed below) recalculate the TBAL. Using the ECRof 0 will result in the break-even balance for TBAL.

0.1

Bank’s earnings credit rate, ecr

0.12

Problem 3

Module Five Homework Assignment

Problem 3 (from Chapter 10)

What factors determine how frequently transfers should be made from a deposit account to a concentration account? Find a minimum of one peered reviewed article form a financial journal in the SNHU Online Library to support your answer. Your response should be between 100-150 words in length. Remember to list your references in the reference section of this worksheet and properly cite them in accordance to APA citation requirements.

We use concentration accounts for the transfer of funds in private banking, trust accounts, custody accounts and international transcations between parties. The deposit account is used for the aggregate funds from multiple locations into one account that’s centralized. A factor in transfers is money laundering because of the risk that’s involved when money is being wired from one account to another. If the persons information such as name and amount is seperate then when an audit is preformed there is no tracking. I work at BNY Mellon and we use use concentration accounts and we implement adequate policies, procedures, and processes covering the operation and recordkeeping for these accounts. Policies should establish guidelines to identify, measure, monitor, and control the risks. Compliance and control should always require these: 1. Two signature on the general ledger 2. No customer access to concentration accounts 3. Checking the transactions on the statements 4. Always have customers information by identification 5. Always reconcile the customers account with transactions. Mitchell Berlin and Loretta J. Mester. The Review of Financial Studies , Vol. 12, No. 3 (Autumn, 1999), pp. 579-607

References

References