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coffeewasp36Lv1
26 Dec 2018
JPMorgan Chase Bank is short cash reserves in the amount of $225 million conditions expected to last for the next five business days and is weighing
(a) securing a loan in the domestic federal funds market, where the interest rate prevailing today is 5.45 percent;
(b) issuing seven-day domestic negotiable CDs at a current market rate of 5.50 percent; or
(c) tapping its foreign branch offices for 30-day Eurodollars at a market rate of 5.58 percent.
The estimated noninterest cost of all these various funding sources is approximately the same, except that the domestic CDs currently carry an annual FDIC insurance
fee of $0.04 per every $100 in deposits received from the public. Which source of funds would you recommend the bank make use of?
JPMorgan Chase Bank is short cash reserves in the amount of $225 million conditions expected to last for the next five business days and is weighing
(a) securing a loan in the domestic federal funds market, where the interest rate prevailing today is 5.45 percent;
(b) issuing seven-day domestic negotiable CDs at a current market rate of 5.50 percent; or
(c) tapping its foreign branch offices for 30-day Eurodollars at a market rate of 5.58 percent.
The estimated noninterest cost of all these various funding sources is approximately the same, except that the domestic CDs currently carry an annual FDIC insurance
fee of $0.04 per every $100 in deposits received from the public. Which source of funds would you recommend the bank make use of?
2 Jun 2021
