Learn more about banking!

Watch these videos..

a. http://videos.howstuffworks.com/howstuffworks/54-how-money-is-made-video.htm

b. http://videos.howstuffworks.com/howstuffworks/3-how-atms-work-video.htm

Answer the following questions in a one whole sheet of paper.

Banks earn money through lending the money deposited by depositors.
.
1. What should be the guidelines of banks in terms of giving loans?

Open the site and click 5 C’s to seethe answer for #1
http://www.federalreserveeducation.org/fed101/supervision/coursework.htm

After knowing the guidelines, play the Virtual Examiner and try to find out if you can be a good banker.

-Click the site below and read the Loan Information of Judy Jepson before making your choice or anlaysis on each C's

http://www.federalreserveeducation.org/fed101/supervision/bankexam.cfm


2. In your own analysis , after playing the virtual bank, what are the common errors committed by bankers?

Sample Problem on computing bank profits :

Savings deposit :interest rate 5% Loan Rate :14%
Amount Deposited : P 200,000.00
less Reserve Requirement of 10% = P 20,000.00
Amount available for Loans = P 180,000.00
How much will the bank gain if the above amount was loaned at 14% per annum?
180,000.00 x 14% = P 25,200.00

Banks will pay the depositors 5% of 200,000.00
so, P 200,000.00 x 5% = P 10,000.00

Subtract the amount gained from loan with amount paid for depositors then you will get the banks total profit..
Amoun gained from Loans P25,200 - P10,000 ( amount paid to depositors)
banks profit is P 15,200.00 .

C. Using the same procedure in the above-mentioned site, compute for the banks profit if:

Bank total deposits - P 550,000.00
Central Bank Reserve Requirement - 20%
Loan Interest rates - 12%
Savings Deposit Rates - 5%

3.How much is the Reserve Requirement?
4. How much can the be offered as loans?
5.How much will the bank pay the depositors?
5.How much will the bank earn from its loans?
6.How much is the banks total profit?
Assignment: ½ sheet of paper

How important is savings and investment in the development of the country's economy?
Note: Study the topics read today and prepare for a next meeting.