BANKS

a. Answer the following in your journal.

1. What are “banks”?
2. What are the different types of banks?
http://finance.mapsofworld.com/financial-institutions/banks/

3. Why do we have to control the flow of money?
http://www.investopedia.com/terms/m/monetarypolicy.asp

Banks earn money through lending the money deposited by depositors.
Read this web site and click 5 C’s to get your answer to the questionbelow:

http://www.federalreserveeducation.org/fed101/supervision/coursework.htm

4. What should be the guidelines of banks in terms of giving loans?

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 analysis on each C's

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

5. After playing the virtual bank, what do you think are the common errors committed by bankers?

Answer the following quiz

http://federalreserveeducation.org/FED101/quiz/quiz.cfm?catID=20&sysID=2&web_ID=FED1

How do banks earn?

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 .

Assignment: 1/2

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 -
Savings Deposit Rates

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?