Do the opportunity costs of borrowing and using differ

Reference no: EM13191599

Lenders perceive that you are risky, so you must pay 12 percent annual interest to borrow from one of them. You only receive 6 percent on funds you have deposited in the bank. Do the opportunity costs of borrowing and using your own funds differ in this example? Explain why or why not.

Reference no: EM13191599

Questions Cloud

By how much can the money supply be expanded : First bank has total deposits of $2,000,000 legal reserves of $220,000. a. If the reserve requirement is 10 percent, what is the maximum loan that First bank can make, and what is the maximum increase in the money supply based on First bank's rese..

Positive displacement and dynamic air compressors : With reference to basic constructional features, contrast the methods of compression employed by positive displacement and dynamic air compressors.

What is the maximum loan that the bank a can make : Yesterday bank A had no excess reserves. Today it received a new deposit of $5000. a) If the bank maintains a reserve requirement of 2 percent, what is the maximum loan that the bank A can make

Narrowly defined chemical composition : Why does the definition of the term mineral include “a narrowly defined chemical composition” rather than a statement such as “a specific chemical composition?

Do the opportunity costs of borrowing and using differ : Lenders perceive that you are risky, so you must pay 12 percent annual interest to borrow from one of them. You only receive 6 percent on funds you have deposited in the bank. Do the opportunity costs of borrowing and using your own funds differ i..

Find the demand curve for a perfectly competitive firm : Which of the following factors would most likely explain why a U.S. company would choose to operate in the U.S. despite much lower wages in Mexico.If a monopolist is earning profits, then price is greater than average total cost.

Described as narco-terror groups : Oftentimes groups like the Revolutionary Armed Forces of Columbia (FARC) are described as "Narco-Terror groups." However, the US makes a clear policy distinction between the War on Terror, which is really a war to counter violent Islamist extremism a..

Reactions and experiences when evaluating art : In this week's video, Bill Goodykoontz discusses having to stay true to your own reactions and experiences when evaluating art. Why is this so difficult to do?

The human resources-managing organizational change : Locate additional sources that describe varied perspectives on the topic. Address how the varied perspectives related to or complement what has been discussed in class. Discuss how strategic change relates to the varied perspectives and whether they ..

User Account

All Pages