Economics And Finance Quiz Questions!

Explanation
A debit balance is actually a negative balance meaning you actually owe the bank that much money

Explanation
Modgilani Miller state that the mode of financing has no bearing on the value of the firm

Explanation
The IRR (Internal Rate of Return) is the rate at which the net present value (NPV) of cash flows equals zero. In this case, the initial cash outflow of 100 bucks is followed by two cash inflows of 100 bucks and 11 bucks at the end of the first and second years, respectively. To calculate the IRR, we need to find the discount rate that makes the NPV equal to zero. By trial and error, it can be determined that a discount rate of 10% results in an NPV close to zero. Therefore, the IRR for these cash flows is 10%.

Explanation
Asset Liability Mismatch refers to the condition of a firm when it attempts to finance its long-term assets using short-term liabilities or vice versa. This mismatch occurs when there is a mismatch between the maturity and cash flow characteristics of a firm's assets and liabilities. It can lead to financial instability and liquidity problems for the firm if not managed properly.

Explanation
The Capital Adequacy Ratio is related to the amount of capital a bank must have in order to cover the various credit risk it has. This ratio measures the bank's capital in relation to its risk-weighted assets, ensuring that the bank has enough capital to absorb potential losses and maintain financial stability. It is an important measure of a bank's ability to withstand adverse economic conditions and fulfill its obligations to depositors and other stakeholders.