Principles of Finance Assignment - Financial Calculations and Analysis

This document provides a comprehensive solution to a finance assignment, addressing key concepts and calculations. The assignment includes calculations of reserve requirements for a bank, exploring the impact of financial crises on families, and analyzing potential job opportunities in the finance sector. The solution covers topics such as required reserves, the reserve ratio, and potential career paths in finance, including roles such as M&A consultant, head of a trading floor, and CFO. The document offers insights into the skills and qualifications needed for these positions. Desklib offers this and other study materials to help students succeed.

PRINCIPLES OF FINANCE
STUDENT ID:
[Pick the date]

Question 1
a) Upto $40 million 2% reserve is required and after $ 40 million, the reserve increases to
8%.
Dell National Bank has total account balance of $ 200 million
Hence required reserves = (2/100)*40 + (8/100)*(200-40) = $ 0.8 million + $ 12.8 million =
$ 13.6 million
b) Total transaction account balance = $ 200 million
Total balance in form of reserves = $ 13.6 million
Hence, required percentage = (13.6/200)*100 = 6.8%
Question 2
a) It is known that the reserve ratio is 8%.
Total deposits held by the bank = $ 1 million + $ 5 million = $ 6 million
Thus, deposits that the bank can have = 6/0.08 = $ 75 million
b) Implied reserve ratio = (Deposits with bank/Total deposits)*100 = (6/65)*100 = 9.23%
In case of scarcity of loanable funds, Reserve Bank can provide loans for the time needs
which would need to be paid back at a later late. This loan by Reserve Bank is usually
extended when the borrowing depository issues some promissory notes which it would buy
back at a mutually agreed later date.
Video (100 Words)
The financial crash had a significant impact on my family since my father was employed with
a leading bank at the time in the capacity of financial advisor. A significant amount of
earnings of my father was in the form of performance linked pay which was adversely impact
and even his job was on the line considering that there was a trust deficit with regards to
investing in any asset especially if linked to bonds or derivatives. However, I had a friend

whose father was working in Lehmann Brothers and thereby was fired. His family had a
tough time as new openings for finance professionals dwindled in that period.
Week 3 Journal (100 words)
Job 1
Source: https://www.indeed.co.uk/Finance-jobs?vjk=aef9af4d71c6c0cb
I am interested in this career owing to the exposure and learning that this provides. Also, the
financial perks are an incentive coupled with future scope. Need to have an MBA coupled
with some relevant experience besides superb communication and analytical skills. In long
term, I could be structuring global deals as M&A consultant.

Job 2:
Source: https://www.indeed.com/q-Finance-jobs.html?vjk=bc515dbe937937b7
I am interested in this owing to the thrill involved and the performance linked incentives.
The key skills would be through knowledge of the oil market, formal education in accounting
and finance, certification in trading and hedging and relevant experience. In long term, I can
be the head of a trading floor in one of the big oil firms.
Job 3:

Spurce: https://www.indeed.com/q-Finance-jobs.html?vjk=ee5ff15dd0ddc7db
I am interested owing to the opportunity for understanding the organisational financial
management and play a role in the same. Formal degree such as MBA would be helpful
coupled with previous relevant experience. In the long run, I hope to become CFO of a
reputed company.