Exam (elaborations)
ECON 331 midterm for Feb 25th 2024 Sunday exam solution Concordia University
- Course
- ECON 331
- Institution
- Concordia University ( )
ECON 331 midterm for Feb 25th 2024 Sunday exam solution Concordia University
[Show more]
Content preview
ECON 331 midterm forFeb 25th 2024 Sunday
exam solution
Concordia University
, lOMoARcPSD|10754654
Dr. Otchere’s Classes: Money and Banking (Econ 331)
SUGGESTED ANSWERS FOR THE Midterm exam
1(i). The bank’s net income after taxes may be calculated by through the following steps. From
the question provided, all figures are in millions of $.
A: INTEREST INCOME
Interest income from loans = 209
Interest income from investment in securities =
26 Total interest income = [209 + 26] = 235
B: INTEREST EXPENSE
Interest paid to depositors = 64
Interest on non-deposit borrowing = 18
Total interest expenses = [64 + 18] = 82
NET INTEREST INCOME = Total interest income less total interest expense) = (235 - 82) =
153
C: NON-INTEREST INCOME
Non-interest income from service fees = 55
Non-interest-income from off-balance sheet activities =
30 Other miscellaneous operating revenues = 13
Total non-interest income = 98
D: NON-INTEREST EXPENSES
Salaries and wages of bank employees = 27
Occupancy and other overhead costs = 3
Other miscellaneous operating expenses = 22
Total non-interest expense = 52 NET
NON-INTEREST INCOME = (98 - 52) = 46
To obtain the PRE-TAX OPERATING PROFIT INCOME, we simply subtract both total
interest expense and total non-interest expense FROM both total interest income and
total non-interest income. Thus, gross profit income before taxes is: (235 + 98) - (82 +
52) = 333 -134 = 199
Net profit income before taxes is determined by subtracting provisions for loan losses
from gross profit income before taxes. That is: (199 - 22) = 177
NET profit INCOME AFTER TAXES is then obtained by subtracting the amount of
income taxes owed from NET income before taxes so that (177 - 33)= 144
Thus, the bank’s net profit income after taxes equal to $144 million.
(ii) The bank’s retained earnings (i.e., undistributed business profits) is also determined
as the bank’s net income after taxes LESS dividends paid to shareholders so that we
get: [144-14] = $130 million.
(iii) From the information given in the question, the bank’s income statement may be
constructed as follows:
The income -expenditure statement: Hypothetical chartered bank in Canada
April 24, 2010 to April 24, 2018
(All figures, in millions of dollars)
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller smartzone. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for CA$16.58. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79373 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now
