Part 1Consider a failing bank. If the FDIC uses the payoff method LOADING... , a deposit of $320,000320,000 is worth a minimum of $[input]enter your response here . (Round your response to the nearest whole number.)

Question

Part 1Consider a failing bank. If the FDIC uses the payoff method LOADING... ​, a deposit of ​$320,000320,000 is worth a minimum of ​$[input]enter your response here . ​(Round your response to the nearest whole​ number.)

BlackTom AI · Accepted Answer

To approach this question, start from the basic rule at issue: FDIC insurance covers deposits up to a statutory limit per insured bank. The standard limit in the United States is $250,000 per depositor, per insured bank, for all accounts of the same ownership category. When a bank fails and the FDIC uses a payoff method, the insured portion of each depositor’s balances is paid out up to that limit, while any amount above the limit is not protected by FDIC insurance in that payout event.

In this problem, a deposit of $320,000 is at stake. Since the FDIC insurance ceiling is $250,000, only up to that amount can be protected in the payoff arrangement. The remaining $70,000 would be uninsured under the standard coverage rules, at least in a single-bank, per-depositor accounting framework.

Think about how to apply the limit to the total deposit: identify the shared cap that applies across all deposits for the same owner in the same bank, then compare the deposit size to that cap. If the total exceeds the cap, the insured portion is the cap, and any excess does not receive insurance protection in the payoff method context.

If you were given numeric checks to fill, you would enter the insured portion of the $320,000 as the amount covered by FDIC insurance, which corresponds to 250,000 in this scenario. The calculation is straightforward: insured amount = min(deposit total, 250,000) = min(320,000, 250,000) = 250,000.

This reasoning relies on understanding the fixed insurance limit and how the payoff method handles deposits that exceed that limit. The key misconception to avoid is thinking that the entire $320,000 can be protected or that insurance scales with the deposit amount beyond the cap. In reality, protection is capped, and any amount above the cap remains uninsured under the standard arrangement for this bank failure scenario.

Homework:Chapter 10 Homework

Part 1Consider a failing bank. If the FDIC uses the payoff method LOADING... , a deposit of $320,000320,000 is worth a minimum of $[input]enter your response here . (Round your response to the nearest whole number.)

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Homework:Chapter 10 Homework

Part 1Consider a failing bank. If the FDIC uses the payoff method LOADING... ​, a deposit of ​$320,000320,000 is worth a minimum of ​$[input]enter your response here . ​(Round your response to the nearest whole​ number.)

View Explanation

Log in for full answers

Similar Questions

Risk-based deposit insurance premiums help control moral hazard by:

Which of the following outcomes is most directly attributable to the absence of a fully mutualised European Deposit Insurance Scheme (EDIS)?

A key reason full European Deposit Insurance Scheme has faced political resistance is that:

A key reason full European Deposit Insurance Scheme has faced political resistance is that:

What is the drawback of deposit insurance facility?

Financial consolidation of banks with other financial services in recent years poses government safety net problems. The safety net intended for depository institutions may be

The primary difference between the "payoff" and the "purchase and assumption" methods of handling failed banks is

More Practical Tools for Students Powered by AI Study Helper

Making Your Study Simpler

Part 1Consider a failing bank. If the FDIC uses the payoff method LOADING... , a deposit of $320,000320,000 is worth a minimum of $[input]enter your response here . (Round your response to the nearest whole number.)