BUS302 STDY GUD

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School

California State University, Northridge *

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Course

302

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Business

Date

May 14, 2024

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docx

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18

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BUS 302 #13555 Team 4 Croc Your World 04/15/2024 California State University, Northridge David Nazarian College of Business and Economics Green Outlook Bank Monday, April 15th, 2024 BUS 302 Monday, 3:30 p.m. - 6:15 p.m. Team #4 Melanie Enjilian Karine Grigorian David Hernandez Fadi Stephan Messiah Khachadoorian Noah Ziraki Date: April 15th, 2024 To: Green Outlook Bank Investors
BUS 302 #13555 Team 4 Croc Your World 04/15/2024 From: Team #4 Subject: Green Outlook Bank Dear Green Outlook Bank Investors, Enclosed please find our analysis of important components of this case, our economic considerations, and our recommendations. Thank you for giving us the chance to help your business resolve this matter. It was a pleasure working with you. Should you have any questions, please do not hesitate to reach out, as we would be happy to assist. Thank you. Best Regards, Team #4 i
BUS 302 #13555 Team 4 Croc Your World 04/15/2024 Table of Contents Executive Summary …..…………………...…….……………….……..……… Page iii I. Background …………….………………………………………………..………. Page 1 II. Federal Reserve Policy………………………………………………...………. Page 2-3 III. Economic Analysis ……..……………….…………………………………… Pages 3-7 IV. Ethical Issues & Principles …..……..………..…………………… ..... ……. Pages 8-9 V. Market Supply & Demand ………………...………………..…..….….…...… Pages 9 VI. Strategic Considerations & Recommendations ……...……..……………… ..... Pages 10 VII. References ………………………………………..……….……… .... …………. Page iv VIII. Appendix ……………………………………………….………..………… Page v-viii ii Executive Summary Green Outlook Bank is facing a crisis as their stakeholders are losing trust in their system as the economy continues to move on a downwards trend. The bank is trying their best to cater to
BUS 302 #13555 Team 4 Croc Your World 04/15/2024 their high-end clientele by offering them financial planning services to teach them about the economic crisis and how to limit their risks. However, the Federal Reserve has to make its decision regarding the economy moving forward. The Federal Reserve influences the economy by adjusting the rates and reserve requirements. The interest rate adjustments they make impact peoples’ spending, borrowing, and inflation, which affects the economy’s growth and stability. An economic analysis shows us the history and behavior of the economy during 2006 and how it heavily impacts inflation and growth within the country. Additionally, a regression analysis shows the relationship between money supply growth and inflation. The Federal Reserve's actions can have a significant impact on investors from Green Outlook Bank and can cause a lot of ethical issues. The Utilitarian theory suggests the need of making everyone content which includes both the stakeholders and bankers. Creating that balance of good between all will help everyone prosper together by Utilitarian values. In order to create this good balance, the Federal Reserve must maintain interest rates to match with investments and consumer spending. Finding the balance between aggregate supply and demand will make investors and consumers more happy which causes the economy to thrive. Green Outlook Bank should focus on educating their customers and diversifying portfolios in order to be ready for the unexpected. Having these services will only enhance the trust with their customers and also mitigates risks. iii I. Background: All employees at Green Outlook Bank expect to get answers to make sense of what’s going on with the economy. According to the most recent study, customer trust has gone down in
BUS 302 #13555 Team 4 Croc Your World 04/15/2024 the last two months. It is easy to see why investors are worried when analyzing past and present information on company stocks. Consequently, the Federal Reserve has become the center of attention for everyone. The primary objective of Green Outlook Bank, a mid-tier regional bank, is to lend to consumers and small businesses. Traditionally, the bank has used conventional bank deposits to fund its lending. Green Outlook Bank has refocused its efforts to provide its high-end clients with an excellent selection of financial products and assistance, considering the fast expansion of online investing and the ease of mutual funds. A new service includes offering classes on financial planning. A significant section of the bank’s clients are retirees who have had a long-term relationship with the bank with some of them having a wide range of knowledge on money. Some read financial publications often, whereas other individuals are unfamiliar with the Federal Reserve. A significant portion of the bank’s clients hold standard bank accounts and they have different sources of income. Customers, mostly those who are middle aged, have substantial stock holdings, while other customers who are retirees often continue to get income from retirement plans in some capacity. People who use the bank’s services may have worries of business changes, while shareholders worry about the company’s stock value decreasing. The value of the stock increases as the bank’s profits rise. Signs of inflation creates concerns among Pension holders, leading them to worry about their pension losing value. Customers continuously look for signs that suggest depreciation of their real earnings in the near future. 1 II. Federal Reserve Policy The Federal Reserve, also known as "the Fed," serves as the central banking system of the United States, established in 1913. The primary goal of the Federal Reserve is to provide the
BUS 302 #13555 Team 4 Croc Your World 04/15/2024 nation with a secure, adaptable, and financial system. The Federal Reserve is responsible for overseeing the money supply within the U.S. economy, which includes various forms of currency such as cash, coins, checking accounts, and other assets which can be easily converted into cash (Federal Reserve System, 2021b). To accomplish its objectives during an economic decline, the Federal Reserve has several strategies which aim to influence the money supply. Open Market Operations Discount Rate Reduction Lowering Reserve Requirements One strategy involves open market operations, where the Federal Reserve buys or sells government bonds to adjust the funds of commercial banks. By purchasing bonds, the Fed injects money into the banking system, expanding the money supply. On the other hand, selling bonds reduces the money supply (Hall, 2022). Another approach is the adjustment of the discount rate —the interest rate at which commercial banks borrow from the Federal Reserve. Lowering the discount rate encourages borrowing, leading to an increase in the money supply, while increasing it has the opposite effect. Additionally, the Federal Reserve can adjust reserve requirements, which refers to the percentage of deposits banks must hold in reserve. Lowering these requirements allows banks to lend more, leading to expanding the money supply (Hall, 2022). 2 Changes in the money supply have an impact on interest rates, which play a crucial role in the economy. When the Federal Reserve aims to adjust economic flow, it typically lowers interest rates. This reduction makes borrowing cheaper, therefore encouraging businesses and consumers to borrow and spend more, ultimately stimulating investment and economic growth.
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