BMGT495 – Probanker 1st Write Up (3 rounds))

BMGT495 – Probanker 1st Write Up (3 rounds))

Probanker 1-3 write-up In our pro-banker activity we chose to only manipulate interest rates on assets and liabilities, and their associated advertising cost. We chose to stay away from fed-funds, because we were not able to get a firm grasp on their implications in the auto-bank simulation. In our first quarter we used these interest rates: Fixed – 8.50 Floating -5.50 Installment -14.00 Mortgage – 8.50 Passbook -2.00 Retail -2.30 IRA’s 2.00 We lowered our fixed rate loans slightly, to make them more appealing to potential bank customers. However, we did not lower them to much because we found, by examining and analyzing elasticity’s, that Fixed rate loans are extremely sensitive to changes in interest rate. We then raised the rates on floating rate loans. We did this because it is an effective way of getting more people to buy our fixed rate loans, which we felt were better asset for our bank to hold. We also raised the interest rate on