You can rely on the content of all of the previous chapters to complete this assignment, though certainly Chapter 17 covers many of the key topic areas. You should also conduct research and include additional reliable sources. Pay special attention to addressing each bullet point within the narrative of your paper.

  • The core of banking functions and success is their sources of funds. Describe in detail the various sources of bank funds (money), how they acquire these funds and who provides the funds. Similarly discuss the alternative sources of funds if a bank finds itself short of cash. Lastly, discuss why a bank might issue a bond.
  • By most standards, Money Market accounts are a newer funding source for banks versus traditional savings and checking accounts. Discuss how Money Market accounts are different.
  • The Federal Reserve can be a short-term source of funds. Discuss how a bank borrows from the Fed and why a bank would borrow from the Fed. Also discuss how the borrowing interest rate is established and include a description of what this rate (that is charged to banks) is called. Include a discussion about how to determine what that rate is today.
  • Summarize the most significant uses of the fund’s banks obtain; include a description of each and the risks involved. Next, discuss why a bank might invest in securities, even though loans typically generate a higher return; discuss risk as a factor. Finally, discuss how a bank might allocate funds to each type of asset and how this helps a bank to manage risk for the bank and its customers.
  • Describe what is meant by bank capital and discuss how banks determine the optimal amount of capital to hold. Since a bank’s capital is generally less than 10% of its assets, discuss how this compares to the average capital structure of manufacturing corporations and explain this difference.

Include the following elements in your paper:

  • Introduction
  • Narrative of at least 3-pages
  • Conclusion


  • Your paper must include appropriate current APA formatting.
  • It should include a title page with your name, course number, your instructor’s name, date, and the subject of the paper.
  • Your paper should be double-spaced, and in Times New Roman font (12 pt.).
  • Your paper must include in-text citations, and a correctly formatted reference page.
  • For information on citation guidelines visit the Writing Center link located in the Academic Tools tab.
  • Review the grading rubric before beginning this paper.