Essential Sweep Accounts Interview Questions & Answers:
1. How sweep account actually works?
★ A cash account is set up first and a lump sum of money is deposited into that account.
★ A financial adviser and the client will discuss and determine an average balance that should be kept in this account. Depending on the institution's service, this amount may be pre-determined.
★ Most of the extra cash above the average balance will be invested into a money market, CD, or some other form of investment that can be easily liquidated.
★ When the balance in the cash account falls below the pre-determined average balance, some of the investment is liquidated and the proceeds get deposited into the cash account, thus maintaining the average balance.
2. Why companies used Repo Sweeps?
Repo Sweeps are for companies that are concerned about the safety of the bank usually mandate of the companies/institutions charter and not due to the opinions of the employees or financial staff. In this arrangement, swept funds on deposit with the bank are secured by some of the bond holdings of the bank. If the bank were to fail, the depositor would just be given the bond holdings and then could sell the bonds to get their money back (unless something happens to the bond prices in the interim).
3. Define the Eurodollar sweeps transfers of funds?
Eurodollar sweeps are legal transfers of funds to the bank's offshore entities, although essentially they are just an accounting technique to allow the banks to have full lending of the funds without the reserve requirements normally required and without having to pay for FDIC insurance (as the sweep is uninsured). Essentially, the funds are just unsecured obligations of the bank, and therefore are paid the highest interest rate offered by the bank to overnight deposit borrowings.
4. Why we used Capability Maturity Model Integration (CMMI)?
CMMI can be used to guide process improvement across a project, a division, or an entire organization. CMMI helps integrate traditionally separate organizational functions, set process improvement goals and priorities, provide guidance for quality processes, and provide a point of reference for appraising current processes.
Capability Maturity Model Integration (CMMI) is a process improvement approach that provides organizations with the essential elements of effective processes.
6. Define the Econ-model applications and Monopoly role?
The Econ-model applications Perfect Competition and Monopoly emphasize the roles of average cost and marginal cost curves. The short movie Derive a Supply Curve (40 seconds) shows an excerpt from the Perfect Competition presentation that derives a supply curve from profit maximizing behavior and a marginal cost curve.
7. Explain the difference between Marginal cost and average cost?
Marginal cost and average cost can differ greatly. For example, suppose it costs $1000 to produce 100 units and $1020 to produce 101 units. The average cost per unit is $10, but the marginal cost of the 101st unit is $20.
8. What are expenditure in Sweep Accounts?
Expenditure is the outflow from non-profit organization.
9. What are expenses in Sweep Accounts?
Expense is the outflow from a profit oriented organization.
Marginal Cost (MC):
The marginal cost of an additional unit of output is the cost of the additional inputs needed to produce that output. More formally, the marginal cost is the derivative of total production costs with respect to the level of output.
Marginal cost and average cost can differ greatly. For example, suppose it costs $1000 to produce 100 units and $1020 to produce 101 units. The average cost per unit is $10, but the marginal cost of the 101st unit is $20
The EconModel applications Perfect Competition and Monopoly emphasize the roles of average cost and marginal cost curves. The short movie Derive a Supply Curve (40 seconds) shows an excerpt from the Perfect Competition presentation that derives a supply curve from profit maximizing behavior and a marginal cost curve.
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