Final answer:
Different cash balances on the books and bank statements are primarily due to timing differences in recording transactions. The money listed as assets on a bank's balance sheet might not be physically present due to loans made to customers. Factors affecting the value of a loan in the secondary market include borrower reliability, changes in interest rates, and borrowers' financial condition.
Step-by-step explanation:
The books and the bank statement often show different cash balances due to a variety of factors, including the timing of transactions, outstanding checks, bank fees, and deposits in transit. For instance, a company may have recorded a transaction in its books immediately, while the transaction may take a couple of days to reflect in the bank statement.
When considering the money listed under assets on a bank balance sheet, it may not actually be in the bank because of the concept of fractional-reserve banking where banks lend out most of the deposits they receive, keeping only a small reserve on hand. Money can also be recorded as an asset if it is due to be received but is not currently in the physical possession of the bank.
In the context of buying loans in the secondary market, the price offered for loans is influenced by the creditworthiness of the borrower, changes in interest rates, and the borrower's financial health. You would be willing to pay less for a loan if the borrower has been late on loan payments as this indicates a higher risk of default. If interest rates have risen, existing loans with lower rates are less attractive, hence might warrant a lower price. Conversely, if the borrower's financial condition has improved or if interest rates have fallen, such loans become more valuable as their risk drops and their relative interest yield increases compared to new loans.
On your personal balance sheet, a bank deposit would be an asset, representing money you can use, while any loans you owe would be liabilities. A bank, on the other hand, records the deposits they hold as liabilities because they owe this money back to depositors. Loans made out to customers are considered assets to a bank because they represent money the bank will receive over time.