Final answer:
A bank reconciliation item unknown to a bank could be deposits in transit. The money supply includes various items: M1 comprises currency like quarters and checking account balances, while M2 includes savings like a money market account. Proper financial management and understanding market conditions are crucial for handling loans in the secondary market.
Step-by-step explanation:
The bank reconciliation items that a company's bank may not know about usually involve transactions that have occurred on the company's end but haven't yet been reflected on the bank's records. Here's how certain items are categorized in terms of M1 and M2 money supply:
- a. Your $5,000 line of credit on your Bank of America card: Neither
- b. $50 dollars' worth of traveler's checks you have not used yet: M1
- c. $1 in quarters in your pocket: M1
- d. $1200 in your checking account: M1
- e. $2000 you have in a money market account: M2
Deposits in transit are the likely bank reconciliation item that a company's bank may not be aware of, as these involve money that has been deposited by the company but has not yet been credited by the bank.
On the topic of bank statements, the money listed under assets on a bank's balance sheet may not actually be in the bank due to the practice of fractional-reserve banking, where banks lend out a portion of deposited funds. Sudden changes in banking practices can be a sign of possible fraudulent activity.
It is important to keep up to date with balancing your checkbook to avoid issues like overdraft fees, which can occur if you spend more money than you have in your account.
When buying loans in the secondary market, the value of a given loan can vary depending on several factors, such as the borrower's payment history, changes in overall economic interest rates, and the borrower's profitability. A bank may pay less for a loan if the borrower has been late on loan payments or if overall interest rates have risen. Conversely, a loan might be valued higher if the borrower is highly profitable or if interest rates have decreased since the loan was originated.