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As such, one would expect Miss Lenhart to say in the last panel something like "you'll have ''e'' dollars in a year". It is not clear if Miss Lenhart sees the growth of the deposited amount as answer enough to explain ''e'' or if she's just charging $1 for answering the question of what ''e'' is. The supposed interest rate the teacher can earn off this deposit, alone, is so high that the $1 principal will grow to over $22,000 in ten years, $485 million in twenty years, or $10.68 trillion in thirty years. | As such, one would expect Miss Lenhart to say in the last panel something like "you'll have ''e'' dollars in a year". It is not clear if Miss Lenhart sees the growth of the deposited amount as answer enough to explain ''e'' or if she's just charging $1 for answering the question of what ''e'' is. The supposed interest rate the teacher can earn off this deposit, alone, is so high that the $1 principal will grow to over $22,000 in ten years, $485 million in twenty years, or $10.68 trillion in thirty years. | ||
| β | In the title text, | + | In the title text, a {{w|Takeover#Hostile|hostile takeover}} is an acquisition of a company against its management's wishes, by simply buying up its shares from its shareholders. A bank offering accounts with an {{w|APY}} of 172% is certain to go bankrupt almost immediately, making it a very bad investment. Banks earn money by lending at a higher rate than they pay on deposits, but it is illegal in some jurisdictions to charge such high interest rates on loans, and no one would take them anyway. Therefore the bank will lose huge amounts of money on deposits while earning essentially no revenue. The off-comic speaker is effectively buying out the bank in order to drain it of its own funds, which is financially pointless, and may also be illegal. Alternatively, their plan may be to buy 51% of the stock, then attempt to extract a majority of the bank's reserve funds through huge high-interest deposits, which is still not profitable, since banks hold only a small fraction of deposits in reserve, and their market capitalizations (the cost of buying all the stock) are much higher than their total reserves. Even if for some reason this bank had a very high reserve ratio, and this tactic could somehow be profitable, it would usually still be illegal, effectively robbing the other 49% ownership of its equity through deliberately bad management. |
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| + | In the title text, Randall may have also just confused a couple of concepts. A bank offering a 100% rate (assuming somehow sustainably) would be an incredibly good place to open a checking or savings account, and a rational actor would shovel as much money as possible into such an account at this bank. Randall may have simply misused the term "hostile takeover," which would not yield any of the benefits of the 100% rate, as mentioned above, when he really meant to colloquially describe a scenario in which one would aggressively exploit the bank's 100% rate for one's own benefit. (A perhaps unintuitive aspect about banks that might have tripped up Randall is that "assets" in other contexts become liabilities for banks and vice versa. So customer deposits become liabilities upon which a bank would have to pay such an incredibly high rate, and loans, which are traditionally considered liabilities, are assets from which banks derive income.) | ||
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| + | In fact, Randall wasn't confused or tripped up in any way and didn't misuse anything - the title text was just a silly joke based on taking the idea of 100% interest and pretending you could somehow take over the bank and take advantage of this rate for yourself, and calling it a "hostile takeover" is a humorous exaggeration. | ||
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| + | The teacher who inadvertently sparked this action, male, was clearly not Miss Lenhart, who may be better at providing more memorable (if somewhat non-standard) lessons. And, as the speaker cannot even recall what the point was of the original mathematical example, it is possible that they have insufficient understanding of the numbers involved and why their attempt to profit will turn out to be ultimately illusory. A similar lack of successful education in the subjects of business and/or law could also likely come back to bite them, sooner or later. | ||
==Transcript== | ==Transcript== | ||
