QUESTION 31
A bank that funds a portfolio of assets with higher credit risk than another bank has to have more equity capital if creditors are to be indifferent between lending to either bank.
True
False
QUESTION 32
Subprime assets lost value rapidly between 2007 and 2009. This lowered the value of banks that had exposure to these assets and financial institutions that had exposure to banks that were exposed to subprime risk. Since the assets were hard to value they were not acceptable as collateral. This made banks illiquid and this scared away the suppliers of bank capital. A liquidity crisis turned into a credit crisis for many financial institutions such as WAMU, Wachovia, Lehman and others.
True
False
QUESTION 33
If the yield curve shifts up in (interest rates along the curve all change by the same number of basis points) and the bank is funded with liabilities that have shorter maturities than its assets; the value of the bank will decline.
True
False
QUESTION 34
Use the following data about a fixed coupon corporate bond to answer the following question.
The yield to maturity of the bond is greater than 8%
settlement |
11/14/2016 |
||
maturity |
11/14/2026 |
||
rate |
10% |
||
price |
101 |
||
redemption |
100 |
||
frequency |
2 |
||
basis |
0 |
True
False
QUESTION 35
Base your answer to the following question on this document:
https://www.fdic.gov/regulations/safety/manual/section2-1.pdf
Bank capital performs several very important functions. It absorbs losses, promotes public confidence, helps restrict excessive asset growth, and provides protection to depositors and the deposit insurance funds.
True
False
QUESTION 31 A bank that funds a portfolio of assets with higher credit risk than another...
QUESTION 1 As the receiver of a failed bank the FDIC has the authority to arrange for a solvent bank to acquire the assets and liabilities of the failed bank. True False 2.94 points QUESTION 2 Bank capital protects: The FDIC, uninsured depositors, creditors, and owners. Tax payers and the Federal Reserve The FDIC and Taxpayers. Only insured depositors. The FDIC, uninsured depositors, creditors, and taxpayers. 2.94 points QUESTION 3 Base your answers to the following on the information found...
QUESTION 11 Bank Asset Bond A Bank Liability L Settlement 6/27/2019 Settlement 6/27/2019 Maturity 6/27/2029 Maturity 6/27/2022 Rate 10% Rate 8% Yield 9% Yield 8% Redemption 100 Redemption 100 frequency 2 frequency 2 basis 0 basis 0 price of bond price of bond The priice of the bank asset is between 105 and 107 The price of the bank liability is 100 True False QUESTION 12 One reasonable way for a significantly undercapitalized bank to raise capital is sell unproductive...
QUESTION 9 Bank Asset Bond A Bank Liability L Settlement 6/27/2019 Settlement 6/27/2019 Maturity 6/27/2029 Maturity 6/27/2022 Rate 10% Rate 8% Yield 8% Yield 7% Redemption 100 Redemption 100 frequency 2 frequency 2 basis 0 basis 0 price of bond price of bond The price of the bank asset is between 105 and 107 The price of the bank liability is 100 It is true or false ? QUESTION 27 - One reasonable way for a significantly undercapitalized bank to...
Question 1 0 / 1 point A mortgage given by a bank is ___________ to the bank and ___________ to the borrower. Question options: an asset; a liability an asset; an asset a liability; an asset Question 3 0 / 1 point The cost of borrowing overnight from other banks is: Question options: the yield to maturity. the federal funds rate. the bank rate. Question 4 0 / 1 point A bank has borrowed $250 and has received $500 worth...
41 The money supply is a curve that is typically drawn as a vertical line on the standard money supply - money demand graph that is used in the study of monetary policy. We all know the money supply is only controlled by the Federal Reserve Bank. Conclusion: In the audio visual lecture Professor Torres stated that anytime we see a supply curve drawn as a vertical curve line, then that means that the product or service is 100 percent...
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16. Money market instruments issued by the U.S. Treasury are called (a) Treasury bills. (b) Treasury notes. (c) Treasury bonds. (d) Treasury strips. 17. The most influential participant(s) in the U.S. money market (a) is the Federal Reserve. (b) is the U.S. Treasury Department, (c) are the large money center banks. (d) are the investment banks that underwrite securities 18. Federal funds are (a) usually overnight investments. (b) borrowed by banks that have a deficit of reserves. (c) lent by...
18 Congress has the legal right to force the Federal Reserve Bank to accept and carry out their suggested recommendations regarding Monetary Policy. 8 03:57:44 True or False True False 19 The Federal Reserve Bank is the chief regulatory agency among all of the financial regulatory agencies like the SEC, FDIC, etc... The Federal Reserve Bank has the most regulatory power. 03:57:40 Multiple Choice This is foise - the US Treasury Department has the most regulatory power in the U.S....
This is another exam type question. The risk inherent in tranches is different to normal assets. During the GFC it costs many investors a lot of money and during past exams some students lost a lot of marks. Please make sure that you really understand the underlying mechanics. Please do NOT RELY on memorization and shallow knowledge! Understanding wil enable you to get 90%-100% with ease. To enable automatic feedback/marking the answers to the attached questions should be provided by...
Saved Question 20 (1 point) What is a bank run? O A) A situation where a commercial bank is holding zero reserves. B) A panic situation where many depositors rush simultaneously to withdraw their deposit money in the form of cash. OC) A situation where all commercial banks in the system are simultaneously short of reserves. O D) The collapse of a non-commercial bank as a result of non-payment of loans. E) The collapse of a commercial banks as a...