Week 2 Assignment: Understanding Banks & NBFIs Concepts

Correct Mark 1.00 out of 1.00 Da… / M… / FINS5512-5243_00164 / Week 2 - Banks & NBFIs / Week 2 Assignment - Banks & NBFI Started on Sunday, 18 February 2024, 9:20 AM State Finished Completed on Sunday, 18 February 2024, 9:51 AM Time taken 30 mins 32 secs Grade 9.00 out of 10.00 ( 90 %) QUIZ When a bank raises funds in the international markets to fund new lending growth and hedges the exposure of the raised debt to interest rate risk with the help of derivatives, it is involved in: a. off-balance-sheet management b. liability management  Correct c. derived management d. asset management Refer to section 2.1  

Correct Mark 1.00 out of 1.00 Which of the following balance sheet portfolio items is NOT a source of funds for a bank? I Overdrafts II Lease ±nance III Call deposits IV Share capital V Consumer loans VI CD VII Term deposits I, V and VII I, II, and V  Correct answer. Only I I, II, V and VI I, II and VII Your answer is correct. Refer to section 2.2 and 2.3

Correct Mark 1.00 out of 1.00 Match OBS services with corresponding examples: A performance bond provided by the bank to UNSW on behalf of a construction ±rm bidding to upgrade student learning spaces around the Quadrangle.  A credit derivative provided by the bank to a hedge fund, whereby the bank will make a compensation payment to the holder if the Greek government defaults on their debt.  A credit card limit provided by the bank that has been fully drawn down and used by the card holder.  A standby letter of credit provided by the bank on behalf of a U.S.-based ±rm purchasing a gas turbine from a Swiss manufacturer, with the bank making payment only in the event that the U.S. ±rm fails to.  An underwriting agreement obliging a bank to buy unsubscribed shares of the company at the IPO.  Trade and performance related items Foreign exchange, interest rate and other market rate related contracts Not a contingent liability Direct credit substitutes Commitments Your answer is correct. Refer to section 2.4

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Correct Mark 1.00 out of 1.00 Correct Mark 1.00 out of 1.00 Correct Mark 1.00 out of 1.00 FanBank has assets of $36.75 billion and estimates total risk-weighted assets of $9.13 billion. Assuming Basel III requirements (8%), what is the total capital (T1 + T2) requirement for FanBank ( $million )? Express your answer in millions of dollars to two decimal places. Do not write "$" and do not write "millions". Answer: 730.4  The total capital (Tier 1 + Tier 2) ratio under Basel III is 8.0% of risk-weighted assets (not total assets). So the required amount of total capital is $9.13 billion x 8.0% = $730.40 million. The total capital (Tier 1 + Tier 2) ratio under Basel III is 8.0% of risk-weighted assets (not total assets). So the required amount of total capital is $9.13 billion x 8.0% = $730.4 million. Basel II requires that at least half of the risk-based capital ratio must take Tier 1 capital that is at least 4.5%. True False  4% Refer to section 2.7 Which of the following best describes a ±nance company? A ±nancial institution whose function is to provide cash income for employees of corporations or governments after they retire A ±nancial institution that aims to achieve high investment returns on its invested funds by using exotic ±nancial products A ±nancial institution that pools funds for individuals and then invests them in both the money and capital markets A mutual fund managed by a ±nancial intermediary that specialises in investing in short-term debt instruments A ±nancial institution that sells unsecured notes and uses the funds to make loans to household borrowers and companies  Correct answer. Your answer is correct. Refer to section 3.9

Correct Mark 1.00 out of 1.00 Incorrect Mark 0.00 out of 1.00 Correct Mark 1.00 out of 1.00 Which of the following liability types represents a main source of funding for ±nance companies? a. Borrowings from non-residents (overseas) b. Debentures and unsecured notes  Correct c. Bills of exchange d. Fixed-term deposits Refer to section 3.9 Which of the following statements about project-±nance on a non-recourse basis is true? I. Project ±nance loans are secured by the assets and operations of the project’s sponsors. II. Project ±nancing is typically syndicated to a consortium of lenders due to the vast scale of many projects. III. Project ±nance loans are provided to a separate legal entity that is established for the purpose of the project. III  Incorrect answer. Yes, project ±nance loans are provided to a separate legal entity that is established for the purpose of the project (...and NOT to the project's sponsors). But project ±nancing is ALSO typically syndicated to a consortium of lenders due to the vast scale of many projects ( .... and NOT by just a single lender). II I II and III None of the listed statements are true. Your answer is incorrect. Refer to section Extended Learning -Learning Objective 3.10 The prudential supervisor of life insurance o²ces in Australia is the Australian Prudential Regulation Authority (APRA). True  False Refer to section 3.6

Correct Mark 1.00 out of 1.00 A managed fund that offers a balanced growth fund invests mainly in securities that have the potential for large capital growth over time. True False  Refer to section 3.2 Previous Activity Jump to... Next Activity

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Week 2 Assignment - Banks & NBFI_ Attempt 1 _ UNSW

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