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Information risk is a. The cost a company incurs to issue and service equity and debt. b. The risk of the client not being able to pay off a bank loan. c. The company's cost of capital. d. The risk that the information in financial statements is materially misstated.

hich one is not an incentive for a bank to Securitize its mortgage loans? A) Reduce insurance premium paid to FDIC B Meet the regulations on equity capital adequacy Increase the duration of the bank's asset portfolio D Reduce the bank's illiquidity exposure

1. When issuing commercial paper, it is important for a company to have:   A: a party to act as an acceptor and guarantee payment B: collateral to attach to the issue C: a well-established reputation in the markets 2. Which type of financial claim is not satisfied until those of the creditors holding certain senior debts have been fully satisfied?   A: mortgage bonds B: unsecured notes C: subordinated debentures   3. Using the expectations theory of term structure, a negatively sloped yield curve indicates that investors expect:   A: falling long-term interest rates B: rising long-term interest rates C: falling short-term interest rates

Which of the following statements about transaction costs and financial intermediation is not true?   A. Low transaction costs allow banks to offer diversified assets to their customers   B. Low transaction costs allow banks to offer liquidity services   C. Low transaction costs are due to diseconomies of scale in financial intermediation   D. Low transaction costs allow banks to engage in risk sharing

Which of the following has caused banks difficulty in estimating liquidity needs?A. competition for loans from other financial institutionsB. deregulation of interest rate ceilings on depositsC. competition for loans from nonfinancial institutionsD. a, b, and c

Which of the following regulatory restrictions is uniquely applicable for "critically undercapitalized" banks: OA. Cannot accept broker-placed deposits without regulatory approval O & Will be placed into conservatorship or receivership if it its capital level is not increased within a certain time limit. OC. Must have a Tier 1 to risk adjusted assets ratio of at least 3%. OD. Faces no significant regulatory restrictions O E. Has limits on dividends and management fees it is allowed to pay and limits on the maximum asset growth rate among other restrictions

11. Which of the following security holders receives a lower returns with low risk? . T-Bill B. Common shareholders C. Stakeholders D. Creditors 12. The advantage of a company compared a sole trader as form of business organisation is: A. Quick decision making B. Access to external professional management skills C. Use of own funds D. Inability to access external funds Thank you!!!

24. Financial institutions that cut back on their lending are engaged in A) liability management B) deleveraging C) financial innovation. D) torsion control 25. Instruments which provide payments to holders of bonds in the event of default are known as A) collateralized bond obligations B) tertiary payment devices C) credit default swaps D) mortgage-backed securities

H1.

If ABC Bank’s ALCO targets the market value of shareholders’ equity in its interest rate risk management, is the bank positioned to gain or lose if interest rates fall?b. If interest rates rise by 1% for all assets and liabilities, what is the approximate expected change in the bank’s economic value of equity?c. Provide a specific transaction that the bank could implement in order to immunize its interest rate risk exposure.

Which of the following is most consistent with using debt to reduce agency costs or conflicts?   Question 11 options:   Increasing debt reduces a firm’s business risk   The interest paid on debt reduces taxable income and income taxes   The interest paid on debt reduces cash that management of a firm might otherwise waste or use poorly   The issuance of debt helps firms increase their credit rating

The business holds cash, treasury notes, and corporate bonds. It is exposing itself to interest rate risk. Identify whetherA. AvoidanceB. MitigationC. Acceptance

Which one is not an incentive for a bank to securitize its mortgage loans? Reduce insurance premium paid to FDIC Meet the regulations on equity capital adequacy Increase the duration of the bank's asset portfolio Reduce the bank's illiquidity exposure hich one is not an incentive for a bank to Securitize its mortgage loans? A Reduce insurance premium paid to FDIC B Meet the regulations on equity capital adequacy Increase the duration of the bank's asset portfolio Reduce the bank's illiquidity exposure

If a company is worried about having enough cash to pay interest to their bondholders, rent to their landlords and wages to their employees. they are having:a. Solvency issuesb. Liquidity issuesc. Duration matching issues