2.6. Determine the following: 2.6.1.Herfindahl-Hirschman index (HHI) with the following information of the six banks' deposits; 2.6.2.If the biggest and smallest bank (in terms of deposits) merge, what will be the HHI for all the remaining banks? | 2.6.3.Will the merger be allowed? (Ch. 9) A B C Bank ($ in millions) 70 60 80 90 D 120 E 140 F 200

2.6. Determine the following: 2.6.1.Herfindahl-Hirschman index (HHI) with the following information of the six banks' deposits; 2.6.2.If the biggest and smallest bank (in terms of deposits) merge, what will be the HHI for all the remaining banks? | 2.6.3.Will the merger be allowed? (Ch. 9) A B C Bank ($ in millions) 70 60 80 90 D 120 E 140 F 200

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 8P

See similar textbooks

Similar questions

Suppose the simplified consolidated balance sheet shown below is for the entire commercial banking system. All figures are in billions. The reserve ratio is 25 percent. a. What amount of excess reserves does the commercial banking system have? What is the maximum amount the banking system might lend? Show in column 1 how the consolidated balance sheet would look after this amount has been lent. What is the monetary multiplier?b. Answer the questions in part a assuming the reserve ratio is 20 percent. Explain the resulting difference in the lending ability of the commercial banking system.
Suppose that a commercial bank’s current quote for transactions involving the United Statesdollar is A$1.3214 – A$1.3298.(a) State the ask and bid prices for the bank. (b) Calculate the bid/ask spread for the bank.
Suppose that the assets of a bank consist of $100 million of loans of BBB-rated corporations. The PD for the corporations is estimated as 1%. The average maturity is five years and the LGD is 60%. What is the total risk-weighted assets for credit risk under the Basel II advanced IRB approach? Question 5Answer a. $178.1 million b. $13.2 million c. $165.4 million d. $100 million
Suppose that some commercial bank has $100M in deposits and $20M in capital. Assuming a 10% minimum reserve ratio, what is the maximum amount of loans and securities this bank can own? (exclude inter-bank loans as a possibility for this question)
Question 1. Suppose that the central bank buys $6 billion of bonds on the open market and the banks wish to hold reserves of 8 percent. A. What is the largest amount the money supply could ultimately increase? Explain. B. What would the money multiplier be in this case? Question 2. Suppose the government multiplier is 3.5, the money multiplier is 4.5, the income multiplier with respect to the money supply is 2.5 and the marginal tax rate is 20 percent. What is the ultimate change in the government's budget deficit G – T if government spending increased by $10 billion and at the same time the central bank increased the money supply by $5 billion? (Remark: not all the information stated above is needed to answer this question. To answer this question you need to figure out by how much output changes, then figure out the change in tax revenue). Question 3. Consider an economy in which the real level of income is $500B in 2010 dollars, the government multiplier is 3, the…
Question 3 Refer to the data in the table below. Suppose they are the FX rates quoted by two large banks. By Bank A Pair: EUR/USD ◆ USD/JPY ◆ GBP/USD ◆ USD/TRY + USD/CHF USD/CAD ◆ EUR/JPY ◆ AUD/USD ◆ NZD/USD a. b. e.g. Sell 1 Mio GBP versus USD (GBP/USD) C. Bid Client wants to d. Pair: EUR/USD USD/JPY GBP/USD USD/TRY 0.9282 ◆ USD/CHF 1.3479 USD/CAD 143.39 EUR/JPY 0.6856 ◆ AUD/USD 0.6230 ◆ NZD/USD 1.0652 1.0656 134.54 134.57 1.1953 1.1954 18.8580 18.8680 0.9281 1.3478 143.32 0.6855 0.6229 Assume you are the client and will choose the best rate (buy at the lower rate and sell at the higher rate) to deal with either Bank A or Bank B. Fill in the blanks below: Ask By Bank B Buy 10 Mio JPY versus USD (USD/JPY) Sell 0.5 Mio NZD versus USD (NZD/USD) Sell 0.6 Mio EUR versus JPY (EUR/JPY) Buy 5 Mio EUR versus USD (EUR/USD) Ask 1.0652 1.0653 134.57 134.60 1.1949 1.1953 18.8578 18.8678 0.9283 1.3480 143.37 0.6854 0.6229 1.1953 Bid Client deals at Client deals at what rate which bank A 0.9281…
The current spot rates are: GBP (S/E) EUR (S/E) JPY (¥/$) Bid 1.115 1.025 102 13,000,000.35 You owe a customer in England £1 and you are owed 86. You currently have $13 million in the bank. How much will you have in the bank after both transactions are finished? Ask 1.168 1055 127 13,324,862.7451 margin of error +/-10
Suppose that a commercial bank's current quote for transactions involving the United States dollar is A$1.3214 A$1.3298. (a) State the ask and bid prices for the bank. (b) Calculate the bid/ask spread for the bank.
Assume the bid rate of an Yen dollar is $ 1.8 while the ask rate is $ 3.5 at Arab Bank.Assume the bid rate of an Yen dollar is $3.4 while the ask rate is $5.7 at Palestine Bank. Given this information, what would be your gain if you use $8876.7 and execute locational arbitrage? =8876.713.5^ * 3.4b =8876.7/5.7^ * 3.5c =8876.7/3.4^ * 1.8d = 8876.7 /3.5^ * 5.7
Use the following table to answer the question about the money supply given the following hypothetical data for an economy. Item Billions of Dollars $2,000 350 80 Checkable Deposits Small Time Deposits Currency Held By The Public Savings Deposits, Including Money-Market Deposit Accounts Money-Market Mutual Funds Held By Individuals Money-Market Mutual Funds Held By Businesses 1,300 600 700 Refer to the table above. The size of the M1 money supply is: Select one: O a. $1,940 O b. S2,730 O c. None of the above O d. S2,220 O e. $2,080 Activate Windows Go to Settings to activate
If reserves in the banking system increase by $1 billionbecause the Fed lends $1 billion to financial institutions,and checkable deposits increase by $9 billion, why isn’tthe banking system in equilibrium? What will continue tohappen in the banking system until equilibrium is reached?Show the T-account for the banking system in equilibrium.
am. 112.