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- 11MODULE 3: THE BANKING LAWS AND REGULATIONS LEARNING ASSESSMENT M3B PROBLEMS 1. For each of the following economic changes, predict what will happen to equilibrium interest rate and quantity of money in the financial market. Sketch a demand and supply diagram to support your answers. (Letter A is solved/ answered as a sample of how you are to present the answers for the remaining letters.) A. Gross domestic product (GDP) in the economy increases. MS, i, MD2 MD, Quantity of money Since GDP increase will cause an increase in money demand, this causes the equilibrium interest rate in the money market to rise. The equilibrium quantity of money is constant at Q since MS is fixed. (Now do the rest of the problems.) B. The BSP changes its bank regulations in a way that makes it cheaper and easier for banks to make loans. C. People gain confidence that the economy is growing and that their jobs are secure. D. Banks that have made loans find that a larger number of people than they expected are…Answer question 42
- Securities Exchange Act of 1934 The following are correct statements related to the Decline in Traditional Banking in USA, EXCEPT: As a source of funds for borrowers, marketnare of commercial banking has fallen. O Commercial Banks are facing increasing competition from other financial intermediaries. Commercial Banks are devoting increasing amount of their funds to finance consumption and production. Commercial Banks are now engaging more in non-traditional banking activities.1. How would you describe our current modern society if we were still using the barter system for all our market transactions? 2. What do you think are the major advantages of a corporation compared to sole proprietorship? (Discuss briefly)B3B4
- Consider the following balance sheets of two banks. These two banks have equal amounts of assets but are leveraged differently. Assume that there is no regulatory capital requirement. Balance Sheet of Pry Bank Assets Liabilities Outstanding Loans: $300,000 Deposits (Liabilities): $270,000 Total: $300,000 Capital (Net worth): Total: $30,000 $300,000 Balance Sheet of Crow Bank Assets Liabilities Outstanding Loans: $300,000 Deposits (Liabilities): $285,000 Capital (Net worth): $15,000 Total: $300,000 Total: $300,000The challenges faced by banks as a result of AML laws and regulation include:I. A lack of trained/skilled personnel.II. Increased regulatory hurdles and governance.III. Complicated processes and technologies to detect illicit activities.IV. Managing correspondent banking relationships. Question 10Answer a. II, III and IV only. b. I, II and III only. c. I, II and IV only. d. I, II, III and IV.“In view of the increase in complexity of banking activities, emergence of new risk factors andcontinuous change in financial landscape, there is a need for financial risk expertise to undertake riskassessment both at individual institution level as well as on a system-wide basis.” Required: Evaluate other frameworks that are critical in sustaining the safety and soundness of financial institutions apart from risk assessment.
- : (A) Explain primary and secondary functions of Commercial Banks? (B) Discuss in detail, how commercial banks employ their funds to earn profit? (800 words)5. On March 1, Bank extends a line of credit to Farmer. Farmer grants Bank a security interest in all "equipment and farm products, now owned or hereafter acquired." Bank properly files a financing statement on March 10, with the financing statement containing after-acquired language. 3 On October 1, Farmer approaches FinanceCo to request a loan for the purchase of a combine. FinanceCo agrees to make the loan and disburses the funds for the purchase directly to the equipment dealer. Farmer signs a security agreement granting FinanceCo a security interest in the combine. Farmer takes delivery of the combine on November 1. On November 26, FinanceCo properly files a financing statement describing the combine by brand, model, and serial number. Farmer subsequently defaults on his obligations to Bank and FinanceCo. Who has priority in the combine? 6. Assume similar facts as above, but that instead of filing a financing statement on November 26 FinanceCo files its financing statement on…Questions a) regulations of Labuan offshore financial centers? b) Explain the regulatory initiatives by offshore centers done in dealing with various risks faced by the offshore banking industry? c) The relationship between offshore banking and money laundering?
