The table below shows balance sheet data, in £m, for a phone-based bank, AndroidBank:£mloans to corporati ons50loans to households600300AndroidBank's holdings of shares and bonds, etcretail current account deposits (deposits by general public with AndroidBank)commercial current account deposits (deposits by companies with AndroidBank)tangible assets and property150050500cash in vaults50reserve deposits with Bank of England (deposits by AndroidBank)borrowing by AndroidBank in money market30025 If the value of Android Bank's assets falls by £226m, Android Bank will be insolvent.Select one:O TrueO False

Insolvent means a financial distress, when person or entity unable to pay its debts. When total…

Answered: If the value of Android Bank's assets…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

Which of the following statements is correct? A. Bitcoins are mainly used as financial investments, as opposed to a means of payment for services and goods. B. New Bitcoins are given to the miners who win by users whose transactions have been verified. C. If one exchange Bitcoins for domestic currency, the amount of Bitcoins in circulation decreases. D. Bitcoins are created by an institution that makes a loan in Bitcoins. E. Bitcoins are a liability for miners.
Select all that are true regarding liquidity risk for a bank. Consumer trust in the bank ensures a flow of funds from customers, reducing this risk. O A reduced access to credit markets reduces the bank's liquidity risk. Higher liquidity risk is a result of lower borrowing costs to the bank. O The flow of funds form the bank's clearing of payments reduces this risk. | This risk creates an opportunity cost which could result in a hole in the risk management strategy of the bank. O An increase in the bank's credit rating will help to reduce their liquidity risk.
Which of the following was NOT a direct and major consequence of the 2007-2009 U.S. Subprime Financial Crisis? a. Small consumer and household savers lost all their money they had in savings accounts due to the failure of many smaller FDIC member banks b. Many people lost their homes when they could no longer make their payments after their subprime mortgage rates reset to a much higher rate after two years c. Lehman suffered a major financial collapse and ultimately was dissolved after many of its remaining parts were purchased by Barclays and Nomura, among others d. The U.S. stock markets dropped dramatically as the credit fueled economy of the mid-2000s started to suffer after the credit bubble began to burst.
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.
As a bank manager, you conclude that the bank has a capital shortfall and should decrease the equity multiplier (i.e., increase the capital ratio) to prevent bank failure. Which of the following is one of things you can do to manage capital adequacy of the bank? a.Acquiring more reserves through borrowing from fed funds loansb.Selling the bank's holding of mortgage-backed securities and using the proceeds to decrease liabilitiesc.Repurchasing shares of the bankd.Increasing dividend payout ratio to reduce retained earnings.
all of the following statements about a bank's capital are correct except: bank capital is the cushion a bank has against a sudden drop in the value of its assets a bank is more profitable the more capital it holds bank capital decreases as interest rate increase bank capital is what would be left after a bank's owner sold all the assets and paind off all the liabilities
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Classify the following events as mostly systematic or mostly unsystematic. Is the distinction clear inevery case? Provide detailed explanation. a. Short-term interest rates increase unexpectedly.b. The interest rate a company pays on its short-term debt borrowing is increased by its bank.c. Oil prices unexpectedly decline.d. A manufacturer loses a multimillion-dollar product liability suit.
If banks suddenly start to pay interest on all demand deposits, their interest rate margin would: a) become larger b) become smaller c) be unaffected
H5. The bank have an incentive to value the new securities at a higher price because they will gain more. Is that a good or bad strategy? Explain why
Which of the following statements is/are FALSE? A. Under IAS17, companies would often structure their leases as operating leases instead of finance leases as this provided lessees with a good source of off-balance-sheet funding. B. The capital maintenance concept has been put in place to protect creditors' interests from the risk that a business may go bankrupt and creditors may not be able to recover their claims. C. For business A (with closing inventory of £100m and profit of £20m) the impact of an X% change in closing inventory on profit is higher in proportionate terms than for business B (with closing inventory of £500m and profit of £200m). D. The total assets on the SOFP most often understate the value of the business, due to important intangible assets with subjective valuations missing from the SOFP and the assets shown on the SOFP appearing at their historical cost, when the cost model is used. E. Writing down the value of inventory on the SOFP and recognising increased cost…
True or False: Private equity investors can easily sell or exchange their investments for cash anytime? True or False: Private equity firms only invest in small companies? True or False: Everything else stays the same. If a company's gross debt amount increases, its equity value decreases?

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If the value of Android Bank's assets falls by £226m, Android Bank will be insolvent. Select one: True False