Securitization enables a bank to: O a. Move assets off its balance sheet O b. Shift credit risk onto investors Oc.a and c Od. Increase its credit risk
Q: c) What are the benefits and risks of off-balance-sheet (OBS) activities to a bank?
A: Off-balance-sheet (OBS) activities refer to financial transactions or arrangements that are not…
Q: Examples of off-balance-sheet activities include foreign exchange market transactions. Oborrowing…
A: Option b. Borrowing from other banks:Reason: Borrowing from other banks typically appears on the…
Q: Explain how commercial bank mange it balance sheet to maximize its profit without affecting the…
A: Commercial Banks are financial institutions accepting deposits from borrowers and using the deposits…
Q: How does a bank reconcile between liquidity and profitability.
A: Meaning of liquidity and profitability Liquidity- is the ability of the bank to meet its…
Q: Overdrafts are a result of a. loans made against certificates of deposit b. banks paying wire…
A: Very easy and low cost convenient way of getting loan are draft loans.
Q: The speculative motive is the need to hold cash O a. To pay outstanding checks b.…
A: There are many objectives of maintaining cash with company but there are speculation objectives also…
Q: The business holds cash, treasury notes, and corporate bonds. It is exposing itself to interest rate…
A: Since business is exposing itself to interest rate risk, it is ready to bear or accept risk.
Q: Which of the following is not a function of bank management? Investment management Project…
A: Management becomes an integral part of every aspect of the business irrespective of the type of the…
Q: Banks improves the liquidity of the bank by
A: The correct answer is c. Generating additional income from investment
Q: Which one is not the core functions of investment bank? * a.Selling of securities b.…
A: Investment banks are the financial service provider generally works as an intermediary or broker for…
Q: Which are liabilities to a bank? Select one: O a. Vault cash and demand deposits O b. Demand and…
A: Liability is something a company owes to someone else. It is usually a monetary value.
Q: Contrast between overnight policy rate and base lending rate. (b) “In order to enhance the…
A: Fixed income securities are financial instruments that provide investors with a fixed rate of return…
Q: Risk-weighted assets increase Risk-weighted assets decrease
A: Step 1 Risk assets are calculated by adding the amount of risk to the appropriate risk weight of the…
Q: Changes in interest rates may change the market values of the bank's assets and liabilities by…
A: Price risk is the value of the portfolio or investment due to various factors like volatility, poor…
Q: If a bank has a positive repricing gap (RSAs > RSLs), then: Does this bank have reinvestment or…
A: The problem case focuses on identifying the impact of the positive repricing gap on the risk and…
Q: If you are a bank assessing the long-term credit of a company, you are usually most interested in…
A: The term "liquidity" describes a company's capacity to quickly sell off assets to earn cash as well…
Q: Which of the following has caused banks difficulty in estimating liquidity needs? A. competition for…
A: It is the institution that deals with financial and monetary transactions in the economy.
Q: Describe how a bank ma
A: With their own securities trading account, a bank can get into proprietary trading. A Proprietary…
Q: What is the nature of an off-balance-sheet activity? How does a bank benefit from such activities?
A: Dear student, since you have posted two different questions at a time, only one question i e the…
Q: When both deposit and loan interest rates increase at the same speed in the market, a bank tends to…
A: When both deposit rates and lending rates increase the bank tends to make profit out of this. Always…
Q: b) Why is the risk-adjusted return on capital (RAROC) an important tool in credit risk management…
A: The risk-adjusted return on capital (RAROC) is an important tool in credit risk management for…
Q: Bank regulation based on private purchases and sales of banks’ risk is known as: a) liquidity risk…
A: The credit risk regulation is the regulation of credit risk of the bank and it is related to the…
Q: Which of the following statements is/are true? Multiple statements may be true A bank borrowing from…
A: Yes, the statement "A bank borrowing from the central bank signals confidence to other market…
Q: How should a bank structure its liquid assets portfolio to take advantage of falling interest rates…
A: Liquid assets are cash and assets that can be converted to cash quickly if needed to meet financial…
Q: ratios recommended to manage liquidity risk for a
A: Step 1 The risk of insolvency can be reduced by monitoring and evaluating the financial system,…
Q: Depositing money into a commercial bank is investing in a
A: Step1: Commercial banks form part of an organized money market. Commercial banks deals in money and…
Q: A bank that grants loans to firms in a many different lines of business: will increase its…
A: When a bank grants loans to firms in different lines of business then it has to incur more expenses…
Q: Banks use gap analysis to measure interest rate risk in their balance sheets. If firm XYZ is said to…
A: A positive gap is a situation where the bank’s rate-sensitive assets exceed the rate-sensitive…
Q: 6) Bruce the Bank Manager can reduce interest rate risk by assets to increase their rate sensitivity…
A: One of a bank manager's primary duties is to control interest rate risk. The possible impact of…
Q: . Transferring the credit risk of loans from their balance sheet to other fin .Reducing due…
A: Loans after some time increase the risk and institutions giving loans become highly illiquid and…
Q: A deposit institution can offset its liquidity risk to reduce its net deposit drains by reducing its…
A: Option A When a deposit institution faces liquidity risk, it can reduce its net deposit drains by…
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- Question 6 Interest rate swap Why might an individual or organisation be willing to swap fixed-rate loans for floating-rate loans? A. They may perceive that interest rates are ready to increase. B. Their cash flows may vary directly with interest rates. C. Floating rates are not lower than fixed rates. D. They may be able to postpone the payment of principal.16-If the underlying transaction gives you denominated in a foreign currency, the general principle behind a money market hedge states that you need an equivalent liability in the money market to provide a hedge. a. a forward contract b. a foreign bank account c. a liability d. an assetwhich one is correct please confirm? QUESTION 23 The ____ theory holds that the securities markets are demarcated by maturity. a. expectations b. liquidity premium c. boondoggle d. market segmentation
- 18. Sell-side participants in the foreign exchange market are most likely to include: A. banks. B. hedge funds. C. insurance companies.Exchange rate risk is a. The risk associated with the use of debt financing by companies b. The risk of doing business in a particular industry or environment c. The risk of loss due to imports and exports dominated in other currencies d. The uncertainty about the time element, the price concession, and the conversion to cash. ************************** correct answer please.2
- QUESTION 6 Where are most interest rates determined in the US economy? A. Stock market B. Bond market C. Foreign exchange market D. US Department of the TreasuryPQ 4 A given exchange rae will be more or less the same in all the world's financial markets because of a. hedging b. interest arbitrage c. speculation d. currency arbitrageQuestion 18 Which of these selections best describes a bond investment strategy designed to provide the investor with increased diversification (3 answers apply)? Matching Laddered Interest Rate Barbell