When borrowers tend to pay back the loans to bankers earlier, the bank is facing    a. Repricing risk     b. Yield curve risk     c. Basis points risk    d. Embedded options risk

Q: If a bank is exposed to refinancing risk, its profitability is higher if interest rates and if it is…

A: Refinancing risk refers to the risk that a bank's cost of funding (such as the interest rates it…

Q: The principle of gearing 2. Why debt is cheaper than equity 3. What the effect will be on the risk…

A: Gearing is the debt-to-equity relationship or ratio of a firm. Gearing indicates how much of a…

Q: Moral hazard or its reduction explain the following except: O A. Collateral requirements for loans.…

A: A moral hazard is the concept that a party who is protected from risk in some way will behave…

Q: What differences between the daily market valuation of a traditional security and the valuation…

A: There is need of proper valuation of security there many methods of valuation.

Q: How can a bank mitigate LIQUIDITY RISK? Hold a large percentage of its liabilities in Core Deposits…

A: The correct answer for the above mentioned question is given in the following steps for your…

Q: Define interest rate risk and explain why it is very important in the risk management portfolio of a…

A: Interest rate risk is the potential for speculation misfortunes that emerge from a variation in…

Q: Which of the following actions cannot be used by banks to increase reserves? A. Sell Treasury…

A: Reserves  are parts of the income of a corporation that have been set aside to improve the financial…

Q: how can credit matrics model mitigate future credit risk issues for Washington Mutual

A: Washington Mutual (WaMu) was a large financial institution that was severely impacted by the 2008…

Q: decrease in reserve requirements could lead to an    A. increase in bank lending.   B. increase…

A: The Money supply and demand of money is affected by reserve requirement of bank which are placed by…

Q: The following is true for banks managing interest rate risk:     In refinancing risk, banks gain…

A: Step 1 The ability of the bank or financial institution to refinance the matured liabilities at very…

Q: Which one of the following statements is FALSE? Select one: O a. Holding more liquid funds will…

A: Introduction and explanation :The yield of an asset refers to the return or profit generated from…

Q: Discuss how banks benefit when interest rates decrease?

A: Low-interest rate environment- It refers to the state of the economy when the risk-free rate of…

Q: VAR models are used banks to assess lenders exposure to default by its bc customers Select one: O…

A: Answer : True

Q: The financial performance of both Commercial Banks and Savings Banks is measured using the Net…

A: The net interest margin is referred as the net benefit of lending which derived from the lending and…

Q: nterest rate swaps and gap analysis to manage interest rate risk.

A: There are two methods in which a bank can manage its interest rate risk  (a) by matching the…

Q: Systemic risk is a) credit risk. b) an insurance contract against the default of one or more…

A: Systemic risk refers to the risk of widespread disruption or collapse of an entire financial system…

Q: Financial market offers the borrowers funds they need to a. Increasing the productivity b.…

A:

Q: The risk of not having sufficient cash and borrowing capacity to meet deposit withdrawals, loan…

A: Interest rate risk refers to risk of change in value of investments due to change in interest rates…

Q: TRUE OR FALSE 1. Short-term financial policies that are flexible with regard to current assets…

A: 1. Short-term financial policies that are flexible with regard to current assets includes keeping…

Q: Loans Loan Expected Standard Amount Return Deviation A $ 15 8.1% 1.1% million В $ 15 9.2% 1.3%…

A: The following solution is given below:

Q: Is it correct to state that banks’ returns will be higher if interest rates increase? Outline the…

A: The duration analysis is the method through which the financial institutions determine the change in…

Q: Value at Risk (VaR) is a statistical measure of maximum loss used by banks and other financial…

A: Value at Risk is a technique used by institutions to analyze the potential risk assessed in the…

Q: A fundamental analyst uses the discounted cashflow method to value firms, and has a short-term…

A: Fundamental Analysis is a technique to value firms on the basis of their fundamentals i.e. their…

Q: Why do you think banks are willing to offer savers higher rates of return if they agree to less…

A: Savers are those persons who deposit money in various deposit accounts for the purpose of earning…

Q: Which of the following types of financial risk can be effectively managed by holding a lot of…

A: Step1 The chance of losing money on an investment or business transaction is referred to as…

Q: Assess the following statements: I. Default risk is the risk that a security issuer will default on…

A: The risk that a lender assumes in the event that a borrower is unable to make the required payments…

Q: Liquidity risk is a. The risk of doing business in a particular industry or environment b. The…

A: When short term debt obligations of individual investor or business or financial institutions are…

Q: What is discounting? / why do people discours?

A: As per Bartleby guidelines, If multiple questions are posted , only first 1 question will be…

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: What aspect of FHA loans made them particularly attractive to investment companies such as life…

A: FHA loans can be referred as the loans that are ussually required lesser financial obligations and…

Q: Define the Credit Risk and include in your discussion examples of the Credit Risk and why Financial…

A: A large number of financial transactions take place in the financial system and each transaction…

Q: If a bank has , rate-sensitive assets than liabilities, then in interest rates will increase bank…

A: Lets understand the meaning of rate sensitive asset and liabilities. Rate sensitive asset and…

Q: Direct financing allows a borrower to:

A: Direct financing is a financing approaches in which the borrower (or financer) directly purchases…

Q: risk

A: Introduction: Banks & other financial institution play an important role in the economic…

Q: Which of the following best describes interest rate risk? The risk that credit ratings will change,…

A: The effect of interest rates refers to the impact that changes in the cost of borrowing money have…

Q: The average maturity of its assets is larger than that of its deposits, as is typical of most banks.…

A: “Hey, since there are multiple questions posted, we will answer first question. If you want any…

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: Which of the following statements is not correct? Select one: а. The duration of a consol bond is…

A: a) Duration of the Consol Bond /Perpetuity has no maturity =1+yy years where ,y= Coupon rate of the…

Q: When borrowers tend to pay back the loans to bankers earlier, the bank is facing a. Repricing risk O…

A: Since, more than one different questions are posted, answer for the first question is only provided…

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…