With reference to the study entitled, "Loan portfolio diversification, market structure and bank stability" by Shim (2019), discuss the interlink among loan diversification, market concentration, and financial stability.
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- A.Discuss three factors that affect net interest income.B.What are the objectives of the Basel III liquidity standards?C.Discuss any five principles of bank liquidity risk management.D.What are the major advantages of financial derivatives for managing interest rate risk compared to the traditional gap and duration gap techniques?E.Why is the marginal cost of funds critical in loan pricing?If a bank uses credit risk score to determine who will receive a loan, the credit risk score would be considered the: A. dependent variable B. independent variable C. response variable D. classification variableIllustrate with a diagram the flow of funds from lenders to borrowers in a financial system. Diagram must include: Savers Borrowers Financial markets Function of the financial intermediaries Function of the financial markets Direct finance Indirect finance
- are designed to indicate the potential default risk that lenders are undertaking when they grant a loan. Repayment capacity ratios O Financial efficiency ratios Profitability ratios Solvency ratios Liquidity ratiosThe market interest rate... Select the word list below: is the contractual interest rate used to determine the amount of cash interest the borrower. is listed by the bond indenture. is the rate investors demand for loaning funds Answer is the rate investors demand for loaning funds paid byOutline and discuss the fundamental technique of valuation for both stocks and bonds. What role does the concept of annuity cash flow and perpetuity cash flow play in these valuations? Answer both please.
- Credit scoring is a process used to Multiple Choice determine what interest rate to charge a borrower, based on risk considerations. determine the amortization period for a term loan, based on risk considerations. calculate a borrower's return on equity. calculate a borrower's leverage position.8. According to the Loanable funds' theory, how are interest rates determined?9. Compare and contrast three different money market securities in terms of issuer, return, risk and tradability/liquidity.10. Explain the role of non-depository financial institutions within the financial sector? Discuss the core functions of any three of these institutions.Which of the following are all traditional credit risk enhancement techniques? Group of answer choices B. Collateral, transparency, early termination, bond insurance C. Marking to market, netting, guarantees, reassignment D. Bond insurance, netting, disintermediation, put options A. Put options, netting, bond insurance, derivatives
- Describe payday loans, tax-refund advances and structured-settlement advances—the differences between these financing products and the concerns that are associated with similar short-term loan products. Specifically, explain the effect these can have on your future cashflow.Banks use gap analysis to measure interest rate risk in their balance sheets. If firm XYZ is said to have a positive gap, this means: Group of answer choices C. Rate-sensitive assets exceed rate-sensitive liabilities B. Long-term assets are funded with short-term liabilities D. Rate-sensitive assets equal rate-sensitive liabilities A. Liabilities reprice before assetsIllustrates cash flow patterns that are important when evaluating mortgagepass-through securities?