< Question Set 4 >Over the past 10 years, a bank has experienced the following loan losses on its C&I loans, consumerloans, and total loan portfolio.Year2018201720162015201420132012201120102009C&I Loans0.00800.00880.01000.01200.01040.00840.00720.00800.00960.0144Consumer Loans0.01650.0183Commercial Sector = 8.0% ; Consumer Sector = 18.0%Commercial Sector = 18.3%; Consumer Sector 8.2%0.02100.0255Commercial Sector = 8.2%; Consumer Sector 18.3%0.02190.01740.0147Using regression analysis on these historical loan losses, the bank has estimated the following:Xc= 0.002+0.8X₁ and X = 0.003 + 1.8X, where Xc = loss rate in the commercial sector, X₁, = loss rate in the consumer (household) sector,and X₁ loss rate for its total loan portfolio.O Commercial Sector = 18.0%; Consumer Sector = 8.0%0.01650.02010.0309(1) If the bank's total loan loss rates increase to 10 percent, what are the expected loss rate increasesin the commercial and consumer sectors?Total Loans0.00750.00850.01000.01250.01050.00800.00650.00750.00950.0155 < Question Set 4 >Over the past 10 years, a bank has experienced the following loan losses on its C&I loans, consumerloans, and total loan portfolio.Year2018201720162015201420132012201120102009C&I Loans0.00800.00880.01000.01200.01040.00840.00720.00800.00960.0144Consumer Loans0.01650.0183Commercial Sector = 8.0% ; Consumer Sector = 18.0%Commercial Sector = 18.3%; Consumer Sector 8.2%0.02100.0255Commercial Sector = 8.2%; Consumer Sector 18.3%0.02190.01740.0147Using regression analysis on these historical loan losses, the bank has estimated the following:Xc= 0.002+0.8X₁ and X = 0.003 + 1.8X, where Xc = loss rate in the commercial sector, X₁, = loss rate in the consumer (household) sector,and X₁ loss rate for its total loan portfolio.O Commercial Sector = 18.0%; Consumer Sector = 8.0%0.01650.02010.0309(1) If the bank's total loan loss rates increase to 10 percent, what are the expected loss rate increasesin the commercial and consumer sectors?Total Loans0.00750.00850.01000.01250.01050.00800.00650.00750.00950.0155

Given:For Commercial sector:XC= 0.002 + 0.8 XLSo,If XL increases by 10%, XC increases by = 0.8 X…

Answered: Year 2018 2017 2016 2015 2014 2013 2012…

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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Information concerning the allocation of loan portfolios to different market sectors is given below: Allocation of Loan Portfolios in Different Sectors (%) Sectors National Bank A Bank B Commercial 30% 50% 10% Consumer 40% 30% 40% Real Estate 30% 20% 50% Question: What’s the portfolio deviation from the national average for Bank A and Bank B, respectively?
According to the waterfall principle of securitization Question 7Answera.... investors with lower seniority should receive all their cash flows before the ones with the higher seniority receive their cash flows. b.... investors with higher seniority are more likely to be paid later than the ones with lower seniority. c....during the Credit Crisis of 2008/9, assets were over-rated by the credit rating agencies, in particular the more senior tranches. d....the mezzanine tranches of ABSS tended to be the largest ones of these securitized assets.
A financial institution uses a loan base rate of 4.35% and sets the credit risk premium at 6.68%. The institution charges a 1.5% loan origination fee and imposes 3.22% compensating balances. The required reserves for this institution are 10%. Additionally suppose your institution specifies the following linear probability model to estimate the probability of default: PD=80-8₁ Wealth - B₂Credit Score + B3 Number of Bankruptcies Bo= 10, 109.5 8₁0.10 B₂ = 0.20 B3 = 0.60 Use the information above to answer the question. What is the gross rate of return on the loan? O 9.31% O 11.03% O 12.53% 12.90%
Last time i got incorrect answer.. please answer correctly and don't copy.
UBFB20233 CREDIT ANALYSIS AND LENDING
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.
Which interest rate is used on very short-term loans from one bank to another? A. Prime interest rate B. Commercial paper rate C. Treasury bill rate D. Fed funds rate
The zero-lower-bound problem: A. creates a negative shock to the economy. B. occurs because people can always earn more from holding bonds than holding cash... C. is responsible for the recession of 2007-2009. OD. implies that nominal interest rates can be zero.
2) Which of the following statements is INCORRECT based on the time value of money? A) In general, money today is worth more than money in one year. B) We define the risk-free interest rate (rf) for a given period as the interest rate at which money can be borrowed or lent without risk over that period. C) We refer to (1-r) as the interest rate factor for risk-free cash flows. D) For most financial decisions, costs and benefits occur at different points in time.
Discuss how the subprime mortgage crisis of 2007 was based upon the flawed financial model that house prices only increase.
4. Gap and Duration Analysis Take the following balance sheet, which of the assets and labilities are rate-sensitive? Which assets and liabilities are not? a. Assets Value Liabilities Value Checkable Deposits Savings Deposits Money Market Accounts 40 Long-Term Loans Long-Term Securities 75 26 100 Reserves 54 10 Variable Rate CDs 25 Short-Term Securities Variable-rate Loans 15 30 Long-Term CDs 25 b. What is the estimated rate of change of bank profit, in terms of next year's interest rate, conditional on this year's interest rate being 2%? c. Suppose that all the long-term securities that the bank holds mature in 4 years and their interest rate will be 5% in that year. What is the approximate market-value of these long-term securities in 4 years given this year's interest rate is 2%?
2. Government Treasury bills are yielding 4.15%. Inflation is 2.75%. What is the real rate of return on this financial asset? A. 6.90% B. 7.01% C. 1.36% D. 1.40%

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