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Question
_____________ are the most diversified of depository institutions and ______________ are on average the largest depository institutions.
A. Banks; savings institutions
B. Credit unions; banks
C. Credit unions; credit unions
D. Banks; banks
E. Savings institutions; banks
Answer
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Related questions
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What is the total amount of net fee revenue generated from the mortgages over the year?
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A _____ position in T-bond futures should be used to hedge falling interest rates and a _____ position in T-bond futures should be used to hedge falling bond prices.
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A bond portfolio manager has a $25 million market value bond portfolio with a 6-year duration. The manager believes interest rates may increase 50 basis points. Which of the following could be used to help limit his risk?
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A. I only
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A macro hedge is a hedge of a particular asset or liability exposure to a change in a macroeconomic variable.
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Buying a cap is similar to buying a call option on bond prices.
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The bank's one-year repricing gap is (Million $)A. $425.B. $285.C. $74.D. $140.E. $66.
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Due to convexity problems, banks are actually better off using the simpler repricing model to manage interest rate risk rather than the duration model.
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The cash flow from the interest a bank receives on a long-term loan that is normally reinvested is called the runoff from the loan.
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If a bank has a negative repricing gap, falling interest rates increase profitability.
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In a bank's three-month maturity bucket, a 30-year ARM with a rate reset in six months would be considered a fixed rate asset, but in its one-year maturity bucket, this ARM would be considered a rate-sensitive asset.
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Why might a bank face abnormal deposit drains?
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Explain the relationship between each of the following ratios and liquidity risk.
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c) Loan commitments to total assets
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Explain how liquidity risk can lead to insolvency risk.
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In the absence of deposit insurance, a deposit is a _______________ to the bank's assets.A. pro rata claimB. first come/first serve claimC. full pay or no pay claimD. both A and BE. both B and C
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The BIS recommends that depository institutions do which of the following to realistically measure liquidity risk?I. Construct a maturity ladder of funding requirements over both the short and long run.II. Conduct scenario analyses of the bank's implied liquidity position under different bank and economic conditions.III. Always keep the loan to deposit ratio less than one.A. I onlyB. II onlyC. I and II onlyD. II and III onlyE. I, II, and III
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A four-class CMO has Class A, Class B, Class C, and the residual Class Z securities outstanding. Which class has the longest duration?
A. Class A
B. Class B
C. Class C
D. Class Z
E. All have the same duration
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Banks were willing to swap LDC loans for Brady bonds because:
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B. the bonds had variable interest rates.
C. the bonds were marketable and the loans were not.
D. the bonds were uncollateralized.
E. none of the above
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Vulture funds specialize in buying distressed loans.
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More than 90% of loan sales are via assignments.
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The buyer of a loan in a participation has a double-risk exposure: one to the borrower and one to the selling bank.