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Question
Macaulay's duration:a. is a weighted average of the time until cash flows are received.
b. is always greater than maturity.
c. is never equal to maturity.
d. directly indicates how much the price of a security will change given a change in interest rates.
e. estimates when embedded options will be used.
Answer
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Related questions
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Which of the following is not true regarding collateralized mortgage obligations (CMOs)?
a. Interest earned on CMOs is exempt from state income taxes.
b. CMO yields are generally higher than comparable Treasury yields.
c. CMOs exhibit little default risk.
d. All of the above are true.
e. Only a. and c. are true.
Q:
Regulators generally prohibit banks from purchasing ____________ for income purposes.
a. Treasury bills
b. commercial paper
c. common stock
d. repurchase agreements
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a. A Hays County general obligation bond to modernize the county fire department.
b. A Lubbock County general obligation bond to build a new sewer plant.
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e. A State of Texas bond to finance road repairs.
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Banks can effectively improve their portfolios by:
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b. obtaining less call protection when rates are expected to fall.
c. reducing diversification when the economy is slowing down.
d. increasing bond quality when quality yield spreads are low.
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An investor can invest in either a tax-exempt security that pays 5% or a taxable corporate security of comparable risk and maturity that pays 8%. At what marginal tax rate will the investor be indifferent between these two securities?
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Q:
The static spread is:
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b. the difference between a fixed-rate yield and a floating-rate yield.
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d. the difference between expected inflation and the current Treasury bill rate.
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Q:
Eurobonds are subject to fewer regulations than U.S. issued bonds.
Q:
A forward market exchange in foreign currencies is an agreement to exchange:
a. currencies in the future at an unspecified time at an exchange rate determined at the time the contract is agreed to.
b. currencies in the future at a specified time at an unknown exchange rate.
c. currencies in the future at an unspecified time at an unknown exchange rate.
d. a product for a foreign currency in the future at a specified time.
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Q:
Non-performing international loans do not completely reflect potential losses because:
a. foreign governments have never defaulted on their debts.
b. banks often loan borrowers funds to make payments on existing loans.
c. U.S. banks can easily recover the funds in foreign courts.
d. the U.S. government has strongly discouraged U.S. banks from making international loans.
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The risk that a foreign government will suspend debt service payments is known as:
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Q:
The first type of international office that a bank forms outside its home country that is exploratory in nature is known as:
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Q:
Historically, what has prevented universal banks from operating in the United States?
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b. The Glass-Stegall Act
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a. France
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Q:
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a. 1.6%.
b. 2.0%.
c. 4.0%.
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e. 8.6%.
Q:
Prior to the Basle Agreement, primary capital included all of the following except:
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c. undivided profits.
d. perpetual preferred stock.
e. the allowance for loan losses.
Q:
When increasing liabilities to meet liquidity needs, a bank should consider all of the following except:
a. brokerage fees.
b. required reserves.
c. FDIC insurance premiums.
d. lost interest income.
e. A bank should consider all of the above when increasing liabilities to meet liquidity needs.
Q:
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a. the respondent bank is required to purchase a minimum amount of services.
b. it reduces required reserves.
c. the correspondent bank may be marketing their own services in a local community.
d. it often reduces float.
e. it decreases interest income.
Q:
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b. It now has excess reserves in the amount of $10,000,000.
c. It is now deficient $1,000,000 in required reserves.
d. It is now deficient $9,000,000 in required reserves.
e. There would be no impact on the bank's required reserves.
Q:
Venture capital financing that comes in the "later rounds" of financing may take the form of:
a. start-up capital loans.
b. mezzanine financing.
c. automobile financing.
d. seed money.
e. staff financing.
Q:
What are the firm's estimated working capital needs?a. $90b. $540c. $630d. $1,170e. $2,034
Q:
Loan covenants:
a. protect the borrower from lender interference in management.
b. are limited to "negative" provisions.
c. may limit discretionary cash outlays by borrowers.
d. are seldom enforced.
e. often result in the lender's bankruptcy.
Q:
In the credit process, which of the following activities falls under Credit Execution and Administration?
a. Financial statement analysis
b. Evaluate collateral
c. Officer call programs
d. Review loan documentation
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The risk of potential loss of interest and principal on international loans due to borrowers in a country refusing to make timely payments, as per the loan agreement is known as what type of risk?
a. International risk
b. Foreign risk
c. Continent risk
d. Country risk
e. Government risk
Q:
Smaller banks rely more heavily on internally generated capital than larger banks.
Q:
In regards to repurchase agreements, the margin is:
a. a good faith deposit.
b. a loan against the repurchase agreement.
c. a risk-free guarantee.
d. the difference between the market value of the collateral and the amount of the loan.
e. all of the above.