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Question
The AU ratio measures the bank's ability to __________ and the PM ratio measures the bank's ability to __________________.
A. control expenses; generate income from assets
B. generate income from assets; control expenses
C. maximize interest revenue; minimize interest expense
D. control leverage; minimize physical plant
E. none of the above
Answer
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Related questions
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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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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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Q:
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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
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Banks were willing to swap LDC loans for Brady bonds because:
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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.