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Question
The major liability of the Federal Reserve is
A. U.S. Treasury securities.
B. depository institution reserves.
C. currency outside banks.
D. vault cash of commercial banks.
E. gold and foreign exchange.
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. 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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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 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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Q:
A four-class CMO has Class A, Class B, Class C, and the residual Class Z securities outstanding. Which class has the longest duration?
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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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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.