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Question
Which of the following is NOT true concerning loan losses for a bank?
a) They are among the most important value drivers in retail banking.
b) Default losses are strongly correlated with overall economic growth.
c) They are among the most important value drivers in wholesale banking.
d) A bank’s historical additions to loan loss provisions are a poor indicator of future loan losses.
Answer
This answer is hidden. It contains 198 characters.
Related questions
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The best method for understanding how much value a bank is creating in its different product lines is:
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As long as international investors have access to an emerging market’s local investment opportunities, local prices will be based on an international cost of capital.
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In a two-scenario model of an emerging market, it is recommended that the analyst create a base-case set of forecasts and a set of forecasts associated with a period of economic distress. Which of the following best represents the range of probability weights to assign the economic distress scenario?
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For emerging markets, the recommended input for the risk-free rate for computing beta is:
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When calculating gross investments, it is appropriate to add the increase in the foreign-currency translation reserve to capital expenditures to obtain the actual cash spent on capital investments.
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An analyst should make financial projections of income statements and balance sheets for a valuation in a high-inflation environment by simply projecting all items on a nominal basis.
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In early years, for a given company with a positive profit, ROIC with capitalized R&D will be higher than that with expensed R&D.
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A firm that capitalizes R&D has more opportunity to manipulate short-term earnings compared to a firm that expenses R&D.
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Which of the following company types is most likely to have operating leases as an off-balance-sheet liability?
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Since interest costs, expected returns on plan assets, and amortization of losses are part of the compensation expenses for a firm, they should be considered to be a part of NOPLAT.
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The interest rate for operating lease adjustments is usually higher than the firm’s cost of debt.
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When computing cash flows for a company with operating leases, an analyst should add back the lease depreciation to NOPLAT.
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