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Question
Which of the following is true about hedging using duration analysis?a. The institution may hedge its earnings and its net worth simultaneously.
b. If market value weighted asset duration is greater than the liability counterpart, sell financial futures to "immunize."
c. If market value weighted asset duration is greater than the liability counterpart, buy financial futures to "immunize."
d. Maturity hedging provides the same hedging as duration hedging.
Answer
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Related questions
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In recent years, know-your-clients (KYC) is required by international financial regulators. In the U.S., what is the act that requires financial institutions to share information about customer identities with appropriate government agencies?
a. The USA Patriot Act
b. The Sarbanes-Oxley Act
c. The 9/11 Act
d. The U.S. Treasury Department Act
e. The Gramm-Leach-Bliley Act
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A state-chartered bank which is not a member of the Federal Reserve System will
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b. FDIC
c. OCC
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Which of the following regulators is also the lender of last resort?
a. FDIC
b. Office of Comptroller of Currency
c. Office of Thrift Supervision
d. Federal Reserve System
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a. the banks will be upset with FDIC.
b. the risk-based premium system will adequately "tax" the excess risk returns of banks that have made risky investments.
c. the moral hazard associated with deposit insurance is still present.
d. the regulator will not have to worry about banks taking excessive risk.
Q:
If bank managers lobby to maintain America's traditional "dual banking" structure, they:
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b. want to maintain the right to make loans and take deposits.
c. want the right to fight competition.
d. want the option of remaining a bank or a bank holding company.
Q:
The presence of moral hazard incentives
a. reduces the need for close regulatory supervision.
b. increases the need for more regulations, examinations, and regulators.
c. reduces the church attendance rate of bank managers.
d. increases the role of markets in disciplining excessive risk-taking.
Q:
All of the following are reasons to regulate depository institutions except:
a. To promote safety and soundness.
b. To affect the structure of banking.
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Q:
Private or state deposit insurance funds have not successfully prevented panic because
a. the size of the funds was more than enough to pay all depositors.
b. they overcharged the institutions on their premiums.
c. they did not have a "deep pocket" with unlimited borrowing power like Congress behind them.
d. the regulation of the depositors was not as restrictive as it should have been.
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c. regulatory accounting practices, which inflated capital ratios.
d. all of the above
Q:
Financial institutions are regulated for the following reason(s):
a. they provide essential financial services to consumers and businesses.
b. there is a need to control the money supply.
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Q:
In a purchase and assumption of a failed bank, an assuming bank may be required to invest funds for all but one of the following reasons:
a. acquire the sound assets of the failed bank
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Q:
The maximum amount of FDIC deposit insurance per eligible retirement account is
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Q:
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Q:
Bank capital is the most reliable cushion that prevents a decline in asset values from threatening the integrity of bank deposits.
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Bailout of large banks by federal regulators is an example of market discipline.
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Banks are regulated in part to protect the nation's money supply, much of which is a liability of the banking industry.
Q:
A "too big to fail" policy encourages small banks to take higher risks.
Q:
The Office of the Comptroller of the Currency (OCC) is the oldest bank regulatory agency.
Q:
A foreign branch office of a U.S. bank is regulated by
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b. the host country bank regulation.
c. the FDIC.
d. the SEC.
e. both a and b
Q:
All of the following are techniques reducing credit risk in international lending except
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b. pooling risk through syndication with other banks.
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Q:
Which of the following is associated with the currency risk of international lending by a U.S. bank?
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b. The U.S. bank is paid dollars by its foreign borrowers.
c. A U.S. bank receives an interest payment from a French borrower paid in Euros.
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International bank lending is characterized by all of the following except that loans
a. are unsecured.
b. have floating rates.
c. are made for relatively small amounts.
d. are priced relative to the LIBOR.
Q:
Which of the following forms of international banking organization was intended to bring offshore, shell banking back to the U. S.?
a. Edge Act banks
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c. international banking facility
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Q:
While country central banks have pursued their own country interests, recently under the framework of the Bank for International Settlements, central banks from leading economies have agreed to
a. allow international banks to branch throughout every country involved.
b. stabilize interest rates.
c. establish minimum capital ratios for international banks.
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Q:
Most large international loans are funded in the Eurocurrency market.
Q:
If a hedge fund manager focused on short-selling of stocks, he/she would
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c. borrow money to invest in stocks.
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Q:
Which of the following is not the difference between hedge funds and mutual funds?
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Q:
Hedge funds would provide investor portfolio diversification benefits if:
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b. the hedge fund and the portfolio are investing in the same things.
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d. the hedge fund portfolio includes none of the investments of the investor's portfolio.
Q:
Which of the following mutual fund types is likely to have the highest risk exposure?
a. growth and income funds
b. aggressive growth funds
c. balanced funds
d. income-equity funds
e. money market funds
Q:
Mutual fund managers can keep their cash balances low by all but one of the following:
a. maintaining lines of credit at commercial banks
b. increasing redemption fees
c. working to maintain low NAV
d. redeeming shares with stock