Credit markets are driving long-term changes in banks. Forces that combined to lead to a concentration of low-quality credit in loan portfolios include: Group of answer choices A. Remediation D. Large firms borrowing extensively from individual banks B. Disintermediation

Q: Identify the incorrect statement below; Group of answer choices “Too much inventory can lead to…

A: Current assets are those assets which are to be utilised for the purpose of business in day to day…

Q: Which innovation has caused the most trouble for financial institutions that issue residential…

A: Answer: The correct answer is option A. Securitization.

Q: Which one of the following statements regarding the loans market is false? a) The principal-agent…

A: Please see the next step for the Answer

Q: Agency costs of debt arise any time there is a conflict between lender interests and borrower…

A: First let us define agency costs. Agency costs in the context of debt refer to the potential…

Q: 1) The finance manager is required to lo into the financial implications of every decision in the…

A: Financial managers are concerned with financial aspect of each decision and increase the…

Q: It is well recognized that banks are quick to increase base loan rates and quick to lower base loan…

A: Bank loan: Bank loan can be defined as the amount of money borrowed from the banking institutions.…

Q: Regulatory reviews include an assessment of capital, asset, quality, management, earnings,…

A: Regulatory reviews:Regulatory reviews are a crucial aspect of assessing the financial health and…

Q: When deposit inflows exceed loan demand a bank can A. No answer text provided. B. buy back shares…

A: The correct answer is D. invest in safe fixed income securities. Explanation:The correct answer is…

Q: VAR models are used banks to assess lenders exposure to default by its bc customers Select one: O…

A: Answer : True

Q: Banks issued a large number of mortgagtes (including the subprime market) because O real estate…

A: The subprime crisis was one of the largest financial crises in 2007-08 were due to subprime lending,…

Q: Historically, financial access to the poor have been difficult. Since the microfinance movement took…

A: Microfinance refers to those financial services that are provided to individuals and to groups with…

Q: Bank Muscat advances secured and unsecured loans to their customers. If Bank Muscat is issuing…

A: Secured loans are the loans which provided to borrower after taking collateral security. Unsecured…

Q: Long-term financing may be riskier than short-term financing during periods of tight credit because…

A: Long term financing refers to financing in which the maturity of the debt or the loan or the…

Q: Directions: The best way to do this case is to use relevant credit information and calculate some…

A: a. Return on Assets is calculated by the following formula = Net Income/Average Total Assets *100 b.…

Q: Which of the following statements is INCORRECT ? Large investment banks finance most of their…

A: Financial institutions are organizations that facilitate financial transactions, provide financial…

Q: Which of the following statements is usually correct? A low receivables turnover is good for the…

A: Solution Concept Debt to equity ratio is mathematically given as =total debt / total equity A…

Q: What is the effect of extending the collection period for accounts receivable? The collection cost…

A: By extending the collection period, Debtors will be encouraged to purchase more and may eventually…

Q: An analyst at a company notes that its cost of debt is far below that of equity. He concludes that…

A: The balance between equity and debt in a company's capital structure is a fundamental aspect of…

Q: Overdrafts are a result of a. loans made against certificates of deposit b. banks paying wire…

A: Very easy and low cost convenient way of getting loan are draft loans.

Q: Which is correct with regards to the effects of restricting credit standards? * O An increase in…

A: A credit policy lays out the conditions under which consumers who purchase on credit must pay back…

Q: The severity of a recession can be magnified by credit market imperfections in which: there is…

A: Credit market imperfections refer to the situations where the assumptions of perfect competition,…

Q: Imagine that you are in the position of buying loans in the secondary market (that is, buying the…

A: Banks generally prefer secondary markets for lending purposes so that they can always have the funds…

Q: Suppose a bank offered to make loans to potential borrowers without checking their credit history.…

A: The banks generate their income mainly from the difference between the lending rate and the rate…

Q: The asymmetric information problems that act as a barrier to efficient allocation of capital is…

A: Introduction: Dynamics of financial crisis: The explanation of financial crisis are as follows…

Q: Which of the following situations are likely to result in higher loan defaults?     Mortgages…

A: Loan default implies that borrower is not able to repay debt according to initial predetermined…

Q: Hagement ratios measure how effectively the firm uses its plant and equipment. Which of the…

A: The TIE ratio measures the extent to which operating income can increase before the firm is unable…

Q: Financial slack is the amount of unused access to debt markets or bank financing. Which theory of…

A: Without a doubt! The Pecking Order Theory, which was first developed by Myers and Majluf, two…

Q: True/False and Explain: Josephine says that firms which obtain debt financing by posting collateral,…

A: The objective of the question is to determine whether the statement made by Josephine is true or…

Q: Show that the Ricardian Equivalence does not necessarily hold if the assumption of perfect credit…

A: Ricardo's equivalence is an economic theory that states that funding government spending from…

Q: Which one is not an incentive for a bank to securitize its mortgage loans? Reduce insurance premium…

A: The objective of the question is to identify which among the given options is not a reason for a…

Q: hich one is not an incentive for a bank to Securitize its mortgage loans? A) Reduce insurance…

A: The objective of the question is to identify which among the given options is not a reason for a…

Q: an example of how the factors in a firm's credit policy might differ between relaxed and restrictive…

A: Answer: The company’s credit policy consists of the following four key factors like credit period,…

Q: Why have the use of standby credit letters grown in recent years? O A. The growth of bank loans…

A: Standby letter of credit It is a legal document to provide the guarantee the commitment of the bank…

Q: In most lending organisations, credit losses occur due to lack of credit risk monitoring. You’re…

A: Credit risk is referred as the possibility of the loss, which used to result in the failure of the…

Q: he required return on assets will change, if O a. one of the firm's business lines is closed. O b.…

A: Return on assets is income earned on whole assets after doing payments to all and it indicates the…

Q: 4. Which of the following is false about the risk-shifting problem? Risk-shifting leads to a…

A: Risk shifting is an agency problem which arises when the company takes more debt thereby increasing…

Q: in wholesale credit market, commercial banks only focus on the price rationing strategy. is this…

A: Rationing refers to the distribution of a given amount of goods or services among various…

Q: Since risks, such as credit, liquidity, default, technological, and legal risks, among others, may…

A: 'Financial market stability' refers to a state in which market transactions are not disrupted…

Q: e usage of financial intermediaries as middlemen for these transactions actually increased?

A: Financial intermediaries are those people  who act as middlemen for financial activities. Financial…

Q: If a bank has a negative gap, it is likely that it has a:   a. positive duration gap. b. negative…

A: interest rate gap give the risk of interest on assets and laibilties  Negative gap indicates that…

Q: The deterioration of the balance sheet of financial institutions leads to : a. a deleveraging…

A: Effect of deterioration on the balance sheet of financial institutions: When a financial…

Q: Which of the following is not a factor that can provide financial instability? a. Decreases in…

A: Financial instability is a situation where there is a disruption in your financial system and when…