Depositing money into a commercial bank is investing in a

What is a common method used by banks to account for the interest income on loans that considers changes in market interest rates? a) Straight-line interest b) Effective interest rate method c) Simple interest d) Discounted cash flow method

Distinguish between illiquidity and insolvency for banks and discuss the role of capital in protecting against these problems.

What are the advantages and disadvantages of direct lending for the bank? How are banks reducing the effect of the disadvantages?

When both deposit and loan interest rates increase at the same speed in the market, a bank tends to (      ) to make profit.   a. reinvest  b. refinance   c. keep neutral

Give detailed explanation

Why is liquidity risk inherent to the business of banking? How can a bank seek to minimize its liquidity risk?

What are the several components of a deposite institution 's liquidity plan? How can such a plan help a deposite institution reduce liquidity shortages?

Explain the risks that banks expose themselves to in their day-to-day operations. Analyse how banks undertake Credit Risk management.

Liability management increases a bank's _________ risk and _________ risk.A. interest rate; priceB. liquidity; financialC. interest rate; financialD. price; interest rate