nvestment banks may lose ________ if new securities issues are ________. future business; undersubscribed large amounts of money; oversubscribed future business; oversubscribed large amounts of money; fully subscribed
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future business; undersubscribed
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large amounts of money; oversubscribed
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future business; oversubscribed
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large amounts of money; fully subscribed
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- hich one is not an incentive for a bank to Securitize its mortgage loans? A) Reduce insurance premium paid to FDIC B Meet the regulations on equity capital adequacy Increase the duration of the bank's asset portfolio D Reduce the bank's illiquidity exposureMarket risk is defined as the risk: Question 1Answer a. Incurred by granting loans to companies that do not hold a large market share. b. Incurred in the trading of assets and liabilities due to changes in interest rates, exchange rates and other asset prices. c. That a sudden surge in liability withdrawals may require FIs to liquidate assets at less than fair market prices. d. That an FI loses market share.View Policies Current Attempt in Progress The widely publicized subprime lending crisis was NOT caused by O capital market participants who acted in their own self-interest. O a lack of investor understanding of the investment's true risk. O the practice of securitizing assets. O a lack of transparency. Save for Later
- Balance Sheet Insolvency occurs when Liabilities are greater than the Assets resulting in negative capital equity. For a Financial Institution, Insolvency Risk can be defined as the risk that there is insufficient capital to offset either a decrease in the market value of assets relative to liabilities or an increase in liabilities relative to the market value of assets. A. Describe a situation where Insolvency Risk could be caused one of the many risks that a Financial Institution may face. B. Describe the best protection against insolvency risk at a Financial Institution.Which one of the following statements is FALSE? Select one: O a. Holding more liquid funds will reduce the liquidity risk faced by a bank. O b. An increase in the yield of non-liquid assets is likely to increase holdings of liquid assets O c. Loans from short-term money market dealers are classified as purchased liquidity Od. Higher liquidation costs of non-liquid assets encourage a bank to hold more liquid assetsProvide an explanation of whether it is advantageous for a bank to classify debt investments as “held to maturity “or “available for sale” if the required return by the market declines? What impact will this have on the bank's balance sheet and net income?
- If a bank is exposed to refinancing risk, its profitability is higher if interest rates interest rates fall; rise rise; stay the same rise; rise rise; fall and if it is exposed to reinvestment risk, its profitability is higher if fall; fall4) All else the same, if a bank's liabilities are more sensitive to interest rate fluctuations than are bank profits. its assets, then in interest rates will A) an increase; increase B) an increase; reduce C) a decline; reduce D) a decline; not affectMoral hazard or its reduction explain the following except: O A. Collateral requirements for loans. O B. The Enron and Tyco scandals. O C. The success of zero commission trading. O D. Covenants requiring borrowers to provide information periodically.
- MF 1 Explain in detail how can bank recover from a significant net loss due to unrealized securities.TRUE OR FALSE 1. A company buys marketable securities when the cash outflows exceed the cash inflows. 2. There is no cost in holding large amounts of cash for business operations. 3. Marketable securities are long-term investments in money market securities.When a bank increases its provision for loan losses, it generally indicates the bank expects an increase in nonperforming and noncurrent loans lower net charge-offs an increase in net operating income increase demand for liquidity