What is the purpose of gap analysis and duration analysis? O The purpose of both analysis is to determine the bank's sensitivity to interest rate movements. The purpose of both analysis is to determine the bank's sensitivity to the liquidity risk. The purpose of gap analysis is to determine the bank's sensitivity to the liquidity risk, whereas the purpose of duration analysis is to determine the bank's sensitivity to interest rate movements. O The purpose of gap analysis is to determine the bank's sensitivity to interest rate movements, whereas the purpose of duration analysis is to determine the bank's sensitivity to the liquidity risk.

What is the purpose of gap analysis and duration analysis? O The purpose of both analysis is to determine the bank's sensitivity to interest rate movements. The purpose of both analysis is to determine the bank's sensitivity to the liquidity risk. The purpose of gap analysis is to determine the bank's sensitivity to the liquidity risk, whereas the purpose of duration analysis is to determine the bank's sensitivity to interest rate movements. O The purpose of gap analysis is to determine the bank's sensitivity to interest rate movements, whereas the purpose of duration analysis is to determine the bank's sensitivity to the liquidity risk.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

21
9.
Which of the following could be formulation of Transactions Money (M1)? O A)currency held outside banks+ demand deposits + traveler's checks + other checkable deposits B) currency held outside banks + traveler's checks + other checkable deposits + money market accounts O comoney market accounts + currency held outside banks D Jeurrency hold outside banks demand deposts traveler's checks other checkable deposits+ savings accounts money market accounts+ othar near monies
Which of the following actions by the Bank of Canada will result in an immediate increase of approximately $600 million in excess reserves for banks? (Assume a target reserve ratio of 30%.) OA. Transfer $600 million out of commercial bank deposits into its own accounts OB. Purchase $857 million of government securities from the non-bank public, because of the 30% target reserve ratio OC. Purchase $600 million of government securities from the non-bank public OD. Purchase less than $600 million of government securities from the non-bank public E. Sell $857 million of government securities to banks, because of the 30% target reserve ratio OF. Sell $600 million of government securities to banks G. Sell less than $600 million of government securities to banks
2
i will 10 upvotes urgent
Why do you think the Fed maintains 5-year terms for Federal Reserve district bank presidents? O The terms are 5 years or less depending on when the district bank president in question reaches age 65. O Maintaining the 5-year terms helps ensure that the presidents are not unduly influenced by politicians. O Maintaining the 5-year terms helps to achieve the Fed's aim of confusing market participants about the stance of policy. O There is no deliberate strategy behind maintaining the 5-year terms.
Give typing answer with explanation and conclusion
. A well-known bank has specialized in adjustable-rate mortgages. They have originated 7 billion USD in adjustable-rate mortgages. This bank generally raises money by borrowing with shorter term loans and issuing fixed-interest rate Certificates of Deposit. The bank has 6 billion in short-term adjustable-rate loans to partly help fund the loan portfolio. The federal reserve has announced an increase in their target interest rate of 50 basis points (0.5%). What is the equation and solution.
Prudent commertial bank is trying to estimate the liquidity requirements today (last day of February) for the month of March. Assume legal reserve requirements are s%. Currently the bank's total deposits are sooo million and are expected to grow by 8 percent during the month of March. The bank has estimated that 20% of the total deposits are hot money deposits, 30% are vulnerable deposits and the rest are stable (core) deposits. The liquidity manager would like to keep a liquidity reserve of 8o% for hot money, 35% liquidity reserve for vulnerable deposits and 10% Tiquidity reserve for core deposits. Currently the bank's total loans are at 4000 million. The bank expects a 400 million reduction in the level of loans during March
8 Suppose the overnight market is currently in equilibrium with the equilibrium overnight interest rate iON equal to the Bank of Canada’s (BOC) target (or policy) interest rate iT. Suppose due to some bad financial news banks become less willing to lend overnight to other banks due to concerns about their solvency. What will happen to the demand for settlement balance held overnight at the BOC? How will the BOC react to this situation to insure the overnight interest rate remains at it target level? Briefly explain with the aid of a diagram.
4. ● There are 2 investors. Each has deposited $10 in the same bank. The bank invested both deposits in a single long-term project. If the bank wants to end the project before its completion, a total of $12 can be recovered (out of the $20 invested). If the bank waits until the project is completed, it will receive a total of $30. Investors can withdraw money from their bank accounts at only 2 periods: before the project is completed and after. The extensive from representation of the game between both investors is depicted below: Withdraw Not 2 Not Withdraw Not 10 2 1 2 10 Withdraw Withdraw 15 Withdraw 6 6 2 Not Withdraw 20 10 Not Not 15