When deposit inflows exceed loan demand a bank can A. No answer text provided. B. buy back shares C. give larger dividends to customers D. invest to safe fixed income securities -

Q: Borrowing of reserve fund by Bank means a. To meet the customers need for business loans b.…

A: A reserve fund is a special account with a financial institution such as a bank

Q: If a bank is exposed to refinancing risk, its profitability is higher if interest rates and if it is…

A: Refinancing risk refers to the risk that a bank's cost of funding (such as the interest rates it…

Q: The two most pressing demands for liquidity from a bank come from, first, customers withdrawing…

A: Liquidity in banking refers to the capacity or the ability of the banks to give cash to customers on…

Q: As a potential investor would you prefer to invest in a structured note? Why or why not?

A: Note: Since you have posted multiple independent questions in the same request, we will solve the…

Q: How can a bank mitigate LIQUIDITY RISK? Hold a large percentage of its liabilities in Core Deposits…

A: The correct answer for the above mentioned question is given in the following steps for your…

Q: Assume that banks aim to hold no excess reserves. The AAA bank responds to the change in its reserve…

A: Reserve Ratio is the minimum proportion of total deposits that bank need to keep as reserves. A bank…

Q: Which of the following actions cannot be used by banks to increase reserves? A. Sell Treasury…

A: Reserves  are parts of the income of a corporation that have been set aside to improve the financial…

Q: The way in which the price of securities determined in Financial Markets is:

A: The correct answer is b. Through frequent interaction between investors.

Q: Which one of the following statements is FALSE? Select one: O a. Holding more liquid funds will…

A: Introduction and explanation :The yield of an asset refers to the return or profit generated from…

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: Since idle cash does not make money, a manager may choose to invest this extra cash in temporary…

A: Investment in temporary investments means investing in short term highly liquid investments.These…

Q: Loans are collateralized to: a increase returns b increase liquidity c reduce concentration risk d…

A: Note: Since you have posted multiple questions, we will solve the first question for you as per…

Q: Directions: A. On the space provided, write TRUE if the idea being expressed is correct and FALSE…

A: Answer -    1. Investments generally earn passive income - TRUE Passive income describes money…

Q: TRUE OR FALSE 1. Short-term financial policies that are flexible with regard to current assets…

A: 1. Short-term financial policies that are flexible with regard to current assets includes keeping…

Q: A trade finance instrument not supported by bank guarantee is called   O a. Irrevocable LC   O…

A: Answer: There are various types of financial instruments that can be traded on return of any goods…

Q: The business holds cash, treasury notes, and corporate bonds. It is exposing itself to interest rate…

A: Since business is exposing itself to interest rate risk, it is ready to bear or accept risk.

Q: Prove the statement with example "A bank should not sacrifice ether safety or liquidity to earn a…

A: Lending and accepting deposits are the two foremost basic functions as well as the very reason for…

Q: Banks improves the liquidity of the bank by

A: The correct answer is c. Generating additional income from investment

Q: When a small firm works with an investment banker to raise funds through the sale of bonds on a…

A: Bonds:Bonds are debt instrument also known as a fixed income security that is created for raising…

Q: Why do commercial banks, like Westpac and ANZ, engage in credit risk transformation? O a. The…

A: Credit risk transformation refers to the process through which banks and other financial…

Q: A bank is insolvent if Group of answer choices its assets are less than its liabilities. it is…

A: Accounting insolvency happens when the value of a company's debts is more than the value of its…

Q: Pass through securities alleviate risk from their balance sheets by O A. Keeping the mortgages on…

A: Securities are the financial instruments in the form of stocks, bonds, and other money market…

Q: If a bank has , rate-sensitive assets than liabilities, then in interest rates will increase bank…

A: Lets understand the meaning of rate sensitive asset and liabilities. Rate sensitive asset and…

Q: Using interbank borrowing and lending market, such as the federal funds market in the US, can help a…

A: The interbank rate is the rate at which the banks lend or borrow money from one another. The…

Q: What steps will a bank take to put in place an aggressive /defensive strategy in the face of rising…

A: If there is a difference between the interest sensitive assets and interest sensitive liabilities of…

Q: Match the best answer to each statement. This category include short-term, highly liquid investment…

A: Current assets refer to the assets of a company that are held for the short term and capable of…

Q: If the Duration GAP for a bank is positive and interest rates rise, the value of the bank's equity…

A: Interest rate gap is a risk tool used by banks and this is based on mismatch between the assets and…

Q: Banks still make more money on investments than fees for customer-related non-credit-related fees.…

A: Investment banking:  Investment banks will also help with reorganizations, mergers, and trades for…

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: Why would a bank sell a package (portion) of its loans? A) to decrease liquidity B) to increase the…

A: Securitization  is a process wherein individual loans, debts, etc., that involve a payment stream…

Q: he firm has adequate cash to pay bills

A: The stakeholders of the entity evaluate the financials of the company in many possible ways.…

Q: Bank assets tend to have maturities and _liquidity than bank liabilities O equal; equal Olonger;…

A: Bank assets typically have longer maturities and lower liquidity compared to bank liabilities due to…

Q: Which of the following statements is correct? O A. Investors appreciate illiquid assets in their…

A: Liquid and Illiquid Assets:   Any asset that can be converted to cash at short notice, and without…

Q: Select all that are true regarding liquidity risk for a bank. O Consumer trust in the bank ensures a…

A: The answer is provided below.

Q: Match the correct type of bank risk with the appropriate associated statement. 1.The possibility…

A: Risk is referred as the possibility of the something bad happened. It also involves in an…

Q: Which of the following statements is/are true? Multiple statements may be true A bank borrowing from…

A: Yes, the statement "A bank borrowing from the central bank signals confidence to other market…

Q: do not earn

A: Non- Banking Financial Institutions - NBFCs are financial institutions that provide bank-related…

Q: Assume two banks are equal to each other in size in terms of total assets. The bank which has more…

A: Explanation: Yes, the bank that would have higher liquidity will have a lower return on equity. The…

Q: As a bank manager, you conclude that the bank has a capital shortfall and should decrease the equity…

A: Capital adequacy is the appropriate level of capital (shareholder money) that a bank must possess as…

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…