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Question
The duration of a soon to be approved loan of $10 million is four years. The 99th percentile increase in risk premium for bonds belonging to the same risk category of the loan has been estimated to be 5.5 percent.
If the minimum RAROC acceptable to the bank is 8 percent, what should be its expected percentage fee income in order for it to approve the loan?
A. .157 percent.
B. .331 percent.
C. .471 percent.
D. .531 percent.
E. .571 percent.
Answer
This answer is hidden. It contains 157 characters.
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What information does the net liquidity statement provide?
A. A long-term focus on liquidity.
B. Sources and uses of liquidity.
C. Net asset value.
D. Liquidity index information.
E. Peer group ratio comparison.
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Which of the following is NOT used as a method of measuring liquidity risk?
A. Liquidity coverage ratio.
B. Liquidity index.
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In the event of financial distress, open-ended mutual fund investors
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B. have an incentive to avoid a run since that will deplete the fund net asset value.
C. have an incentive to cash in their shares quickly since that will increase the fund's net asset value.
D. will switch into low risk bank deposits.
E. have an incentive to avoid a run since the Federal Reserve guarantees mutual fund holdings.
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What is the asset adjustment to a bank's balance sheet if the bank sold a five-year, 7 percent annual coupon $100,000 bond acquired at par, but now yielding 8 percent? The bond was not in the mark-to-market portfolio.
A. A $96,007 reduction in assets.
B. A $96,007 increase in assets.
C. A $100,000 reduction in assets.
D. A $100,000 increase in assets.
E. A $100,000 increase in liabilities.
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If stored liquidity is used by a DI to fund an exercised loan commitment
A. the balance sheet will decrease by the amount of the new loan.
B. only the asset side of the balance sheet will increase.
C. the balance sheet will increase by the amount of the new loan.
D. only the liability side of the balance sheet will increase.
E. there will be no effect on the balance sheet.
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Open-end mutual funds issue a fixed number of shares as liabilities.
Q:
Where are the contingent items disclosed in the financial statements?
A. On the assets side of the balance sheet.
B. On the liabilities side of the balance sheet.
C. As footnotes to financial statements.
D. In the income statement.
E. In the director's report.
Q:
Fees from derivative products are an increasing component of noninterest income for many FIs.
Q:
To be an affiliate of a holding company, the parent must own at least 50 percent of the shares of the affiliate company.