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ch15 - ch15 Key 1 The risk that has to do with banks...

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ch15  Key   1. The risk that has to do with banks trading in foreign currencies is called _________________________.  exchange risk   Rose - Chapter 15 #1   2. The risk that has to do with fraud, embezzlement and bank robberies is called __________________.  crime risk   Rose - Chapter 15 #2   3. _________________________ is measured by the par value of the shares of common equity outstanding.  Common stock   Rose - Chapter 15 #3   4. __________________ is the amount in excess of par value paid by the bank's shareholders.  Surplus   Rose - Chapter 15 #4   5. _________________________ are the net earnings of the bank which have been kept by the bank rather than  distributed as dividends to stockholders.  Undivided Profits (or retained earnings)   Rose - Chapter 15 #5  
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6. Core capital such as common stock, surplus, undivided profits, qualifying noncumulative preferred stock, etc.  is referred to as __________________ capital as defined by the Basel agreement.  Tier 1   Rose - Chapter 15 #6   7. The international treaty involving the U.S. and 11 other leading industrialized countries to impose common  capital requirements on all banks is known as the _________________________.  Basel Agreement   Rose - Chapter 15 #7   8. Supplemental capital such as the allowance for loan losses, subordinated debt, mandatory convertible debt,  intermediate-term preferred stock, cumulative preferred perpetual stock and equity notes is more commonly  known as _________________________.  Tier 2 capital   Rose - Chapter 15 #8   9. When items on a bank's balance sheet are multiplied by the appropriate risk-weighting factor they are often  called _________________________.  risk-weighted assets   Rose - Chapter 15 #9   10. The fact that a bank may suffer deficiencies in quality control, inefficiencies in producing and delivering of  services, weather damage, aging or faulty computer systems, errors in judgment by management and  fluctuations in economy that could adversely affect the bank's performance is known as  _________________________ risk.  operational   Rose - Chapter 15 #10  
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11. One defense against risk for the bank is to spread out a bank's credit accounts and deposits among a wide  variety of customers, including large and small accounts different industries, etc. This defense is known as  _________________________.  portfolio diversification   Rose - Chapter 15 #11   12. One defense against risk is for the bank to seek out customers located in different communities or in  different countries. This defense is known as _________________________.  geographic diversification   Rose - Chapter 15 #12   13. When all else fails, the ultimate defense against risk in banking is _________________________.  owners' capital (net worth)   Rose - Chapter 15 #13   14. The largest component of capital among thrift institutions is _____________.  retained earnings   Rose - Chapter 15 #14
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