HW_2_Questions_Chapters_17_18_20[1]

HW_2_Questions_Chapt - HW 2 Questions Chapter 17 1 If a bank finds that its ROE is too low because it has too much bank capital what can it do to

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
HW 2 Questions Chapter 17 1. If a bank finds that its ROE is too low because it has too much bank capital, what can it do to raise its ROE? 2. What are the benefits and costs for a bank when it decides to increase the amount of its bank capital? 3. If a bank is falling short of meeting its capital requirements by $1 million, what three things can it do to rectify the situation? 4. X-Bank reported an ROE of 15% and an ROA of 1%. How well capitalized in this bank? 5. Below is the balance sheet for Tribank. The required reserve ratio is 8%. Deposits fall by $5 million. What does the new balance sheet look like? How much money does the bank need to meet required reserves if any? Assets Liabilities Required Reserves $ 8 million Checkable Deposits $100 million Excess Reserves $ 3 million Bank Capital $ 6 million T-bills $45 million Loans $50 million 6. To meet any shortfall in the previous question, TriBank will borrow the cash in the fed funds market. What does the balance sheet look like after this transaction? Chapter 18 1. Explain in your own words the following financial innovations: Junk Bonds, Commercial Paper, and Securitization. 2. IB buys a 5-year, 10% coupon bond with a face value of $100,000, and is selling
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/13/2011 for the course FIN 353 taught by Professor Cobus during the Spring '08 term at S.F. State.

Page1 / 4

HW_2_Questions_Chapt - HW 2 Questions Chapter 17 1 If a bank finds that its ROE is too low because it has too much bank capital what can it do to

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online