commercial banking and finance

commercial banking and finance - AFF2401 Commercial Banking...

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1 AFF2401 Commercial Banking and Finance Tutorial Booklet Semester 1, 2011 Week 1 The financial services industry Lange et al. (2010): chapter 1 Questions 1, 2, 4, 5 Week 1 General Questions 1A. Students are to find and print out a balance sheet from a major Australian bank. (i) Explain some typical assets and liabilities that are found. (ii) Using the data from your bank, calculate the ratio of Shareholders’ Equity / Total Asset. Discuss. 1B. Discuss the assignment topic area and how you might go about it. Week 2 What makes banks special? Lange et al. (2010): Chapter 3 Questions 1, 5, 7, 11
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2 Week 3 The Regulatory Environment 1. (a) Name the Australian bank prudential regulator. (b) What is bank prudential supervision? (c) Why is the banking sector subjected to government prudential supervision when other sectors of the economy are not? Is this justifiable? 2. What actions can APRA take if an Australian bank does not comply with APRA’s prudential standards? 3. In the context of APRA’s Probability and Impact Rating System (PAIRS): www.apra.gov.au/PAIRS/upload/SOARS_Final_May_2008_External_Version.pdf www.apra.gov.au/PAIRS/upload/PAIRS_Final_May_2008_External_Version.pdf (a) Explain the three factors considered by APRA in determining the probability of insolvency of a bank. (b) Outline the four regulatory responses APRA uses in dealing with a bank. (c) Explain how APRA decides which regulatory response to adopt. (d) If an Australian bank has a high probability rating and a high impact rating what form of supervisory response would you expect from APRA? 4. (a) Outline two prudential standards other than capital adequacy, which influence Australian banks’ management of credit risk. (b) Briefly comment on the main features of: (i) APS210 Liquidity (ii) APS222 Association with related entities (iii) APS120 Securitisation 5. What is moral hazard? Why is it seen as an argument against deposit insurance? 6. Define bank equity capital and explain why it is recorded on the liabilities side of a bank's balance sheet. 7. A bank’s regulatory capital base is defined in APS 111. Outline the key components of this definition and explain why the essential characteristics of bank capital were important to formulating this definition.
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3 Week 4 Capital Adequacy Lange et al. (2010): Ch. 17 Questions 1, 2 Lange et al. (2010): Ch. 3 Questions 9, 10, 11, 17 Week 4 (Saunders and Cornett 2010) Questions 14. What are the definitional differences between Tier I and Tier II capital? 15. What components are used in the calculation of credit risk-adjusted assets? 16. Explain the process of calculating credit risk-adjusted on-balance-sheet assets. Week 4 General Questions 1A. (i) Outline the three pillars which comprise BASEL 2. (ii)
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This note was uploaded on 10/08/2011 for the course LAW 101 taught by Professor Jan during the Three '11 term at Monash.

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commercial banking and finance - AFF2401 Commercial Banking...

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