FIN 408- Exam #1 Questions+Answers

FIN 408- Exam #1 Questions+Answers - FIN 408- Exma #1 1)...

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FIN 408- Exma #1 1) Interest rates have increased unexpectedly. Bank has a negative dollar gap, or is liability sensitive. You would expect: a decrease in their net interest margin 2) Twist Interest Rates will significantly increase commercial bank profits. Small banks will experience increased profits: Part of the Feds plan calls for the Fed to stop allowing its portfolio of mortgage-backed securities to shrink as loans are paid off. Instead, the Fed will reinvest the proceeds of the maturing or repaid loans in the new mortgage-back securities, thus dropping rates. 3) The bank sells a repurchase agreement to another bank. The repurchase agreement sold by the bank are : Liabilities of the bank and appear on the right side of the BS. (sell repurchase agreements: liability, buy repurchase agreements: asset) 4) Regulatory dialetic process 5) 1,000,000-970,000/1,000,000 x 360/250= .0432 6) 4,900,000=5,000,000+50,000(recoveries) + 450,000 (provision for loan losses)+ X= (-600,000) 7) NIMte= 15,000,000+4,800,000-40,000/520,000,000=.038
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This note was uploaded on 11/15/2011 for the course FIN 408 taught by Professor Staff during the Fall '11 term at Miami University.

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FIN 408- Exam #1 Questions+Answers - FIN 408- Exma #1 1)...

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