Practice Problem Solutions (to prepare for exam)
1 Cost of funds - CD
6.20% 1 yr
0.13% acq cost
no res. Req.
6.408% marginal cost
6.732% marginal cost with reserve requirement
2 Gross Marg. Int.
Non int. cost
All In marg. Cost
- Stanford Bank Game Overview
+ I. Output report
+ A. Balance Sheet
- 1. $4.8 billion bank
+ 2. Assets
- a) Cash&Due-From Assets, Investments, Int. term Assets, P&E, Other
+ b) How is this diff. from a Manuf. firm?
- (1) no Inventory
- (2) very little P
1. At every rate we offer, the cost of those savings is now lower to get the same amount
So bank uses more Savings and less CDs to finance assets.
new MC of Savings
MC of CD's
difference between lines is the decrease in CD's
C+ old S*
C+ new S* $ D
Develop new business
Collect information, verify it
Analyze financial statements, forecasts
Rate Quality (Risk)
Determine pricing, value collateral, set terms
Perfect any liens, file legal paperwork
Monitor collateral, terms, payments
First Homework Problem Set solutions
left (contra asset)
thing 1Ratios 1 thing 2 Ratios 2
The Stanford Bank Game, Version XII Bank no. 1 —- Period 2.], Page 1
Bankl — Statements of Financial Condition
Baiance Sheet Income Statement
Resources 2.1 1.4 Operating Income 2.1 1.4
Cash and due from banks 364.003 362.937 Interest income
1. Compare and contrast the performance of the two banks below.
Does Maroonville's higher LLP percentage indicate it is riskier? Why or
Bank of Maroonville
State Bank of Orange
3.98% very similar
0.50% Maroonville is substantially hi
a. Analysis of cash flow and loan decision
The Cash Flow statement on the next sheet shows a negative CBIT and FCF and a substantial increase in borrowing to fund the
operating deficit. The firm cannot pay its interest obligations, make payments
Credit Decisions: 5Cs of Credit
These are the five factors that are evaluated in a request for a loan. Here we address what
one tries to assess about each factor and how one can measure the relevant issues for each
Want To Assess
Objectives: As you start your careers, you will be setting up your retirement accounts for
the first time.
What types of accounts are available? What are the advantages of each?
What is the dollar difference i
Your Bank's Acct.
Def. Avail. Items
Acct. @ Fed
Sec. Gains &
Commercial Bank Management FIN 4254
Final Exam Description
This document could be updated and revised as late as Thursday.
(The review session is on Thursday.)
Version 05/5/15 (first draft)
The final exam will have a format similar to that of the first tw