MONETARY POLICIES OF CENTRAL BANKS OF USA
Monetary Policies of Central Banks of USA to Achieve Financial Stability
MONETARY POLICIES OF CENTRAL BANKS OF USA
Monetary Policies of Central Banks of USA to Achieve Financial Stab
Too Big Too Fail = theyweretoobigtobeliquidatedbyregulatorseitherbecauseofthe
The Financial Services Industry: Insurance Companies
In recent years, the total assets of insurance companies in the U.S. have been decreasing.
The process of life insurance uses risk pooling to transfer income-related uncertaint
FIN 701 Assignment Fall Term, 2013
Due: Wednesday, November 20, 2013
The Objective: The purpose of this project is for you to analyze and understand the risk exposure
and risk management of Canadian financial institutions (FIs) by examining the financial
Chapter 03 - Financial Services: Insurance
Financial Services: Insurance
True / False Questions
1. In recent years, the total assets of insurance companies in the U.S. have been decreasing.
2. Due to a recent increase in demand for n
W2015 PROBLEMS CHAPTERS 25 & 26
CHAPTER 25 LOAN SALES PROBLEMS, PAGE 636-637
1. What is the difference between loans sold with recourse and loans sold without recourse
from the perspective of both sellers and buyers?
Loans sold without recourse means that
Chapter Twenty Four
Options, Caps, Floors and Collars
The payoff values on bond options are positively linked to the changes in interest rates.
A bond call option gives the holder the right to sell the underlying bond at a prespecified
Chapter Twenty Five
The extreme growth of the swap market has raised concern about the credit risk
exposures of banks engaging in this market.
The largest segment of the global swap market is the currency swap market.
The Financial Services Industry: Finance Companies
Finance companies differ from banks in that they do not accept deposits.
Finance companies have been among the slowest growing FI groups in recent years.
Sales finance instit
Chapter Twenty Six
The growth of the commercial paper market as well as the increased ability of banks to
underwrite commercial paper has reduced the importance of short-term segment.
Banks began selling loans only in the last twe
Credit Risk: Individual Loan Risk
Problems involving bank loans to LDCs (less-developed countries) during the 1980s and
1990s primarily were a result of foreign exchange risk.
Junk bonds are bonds that are rated less than inve
FIN 701 W2015 PROBLEMS CHAPTER 16 OFF BALANCE SHEET RISK, pp. 378-379
Contingent Bank has the following balance sheet in market value terms (in millions of
The Financial Services Industry: Depository Institutions
In recent years, the number of commercial banks in the U.S. has been increasing.
Large money center banks finance most of their activities by using retail consumer
Why are Financial Intermediaries Special
Financial intermediaries specialize in the production of money.
The adverse effects on the economy that can occur because of major disturbances to the
special functions or services provided
Credit Risk: Loan Portfolio and Concentration Risk
The concentration limit method of managing credit risk concentration involves
estimating the minimum loan amount to a single customer as a percent of capital.
Interest Rate Risk I
The economic insolvency of many thrift institutions during the 1980s was due, at least
Because the increased level of financial market integration has increased the speed with
which interest rate changes a
Interest Rate Risk II
In most countries FIs report their balance sheet using market value accounting.
Marking -to-market accounting is a market value accounting method that reflects the
prices of assets and liabilities when purcha
Technology and Other Operational Risks
Two important input factors in financial intermediation are capital and labor.
16-2 Technological efficiency focuses exclusively on the cost side of financial
The Financial Services Industry: Securities Firms and Investment Banks
Investment banks specialize in the origination, underwriting, and distribution of
Investment banks engage in activities such as advising on
Deposit Insurance and Other Liability Guarantees
Contagious runs on bank deposits are directed at FIs, whether they are failing or
The adverse effects of a contagious run include the restrictions on the ability of
Risks of Financial Intermediation
Because the economies of the U.S. and other overseas countries have become more
integrated, the risks of financial intermediation have decreased.
Interest rate risk stems from the impact of both
If the credit risk of the borrower is good, then the sovereign country risk is irrelevant.
15-2 FIs that lend to foreign countries often need to make provisions to their loan loss
Liability and Liquidity Management
18-1 To reduce liquidity risk an FI can manage efficiently the liability structure of its
18-2 One method of reducing the risk of a liquidity crisis for an FI is the efficient
Capital is the primary protection for an FI against the risk of insolvency and failure.
The primary role of capital for an FI is to assure the highest possible return on equity
Protecting the FI ins
FIN701 W2015 CHAPTER 20 PROBLEMS, pages 490-491
Identify and briefly discuss the importance of the five functions of an FIs capital.
Capital serves as a primary cushion against operating losses and unexpected losses in the value
of assets (such as the