Match the situation with its corresponding risk categoryv The Federal Reserve increases capital requirementsA. Credit risk-v A rogue trader circumvents trading rulesB. Settlement riskv A homeowner defaults on a mortgage loanC. Legal riskv On the date of settlement, the seller can't deliver the promised securitiesD. Liquidity riskv Interest rates rise causing the value of the bank's bond portfolio to declineE. Market riskv A bank is unable to obtain short-term funding to meet deposit outflowsF. Operational risk

1. Market risk 2. Legal. Risk 3. Credit Risk 4. Settlement risk 5. Operational risk

Answered: Match the situation with its…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Bonds issued by corporations and exposed to default risk are classified as A. corporation bonds B. default bonds C. risk bonds D. zero risk bonds
8 As the economy aggregate output fluctuates and maybe the economy enters a recession, the type of risk commercial banks are faced with is a. Interest rate risk b. Additional tax obligation risk c. Economic risk d. None of the above
Bonds issued by corporations and exposed to default risk are classified as A. corporation bonds B. default bonds C. risk bonds D. zero risk bonds Only typed solution
Financial intermediaries are firms that: match buyers and sellers of bonds. O conduct open market operations. match buyers and sellers of stocks. extend credit to borrowers using funds from savers.
1. They serve as coordinators who link the buyers and sellers of financial securities, and sometimes take positions in the securities. *Financial intermediariesGovernmentInvestorsMarket maker 2. A contract requiring a specified future monetary payment at a specified future point in time in exchange for the delivery of a specific asset is called a: *nonconvertible option.hedge.long contract.swap.
QUESTION THREE (3)Explain in detail each of the following primary risks faced by banks and explain how theyare managed.A. Credit risk,B. Liquidity risk,C. Interest rate risk, andD. Foreign exchange risk
If the supply of bonds falls, then bond prices O will generally rise O interest rates will generally fall O both a and b will occur
31) The FDIC must take steps to close down banks whose equity capital is less than ________ of assets. A) 4% B) 3% C) 2% D) 1% 32) Off-balance-sheet activities A) generate fee income with no increase in risk. B) increase bank risk but do not increase income. C) generate fee income but increase a bank's risk. D) generate fee income and reduce risk. 33) The Basel Accord, an international agreement, requires banks to hold capital based on A) risk-weighted assets. B) the total value of assets. C) liabilities. D) deposits. 34) The Basel Accord requires banks to hold as capital an amount that is at least ________ of their risk-weighted assets. A) 10% B) 8% C) 5% D) 3% 35) Under the Basel Accord, assets and off-balance sheet activities were sorted according to ________ categories with each category assigned a different weight to reflect the amount of ________. A) 2; adverse selection B) 2; credit risk C) 4; adverse selection D)…
DMacroeco X + A learn.vccs.edu/courses/362470/quizzes/2905964/take E Apps M Gmail YouTube Maps Get My Payment | . Question 13 Which of the following will yield to a bank the lowest return? O Short term loans with little risk. Long term loans with a lot of risk. There is no distinction in the types of loans and risk or potential return. Loans made where the liquidity rate is the highest. Question 14 2 pts The Federal Reserve has the duty of regulating the nation's money supply. True False Question 15 2 pts P Type here to search
ABC Bank acquires XYZ Bank through a merger but subsequently fails due to some unforeseen incompatibilities resulting from their widely different cultures. This is an example of __________ risk. a. country b. liquidity c. operational d. market
financial markets that function well: a. increase the ease of converting common stocks into bonds b. reduce riskiness of most assets continually c. continually increase the liquidity of most assets d. including available information in asset prices
What is Interest Rate Risk and what is difference between Cash Flow Risk and Interest Rate Risk?

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