Distinguish between loan sales with and without recourse. Why would FIs want to sell loans with recourse?

Question:

Distinguish between loan sales with and without recourse. Why would FIs want to sell loans with recourse? Explain how loan sales can leave FIs exposed to contingent interest rate risks.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Financial Institutions Management A Risk Management Approach

ISBN: 978-0071051590

8th edition

Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders

See More Books

Question Posted: Dec 17, 2015 04:59 AM

See More Questions

Distinguish between recourse and nonrecourse financing.
How can one distinguish between a relaxed but rational working capital policy and a situation in which a firm simply has a lot of current assets because it is inefficient? Does SKIs working capital...
Dan Barnes, financial manager of Ski Equipment Inc. (SKI), is excited, but apprehensive. The companys founder recently sold his 51% controlling block of stock to Kent Koren, who is a big fan of EVA...
Here is the end-of-year account balance information from the accounting records of Jaunty Coffee Company: Sales revenue Cash Cost of goods sold Accounts payable Capital stock Dividends Retained...
For the educational levels described in Exercise 1: a) Write two to four sentences summarizing the distribution. b) What conclusions, if any, could you make about the educational level at other...
The Town of Weston has a Water Utility Fund with the following trial balance as of July 1, 2016, the first day of the fiscal year: During the year ended June 30, 2017, the following transactions and...
The $\frac{1}{2}$-in.-diameter hose shown in Fig. P8.68 can withstand a maximum pressure of $200 \mathrm{psi}$ without rupturing. Determine the maximum length, $\ell$, allowed if the friction...
You are investing your money and opening a fast-food Mexican restaurant that accepts only cash for payments. You plan on periodically issuing coupons through the mail and in local newspapers. You are...
what are some the limitations of title VII of the Civil Rights Act- E? what are some of the limitations of equal Pay Act of 1963? what are some of the limitations of age Discrimination in Employment...
Selected worksheet data for Bonita Company are presented below. Instructions a. Fill in the missing amounts. b. Prepare the adjusting entries that were made. Adjusted Trial Balance Account Titles...
What is meant by when-issued trading? Explain how forward purchases of when-issued government T-Bills can expose FIs to contingent interest rate risk.
The manager of Shakey Bank sends a $2 million funds transfer payment message via CHIPS to the Trust Bank at 10 AM. Trust Bank sends a $2 million funds transfer message via CHIPS to Hope Bank later...
A continuous succession of sinusoidal wave pulses are produced at one end of a very long string and travel along the length of the string. The wave has frequency 70.0 Hz, amplitude 5.00 mm, and...
A taxpayer spends six months in the year working and living in the state. They move across the border, but keep the same job. For all intents and purposes, they are now domiciled in this other state...
Andre wants to make charitable contributions for the tax year to maximize the impact on his State return without needing to adjust for conformity issues. His AGI is $ 7 5 , 0 0 0 . What is the...
A firm has two products, J and K . Product J has a sales price of $ 8 and a variable cost per unit of $ 5 . Product K has a sales price of $ 1 5 and a variable cost per unit of $ 1 0 . The firm...
Kubin Company s relevant range of production is 1 8 , 0 0 0 to 2 2 , 0 0 0 units. When it produces and sells 2 0 , 0 0 0 units, its average costs per unit are as follows: Average Cost per Unit...
What might cause a predtermined overhead rate to give inaccurate product costs?
What is the name of the contra account for receivables that may not be collected?
The manager for retail customers, Katie White, wants to hear your opinion regarding one business offer she has received from an entrepreneur who is starting a mobile phone app called Easy Money. The...
What are the key features or characteristics of the financial statements of banks and similar financial firms? What are the consequences of these statement features for managers of financial-service...
What are the principal accounts that appear on a bank's balance sheet (Report of Condition)?
What are off-balance-sheet items and why are they important to some financial firms?
What role do social institutions play in shaping individual and collective identities, and how do these identities intersect with race, gender, sexuality, and other aspects of social diversity to...
16. Let $V=\operatorname [span]\left\{\left(\begin{array}{1}1 \\ 0 \\ 1 \\ 0\end{array} ight), \left(\begin{array} (1)1 \\ 1 \\ 0 \\ 1\end{array} ight), \left(\begin{array} {1}0 \\ 1 \\ 1 AV...
Blossom Ltd., which follows ASPE had the following comparative statement of financial position: Blossom Ltd. Comparative Statement of Financial Position December 31 Assets 2024 2023 Cash $84.000...

Distinguish between loan sales with and without recourse. Why would FIs want to sell loans with recourse?

Question:

Step by Step Answer:

When FIs sell loans without recourse the buyers of the loans accept the risk of nonrep...View the full answer

Financial Institutions Management A Risk Management Approach

Students also viewed these Banking questions