Explain how the composition of a small community bank’s investment portfolio differs, in general, from the composition of a large bank’s portfolio. Why might mutual funds be attractive to banks?
Answer to relevant QuestionsProvide three reasons why the number of independent commercial banks might fall sharply over the next few years. What are the basic objectives of depository institution regulation? How do regulators attempt to achieve these objectives? How did the provisions of Section 939A of the Dodd– Frank Act alter the behavior of banks in managing their investment portfolios? Assume that the forward exchange rate is for 90 days forward and the interest rates are annualized 90- day rates in Question 9. Can a trader earn covered interest arbitrage profits? Explain how the forward market for foreign exchange differs from the spot market. When will forward exchange rates be at a premium or discount to spot exchange rates?
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