Provide the general outline of existing RBC requirements. Is there a difference between default risk, interest rate risk, and liquidity risk?
Answer to relevant QuestionsExplain how capital reduces banking risks. Discuss the importance of cash flows and economic (market) value rather than accounting value. Two competing commercial banks situated in the same community have comparable asset portfolios, but one operates with a total capital ratio of 10 percent, while the other operates with a ratio of 12 percent. Compare the ...Describe the basic features of the following: a. Open credit lines b. Asset based loans c. Term commercial loans d. Short term real estate loans What are the five Cs of credit? Discuss their importance in credit analysis. Describe the five Cs of bad credit introduced in the text. Explain the importance of identifying the “primary” source of repayment. Clearly, the primary source of repayment is always “cash.” The analysis question is really one of identifying the source of the cash used to ...
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