Strategies Of Banks And Other Financial Institutions Theories And Cases 1st Edition Rajesh Kumar - Solutions

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What are the three requirements of the USA Patriot Act that financial service firms were required to implement after October 1, 2003?
Go to the Securities Industry and Financial Markets Association website at www.sifma.org and find the most recent data on U.S. corporate underwriting activity using the following steps. Click on “Advocacy & Resources” and then“Research & Insights.” In the search bar, type “Fact
Go to the U.S. Treasury website at www.treasury.gov and find the most recent data on foreign transactions in U.S. securities and U.S. transactions in foreign securities using the following steps. Under the “Data” tab, click on “Treasury International Capital (TIC) System” and then, under
Describe the difference between brokerage services and underwriting services.
What are the key areas of activities for securities firms and investment banks?
Describe the difference between a best-efforts offering and a firm commitment offering.
What are the trading activities performed by securities firms and investment banks?
Describe the trend in profitability in the securities industry over the past 10 years.
What are the major assets held by broker–dealers?
Why do broker–dealers tend to hold less equity capital than do commercial banks and thrifts?
What is the major result of the NSMIA?
What regulatory changes resulted from the financial crisis?
What were the trends in foreign transactions in U.S. securities and U.S. transactions in foreign securities in the 1990s through 2010s?
What were the trends in international securities offerings in the late 1990s through 2010s?
Why do foreign banks operating in the United States compete with both U.S. commercial banks and investment banks?
Why did the proportion of equities in long-term funds increase from 42 percent in 1990 to 77 percent by 2000 and then decrease to 65 percent in 2020? How might an investor’s preference for a mutual funds’ objective change over time?
What are the economic reasons for the existence of mutual funds; that is, what benefits do mutual funds provide for investors? Why do individuals rather than corporations hold most mutual funds shares?
What are the three possible components reflected in the return an investor receives from a mutual fund?
Go to the Investment Company Institute website and look up the most recent data on the asset values and number of short-term and long-term mutual funds using the following steps. The website is www.ici.org. Click on “Research,”“Investor Research,” and “Investment Company Fact Book.”
Where do mutual funds rank in terms of asset size among all FI industries?
Describe the difference between short-term and long-term mutual funds.
What have been the trends in the number of mutual funds since 1980?
What are the three biggest mutual fund companies? How have their funds performed in recent years?
Describe the difference between open-end and closed-end mutual funds.
Describe the major assets held by mutual funds in the 1990s through 2010s.
How does the asset distribution differ between money market mutual funds and long-term mutual funds?
Who is the primary regulator of mutual fund companies?
How did the NSMIA affect mutual funds?
What have been the trends in the assets invested in worldwide mutual funds from the 1990s through the 2010s?
What is the difference between a mutual fund and a hedge fund?
What are the performance fees charged by hedge funds?
How is the regulatory status of hedge funds changing?
What are risks common to all financial institutions?
How do large FIs solve the problem of high information collection costs for lenders, borrowers, and financial markets?
What is maturity intermediation? What are some of the ways the risks of maturity intermediation are managed by financial institutions?
What forms of protection and regulation do the regulators of FIs impose to ensure their safety and soundness?
How did the boom in the housing market in the early and mid-2000s exacerbate FIs’ transition away from their role as specialists in risk measurement and management?The following questions and problems are based on material in Appendix 1B to the chapter.
What changes did the Fed implement to its discount window lending policy in the early 2000s?
Bank Three currently has $600 million in transaction deposits on its balance sheet.The Federal Reserve has currently set the reserve requirement at 10 percent of transaction deposits.a. Suppose the Federal Reserve decreases the reserve requirement to 8 percent.Show the balance sheet of Bank Three
Describe how expansionary activities conducted by the Federal Reserve impact credit availability, the money supply, interest rates, and security prices. Do the same for contractionary activities.
Go to the Federal Reserve Board’s website at www.federalreserve.gov. Find the latest figures for financial assets outstanding at various types of financial institutions using the following steps. Click on “Data.” Click on “Financial Accounts of the United States Z.1.” Click on “Release
Use the data in Table 2–4 for banks in the two asset size groups (a) $100 million–$1 billion and (b) more than $10 billion to answer the following questions.a. Why were ROA and ROE strong for both groups over the 1990–2006 period?Why did ROA and ROE decrease over the period 2007–2009? Why
What are the major uses of funds for commercial banks in the United States?What are the primary risks to a bank caused by each of these? Which of the risks is most critical to the continuing operation of a bank?
What are the major sources of funds for commercial banks in the United States?How does this differ for small versus large banks?
Use the data in Table 2–6 to answer the following questions.a. What was the average annual growth rate in OBS total commitments over the period 1992–2021?b. What categories of contingencies have had the highest annual growth rates?c. What factors are credited for the significant growth in
What factors normally are given credit for the revitalization of the banking industry during the 1990s?
What happened in 1979 to cause the failure of many savings institutions during the early 1980s? What was the effect of this change on the financial statements of savings institutions?
How did two pieces of regulatory legislation—the DIDMCA in 1980 and the DIA in 1982—change the profitability of savings institutions in the early 1980s? What impact did these pieces of legislation ultimately have on the risk posture of the savings institutions industry? How did the FSLIC react
Compare and contrast the performance of worldwide depository institutions during and after the financial crisis.The questions and problems that follow refer to Appendix 2B.
Megalopolis Bank has the following balance sheet and income statement.a. Return on equityb. Return on assetsc. Asset utilizationd. Equity multipliere. Profit marginf. Interest expense ratio g. Provision for loan loss ratio h. Noninterest expense ratio i. Tax ratio Assets Balance Sheet (in millions)
Go to the FDIC website at www.fdic.gov and find the most recent breakdown of U.S. bank asset concentrations using the following steps. Click on “‘Analysis’from the menu at the top of the page.” From there click on “Quarterly Banking Profile” and then click on ‘Latest Profile.’ ”
Go to the Federal Deposit Insurance Corporation website at www.fdic.gov and find the latest balance sheet information available for savings institutions using the following steps. Click on “Analysts” from the menu at the middle of the page.Click on “Statistics on Depository Institutions
How do fi nancial intermediaries generate profi ts?
Explain why the banking system was so unstable prior to the establishment of the Federal Reserve System in 1914.
What is a call loan? How did call loans contribute to economic recessions?
Currently a community bank has $45,000 in reserves, demand deposits of $200,000, and loans of $145,000. It unexpectly receives an inflow of deposits of $50,000 into checking accounts and another $25,000 into time deposits. Current reserve requirements on demand deposits and time deposits are 10
Suppose the current reserve requirements set by the Federal Reserve are as follows:A bank has vault cash of $2 million, reserve deposits at the Federal Reserve of $25 million, transaction deposits of $275 million, and nonpersonal time deposits of $100 million. Calculate this bank’s required
Refer to the table in Question 13. Now suppose the Federal Reserve raised the reserve requirements on deposits between $10.7 million and $55.2 million to 5 percent but eliminated the reserve requirement on nonpersonal time deposits. Calculate the bank’s required reserves, excess reserves, and
Given your answers to Question 7, what, if anything, would you expect to happen to (a) housing investment,(b) plant and equipment investment, (c) intended inventory investment, (d) government expenditures,(e) consumption, (f) exports, and (g) imports? Why?Question 7What effects are decreases in
Assume the Fed undertakes open-market operations and buys Treasury securities. Explain what should happen to interest rates. What is the expected change in nominal GNP? How is nominal GNP then partitioned off between inflation and real GNP?
In your opinion, what were the three most important causes of the 2008 financial crisis?
Explain what is meant by the term negative interest rate. Why can interest rate never be negative?
Explain why yields and prices of fixed-income securities are inversely related.
Carol Chastain purchases a 1-year discount bond with a $1,000 face value for $862.07. What is the yield of the bond?
Suppose the 7-year spot interest rate is 9 percent and the 2-year spot interest rate is 6 percent. The forecasted 3-year rate 2 years from now is 7.25 percent.What is the implied forward rate on a 2-year bond originating 5 years from now? (Hint: Under the expectations hypothesis, in equilibrium an
Assume that the term structure of Treasury securities includes the following rates:Using this information calculate: (a) the 6-month annualized yield expected in the second half of the current year, and (b) the 1-year yield expected for year 3 Security 3-month bill 6-month bill 1-year note 2-year
If interest rates are expected to increase, then identify what happens to the following factors using the expectations theory.a. Demand for short-term securities by investors Increase / Decreaseb. Supply of short-term securities by borrowers Increase / Decreasec. Price of short-term securities
Describe the steps in a typical banker’s acceptance transaction. Why is the banker’s acceptance form of fi nancing ideal in foreign transactions?
If you expect prices and incomes to rise, what type of mortgage would you rather have on your house: FRM or ARM? What if you expected prices to fall? Explain your answer. Also explain how your answer would differ if you were a mortgage lender.
Describe the major differences between common stock and preferred stock.
Explain the differences among a market order, limit order, stop loss order, and stop buy order.
What agency is the chief regulator of futures markets?Why is federal regulation necessary?
Describe the factors that promoted the internationalization of financial markets during the previous 15 years. Are any of these factors reversible?
Give the reasons that banks select the bank holding company form of organization. Why would a bank holding company seek to convert to a fi nancial holding company?
The recent development of microfinance led to new ways of looking at banking relationships. Do you believe that microfinance is entirely consistent with bank wealth maximization? If not, what objectives underlie these microloans?
Explain why bank regulators are so concerned with capital adequacy for the banking industry
Assume it was determined that the insurer in question 17 had overestimated its loss reserves by $20 million.If the loss reserve estimate was corrected, what is the impact on policyholders’ surplus?
Granite Insurance Company’s combined ratio 2 years ago was 1.035. A review of that year’s financial statements showed the company paid $4.5 million in income taxes.Why was the company required to pay income taxes when its underwriting activities produced a loss, as measured by the combined
Explain why issuing new securities can be a risky business.
Suppose a financial institution holds a portfolio of bonds with a value of $50,000,000 and duration of 3.5.The portfolio currently yields 4 percent, and you don’t anticipate any changes in the yield over the next month.If the standard deviation of changes in the yield over the next month is 75
What are the strategic drivers facilitating the growth of the financial services industry?
Explain how technological trends shape the future of financial institutions.
Discuss the major challenges faced by financial institutions.
Explain the impact of the global financial crisis on the financial system.
What are depository and nondepository institutions?
Explain the significance of shadow banking systems.
Discuss the critical role of regulation in the financial environment.
Explain the functions of regulatory agencies.
List the major regulatory reforms in the financial sector.
Why is the failure of the regulatory system often considered a reason for the recent economic crisis?
Discuss the major instruments of bank regulation.
Discuss the salient features of the Basel reforms.
Critically evaluate the Basel frameworks.
What are the basic risk mitigation strategies?
Explain the structure of the risk management framework in banks.
Discuss risk management systems.
Explain credit risk.
Explain how credit risk is managed.
What are the different types of interest rate risks?
How is interest rate risk measured?

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Strategies Of Banks And Other Financial Institutions Theories And Cases 1st Edition Rajesh Kumar - Solutions

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