2324 23. Depositors can haveA. currentaccounts in a licensed bank in Hong Kong.B. savingsC. time depositD. all of the above24. The strong form of the Efficient Market Hypothesis holds that prices always reflect all availableinformationA. publicB. privateC. insider-tradingD. public and private

Efficient market hypothesis is the hypothetical theory which helps the investors in estimating the…

Answered: 23. Depositors can bave_accounts in a…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 3MCQ

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A non-bank private agent sells a £1000 bond in an open market purchase by the Central Bank. If the proceeds are held in ________, the open market transaction has no effect on reserves; if the proceeds are held as ________, reserves increase by £1000. A) a box in the house; deposits B) deposits; savings account C) deposits; currency D) a box in the house; currency Support your answer using T-account examples.
Using the image attached: a) Calculate the equity (total asset – total liability) to asset ratio of the bank(Hint: equity to asset ratio = total equity/total asset)b) Calculate the duration and convexity of the both asset and liability sides;c) If the interest rates go up by 1%, using the duration and convexity rule to determine the networth of the bank and the equity to asset ratio; d) In c)’s scenario, to maintain the equity to asset ratio at 40% which is required by the regulation,the bank decides to raise cash (zero duration and zero convexity) from the equity holders.How much cash does the bank need to raise?e) Do you agree with the following statement? Explain why. “The information about a bond’s duration and convexity adjustment is sufficient to quantifyinterest rate risk exposure.
bank manager wants to protect the bank against losses that would be incurred on its portfolio of Treasury securities should interest rates rise, he could financial futures. If a Not yet options on answered Points out of 1 Select one: PFlag question A. sell put B. sell call C. buy put D.buy call
1. Rank the following types of bank liabilities, first according to their level of liquidity risk, and then according to their interest rate risk. Then rank them according to their current cost to the bank. Explain why the rankings vary. DDAs Interest-checking accounts MMDAs Small-time deposits Jumbo CDs Federal funds purchased Eurodollar liabilities Federal Home Loan Bank advances
Q1) Choose the Right answer from the options provided for the following questions: 1. ____________: Setting of the money supply by policymakers in the central bank. a. Controllinginterest ratesb. Monetary policy c. Federal Reserve d. Currency 2. A _________ person prefers investing in stocks which returns are uncertain. a. Risk-averse b. Risk-manager c. Risk-lover d. None of the above
A security analyst calculates the following ratios for two banks. How should the analyst evaluate the financial health of the two banks.Bank A Bank BROE 22% 24%ROA 2% 1.5%Equity Multiplier 11X 16XProfit Margin 15% 14%Asset Utilization 13% 11%Spread 3% 3%Interest Exp. Ratio 35% 40%Provision for loan loss ratio 1% 4%
What are some of the ways that banks can borrow short-term funds when they need "liquidity"?(Select all that apply; three of the answers below are correct.) Reference: Chapters 11 & 12 They can borrow directly from the Securities & Exchange Commission through the "regulatory" market. They can borrow from the Department of Treasury through the "Treasury" window. They can borrow another bank's reserves through the "fed funds" market. The can engage in a "sale & repurchase agreement" (or "repo") by selling some of their securities to another financial insitution and promising to buy them back the next day. They can borrow directly from the Federal Reserve through the "discount window".
Consider a bank with the following balance sheet (Shown in image):a) Calculate the equity (total asset – total liability) to asset ratio of the bank(Hint: equity to asset ratio = total equity/total asset) b) Calculate the duration and convexity of the both asset and liability sides; c) If the interest rates go up by 1%, using the duration and convexity rule to determine the networth of the bank and the equity to asset ratio; d) In c)’s scenario, to maintain the equity to asset ratio at 40% which is required by the regulation,the bank decides to raise cash (zero duration and zero convexity) from the equity holders.How much cash does the bank need to raise? e) Do you agree with the following statement? Explain why. “The information about a bond’s duration and convexity adjustment is sufficient to quantifyinterest rate risk exposure.”
Q1) Choose the Right answer from the options provided for the following questions: 1. ____________: Setting of the money supply by policymakers in the central bank. a. Controllinginterest ratesb. Monetary policy c. Federal Reserve d. Currency 2. A _________ person prefers investing in stocks which returns are uncertain. a. Risk-averse b. Risk-manager c. Risk-lover d. None of the above 3. A low rate of interest can________investments? a. discourage b. decrease c. encourage d. None of the above 4. Which one is a tool of the Federal Reserve? a. Banking for banks b. Controlling inflation c. Banking for the government d. Selective credit controls 5. _________is a promise by a bank to lend the cardholder money with which to make purchases. a. Debit Card b. Money exchange c. E-Money d. None of the above
A. If Nominal Interest Rate is 6% and the inflation premium is 2% the real interest rate earned by the bank is equal to B. Which tool of monetary policy appeals to the profit motive of the commercial banks to encourage or discourage lending? Edit Format Table
Which of the following is NOT an advantage of depositing funds into a bank account (compared to directly purchasing corporate bonds and shares): Options 1. Higher transactions costs 2. Monitoring performed by the bank on behalf of the depositor 3. Better liquidity if funds are needed quickly 4. Efficient payment services 5.Reduced price risk if funds are needed immediately
1. How has deregulation of the financial services industry affected the makeup offinancial intermediaries? How do you think intermediaries’ characteristics willchange in the future? 2. How do banking organizations in the United States differ from banking organizationsin other countries? Why are they different? 3. How is money created in a banking system that has fractional reserve requirements(i.e., a fractional reserve system)? 4. Describe the open market operations undertaken by the Federal Reserve. Whattype of trades would the Fed make if it wanted to increase interest rates? 5. How would funds—that is, the money supply—in the United States be affectedif the Federal Reserve increases reserve requirements? Give an example.

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23. Depositors can bave_accounts in a licensed bank in Hong Kong. B. savings A. current C. time deposit D. all of the above 24. The strong form of the Efficient Market Hypothesis holds that prices always reflect all available information A. public B. private C. insider-trading D. public and private