5. When an organization underwrites and distributes new investment securities to helps businesses obtain financing, it will be classified as a commercial bank.* O True O False
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- 3 These are the examples of non-banking financial intermediaries except:* A. Discount house B. Insurance companies C. Pension fund D. Credit guarantee CorporationWhich one is not the core functions of investment bank? * a.Selling of securities b. Accepting deposits c. Advisory services d. Marketing of securitiesWhich of the following statements is false? A. Moral hazard is the lack of incentive to guard against risk where one is protected from its consequences. B. Information about a bank’s activities and financial performance is available in the bank’s financial statements. C. As long as everyone continues to accept the paper bills in exchange, they will have value and serve as currency. D. To an economist, money is the stock of assets that can be readily used to make transactions.
- Which among the following is not a function of a bank? a. Issuing demand drafts b. Paying interest on deposits c. Sale of tangible goods d. Investing in securitiesDistinguish between illiquidity and insolvency for banks and discuss the role of capital in protecting against these problems.Which of the following is defined as the level of capital that allows banks to sustain the potential losses arising from all current risks and to comply with an acceptable solvency level. a. Asset liquidity b. Capital adequacy c. Liquidity position of a bank d. Market liquidity
- 1. Explain two types of financial risks that are faced by banks operating in the financial sector. 2. Now, discuss how a risk management tool can be used in order to mitigate such risks .(1) How does getting a secured loan using accounts receivable as collateral differ from factoring? (2) Why would lenders want to see that a business already has some level of capitalization before giving it access to more capital by means of a loan?Information risk is a. The cost a company incurs to issue and service equity and debt. b. The risk of the client not being able to pay off a bank loan. c. The company's cost of capital. d. The risk that the information in financial statements is materially misstated.
- please view images below c. Does the bank have enough capital to meet the Basle requirements? If not, what minimum Tier 1 or total capital does it need to meet the requirement? d.Discuss the major shortcomings of the Basle I accord.3. Compare and contrast banking to non-banking institution. How these greatly affect the business industry as well as the consumer/ individuals?(1) What factors might lead a company to gainadditional funds through debt financing rather thanthrough equity financing? (2) Why does consumerdebt have a more negative connotation than businessdebt?