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- What is a financial bubble in the context of asset markets? A. A situation where asset prices are stable and reflect intrinsic value B. A sudden and unsustainable increase in asset prices followed by a crash C. A government policy to regulate asset markets D. A situation where asset prices are controlled by a single entityGiven that banks are operating within a highly disruptive economy it is imperative that a robust Technology Risk Management Framework (TRMF) is in place.i. Name two risk factors that need to be taken into account in the TRMF? ii. Describe two scenarios that could constitute a risk to the bank if the factors mentioned in Question i. were not taken into consideration. iii. What is the possibility of these risks occurring and what would the impact to the bank be? iv. Describe how you would prioritise the risks to ensure the least impact?Should banks that have become “too big to fail” (meaning their collapsewould significantly damage the economy) be subject to stricter regulationsthan smaller banks? Why or why not?
- Discuss the following statements: “(1) individual financial institutions will generally have unimportant effects on market prices or the economy as a whole and (2) serving their financial interests always safeguards stability of the financial system” according toa) microprudential b) macroprudential approaches?10 ***For upvote please do not provide copied answers..... What are the 3 conditions that bankers must ensure to manage their assets and liabilities? What is the basic equation that banks use to understand their financial statements? (hint: the answer is extremely close to the basic accounting equation). What are off-balance-sheet activities that banks engage in?.A commercial bank will become illiquid if A) it has short-term liabilities that exceed its short-term assets. B) it is insolvent. C) it is solvent and liquid. D) there is a financial crisis like the one of 2008.
- The net interest margin of a bank is a function of A What they pay for wages and the revenue B Their cost of funds and what they earn from giving out loans C Whatever the CEO and Board of Director think is fair D The marginal propensity to prosperityWhich of the following statements is incorrect?a. Holdings of liquid assets (or access to credit from financial institutions) reduce the likelihood of financial distress.b. Financial imbalances and asset price crashes have been the key source of recessions in the U.S. in recent past.c. The 1918-1919 Great Influenza pandemic did not lead to an economic depression, although it caused significant fatalities around the world.d. L-shaped recovery pattern in Greece in the aftermath of 2007-2009 global financial crisis was in part due to the unavailability of monetary policy tools to the Greek authorities (because of Euro membership)If a bank has assets of $5 billion and liabilities of $4.8 billion its equity equals $.2 billion. its equity equals –$.8 million and it faces a solvency crisis. its equity equals –$.8 billion. it faces a solvency crisis.
- QUESTION THREE (3)Explain in detail each of the following primary risks faced by banks and explain how theyare managed.A. Credit risk,B. Liquidity risk,C. Interest rate risk, andD. Foreign exchange riskExplain liquidity preference theory of interest. Write it's criticism.Type out the correct answer ASAP with proper explanation of the each option.thank you. How do trends in bond interest rates help predict changes in the business cycle? A.When long-term rates are higher than short-term rates, a recession is likely. B.When long-term rates are lower than short-term rates, an expansion is likely. C.When long-term rates are higher than short-term rates, a trough is present. D.When long-term rates are lower than short-term rates, a recession is likely.