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- How do creditors assess risk when lending funds to a company?Distinguish between illiquidity and insolvency as it affects a bank and discuss the reasons why banks are vulnerable to these problems.How does capital protect a bank from failure? Why are banks currently holding capital well above the minimum regulatory requirement? What are the ways in which a bank can increase its capital ratio?
- How is securitization supposed to help banks and S&Ls manage risks andincrease homeowners’ access to capital?Identify the waysin which banks canmanage their assetsand liabilities to maximize profitCould you give some example that explain thoroughly why capital adequacy management in commercial bank is so important?
- 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 liquidityExplain how commercial bank mange it balance sheet to maximize its profit without affecting the liquidity.Explain liquidity risk and credit risk faced by banks and discuss how banks managethese risks
- Outline the main financial risks exposed by commercial banks and their implications on the value of the bank?(a) Distinguish between the activities of retail and investment banks and discuss howthis has an impact on their approaches to risk management. (b) Explain liquidity risk and credit risk faced by banks and discuss how banks managethese risksDefine Gearing and explain its advantages and disadvantages. Why might a bank be interested in a company’s level of gearing?
