Loans are collateralized to: a increase returns b increase liquidity c reduce concentration risk d all of the above Contingency liquidity support includes: a sale of short term securities b repo agreements c secured line of credit from another financial institution d sale of equity

Q: Which one is not suitable for serial bonds? Select one: a. Principal matures in annual installments…

A: THE PRINCIPAL MATURES IN ONE LUMP-SUM AMOUNT IS SUITABLE FOR TERM BONDS . ALL OTHER OPTIONS ARE…

Q: Moral hazard or its reduction explain the following except: O A. Collateral requirements for loans.…

A: A moral hazard is the concept that a party who is protected from risk in some way will behave…

Q: Which of the following concerning short-term financing methods is CORRECT? Group of answer choices:…

A: Short-term financing is an important method to raise the funds for the short-term working capital…

Q: secured line of credit: Select one: a. is backed up by pledged assets b. is not backed up by pledge…

A: At the time of providing the facility of the line of credit, the financial institution has…

Q: Loans made to closely held firms should have a. collateral b. relationship pricing c. pro-forma…

A: Firm require funds to operate a business. There are many sources to raise funds one of them is loan.…

Q: How can a bank mitigate LIQUIDITY RISK? Hold a large percentage of its liabilities in Core Deposits…

A: The correct answer for the above mentioned question is given in the following steps for your…

Q: Which of the following actions cannot be used by banks to increase reserves? A. Sell Treasury…

A: Reserves  are parts of the income of a corporation that have been set aside to improve the financial…

Q: 1. A type of risk that relates to the changes in the market value of commodities that diminishes the…

A: (Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: _____ is the opposite of a sinking fund. A. Accrual B. Compounding     C. Amortization D.…

A: Sinking fund is setting aside some money for future possible expenses.

Q: Illustrates cash flow patterns that are important when evaluating mortgagepass-through securities?

A: Mortgage pass-through securitiesSecurity is formed when an individual or number of mortgage holders…

Q: The average maturity of its assets is larger than that of its deposits, as is typical of most banks.…

A: Assume we take the case of a bank. For a bank the long term loans are a resource and deposits are…

Q: Having longer-maturity assets than liabilities causes banks to bear which of the following risks? I.…

A: a risk is an uncertain event that will occur or non-occurring and implies future uncertainty and…

Q: The process by which a loan, or more commonly a group, or pool, of loans, is packaged into a deal…

A: The question is related to Financing.

Q: Many types of debt including auto loans, student loans and credit debt are securitized. The…

A: Securitization is the procedure where an issuer designs a marketable financial instruments by…

Q: When borrowers tend to pay back the loans to bankers earlier, the bank is facing    a. Repricing…

A: Repricing risk is associated with the the rate of changes in the interest rate charged. It occurs…

Q: Classify the following items as (1) on-balance-sheet assets, (2) on-balance sheet liabilities, (3)…

A: Off-balance sheet items include the items that are not represented in the balance sheet. Whereas,…

Q: Credit scoring is a process used to   Multiple Choice   determine what interest rate to charge a…

A: Credit score : it is a number between 300 - 850 which depicts consumers creditworthiness.

Q: Boss Co. purchased bonds at a discount in the open market as an investment. The bonds will be held…

A: SOLUTION-4 AMORTIZED COST-  IT IS THAT ACCUMULATED PORTION OF THE RECORD COST OF A FIXED ASSET THAT…

Q: A bank's net interest margin represents the proportion of its investments that are financed with…

A: The difference between interest paid and interest received, adjusted for the entire amount of…

Q: Which of the following is an advantage of debt financing?    a. Excessive debt increases the risk of…

A: Due to high debt, share price decreases because of the higher risk equity holders face. Share price…

Q: hich of the following is not a way in which banks lend short-term unsecured loans? a. Through a…

A: Banks give short term credits to the business to increase the business and grow business and provide…

Q: Explain further the effects/impacts of default on asset-backed security (ABS) to the financial…

A: The question is based on the concept of asset-backed security (ABS). ABS is a financial instrument…

Q: Choose True or False: [T / F] Through credit derivatives, a firm can separate the credit risk…

A: Credit derivates is that financial contract that allows creditors to transfer to third party in case…

Q: Short-term loan from banks is not an example about debt capital. Select one: O True O False

A: A short-term loan is a type of loan that is obtained to support a temporary personal or business…

Q: When selling bonds at a premium, the premium received effectively a.does not affect the cost of…

A: Premium means selling of bond at price higher than face value.

Q: (a) “Both banks and the bond market complete maturity transformation although they accomplish the…

A: Answer

Q: Which of the following are all traditional credit risk enhancement techniques? Group of answer…

A: credit risk mitigation technique is institutional collatoral agreement used to reduced credit risk.

Q: The discount rate used in a net present value analysis is the​ ________.   A. rate of interest…

A: Net present value is calculated by the deducting the present value of cash outflows from the present…

Q: Why would a bank sell a package (portion) of its loans? A) to decrease liquidity B) to increase the…

A: Securitization  is a process wherein individual loans, debts, etc., that involve a payment stream…

Q: hich of the following is not an advantage of a repurchase agreement (repo) market? a.…

A: A repurchase agreement (repo) is a form of short-term financial support for government mortgage…

Q: All things considered stable cash flows enable higher debt borrowing.

A: Cashflows: These are movement of the money from various sources like operations, investment…

Q: Which of the following is not true with Money Market? Select one: O a. Deals in short term funds b.…

A: The money market is a type of financial market that deals with near-term instruments.

Q: If the deposits/loans ratio is relatively high for a bank, this implies an emphasis on: a.…

A: Deposits /Loans as the name suggest implies the number of deposits financed as loans. If it is…

Q: Liability management increases a bank's _________ risk and _________ risk. A. interest rate; price…

A: Liability management is the process of managing the use of assets and cash flows

Q: how collateralized mortgage obligations (CMOs) help to alleviate some of the reinvestment and…

A: Mortgage is a type of debt instrument which is generally secured by collateral. A borrower has to…

Q: Which of the following statements is false?   A.   Asset-backed securities (ABS) may be backed by…

A: A financial asset-backed securities (ABS) is a form of financial investment that is backed by a pool…

Q: Banks use gap analysis to measure interest rate risk in their balance sheets. If firm XYZ is said to…

A: A positive gap is a situation where the bank’s rate-sensitive assets exceed the rate-sensitive…

Q: The borrowing base used to guarantee collateral on an operating line of credit is highly dependent…

A: Borrowing base means the maximum amount that a borrower can borrow from a lender. Any excess of…

Q: Which one of the following is a spontaneous source of financing? Select the correct response:…

A: Spontaneous source of financing is the short term financing needed for business transactions which…

Q: Securitization enables a bank to: O a. Move assets off its balance sheet O b. Shift credit risk onto…

A: Assets securitization is a process in which a company collect or assembles its different financial…

Q: Identify the following as either an advantage (A) or a disadvantage (D) of bond financing for a…

A: Definition: Long-term debt: Long-term debt refers to the obligations of a firm that are due and has…

Q: A synthetic Collateralized Debt Obligation uses credit default swaps to increase the credit risk of…

A: synthetic collateralized Debt obligation invest in non-cash assets to gain exposure on fixed assets…

Q: e investment banker does all of the following except a. make long-term investments for banking…

A: Investment bankers are finance expert who work in raising money for business and help business in…

Q: ou are required to identify and give reasons for the appropriate classification of the debt…

A: Debt instrument can be defined as the financial instrument which acts as a tool for the business…