Methods/instruments that banks use to hedge the risks pertaining loans

Q: Please explain what is direct and indirect financing? What is the role of banks in direct c.…

A: Financing is the process of raising funds for the business activities, to meet out payment…

Q: the lending operation, how many types of loans security?

A: In lending operations banks for their safety of loans ask  for some collateral.You have to provide…

Q: Explain the possible IFRS treatment of bank loans.

A: IFRS is international finance reporting standards will replace with Accounting standards 39.

Q: interest rate risk differs between mortgage companies and other financial institutions

A: The mortgage company is a financial firm that gives out its own loans. They use their own funds or…

Q: What would these securities be called and what does the Bank need to do to ensure the loan monies…

A: Loans refer to the agreement between the borrower and the bank or financial institution for…

Q: Describe some of the motives and mistakes made by the mortgage securitizers?

A: To market as well as attract borrowers for lenders.Evaluation of the borrower's credit…

Q: pros and cons of diversification in banking.

A: Introduction : The diversification of banking refers to the strategic diversification of banking…

Q: How long-term deposit accounts benefit borrowers

A: A deposit account is an account that is held by the customers of a bank and financial institutions…

Q: a. Bank loans are classified as investment-grade and leveraged bank loans. Explain the difference…

A: (a) Bank Loan extended to corporate borrowers can be segregated into two categories viz.…

Q: Discuss in detail about the Loan securitization as a tool for managing risks by banks. Discuss about…

A: Securitization : It is a risk management tool used to reduce an risk that is particular to some…

Q: Credit card debt and commercial loans are easily among the most significant and familiar financial…

A: Credit card debt is a type of bank overdraft wherein the borrower needs to pay an interest amount…

Q: Explain the concept of liquidity risk in banking. Why is it important to control liquidity risk?

A: Liquidity refers to the ability of a bank to meet its cash and collateral obligations without…

Q: In relation to receivables, an entity is required.by PFRSS to O All of these. Classify receivables…

A: Accounts Receivables - Accounts Receivable is represented as the amount due to the company on…

Q: How the interest rate affects the release of credit card

A: Given,

Q: at is the relationship of Debt (Loans) to Borrowers to Financial Intermediaries?

A: The financial intermediaries are very important in the financial world and transactions and there…

Q: describe the role of debt covenants in protecting creditors;

A: Debt covenants are restrictions that lenders (creditors, debt holders, investors) put on lending…

Q: loan portfolio audit

A: Loan Portfolio Audit-:A Loan Portfolio Audit furnishes an organized, in-depth investigation of…

Q: Define the Credit Risk and include in your discussion examples of the Credit Risk and why Financial…

A: A large number of financial transactions take place in the financial system and each transaction…

Q: main theories for internatonal banking explain.

A: International banking include cross-border banking services as well as bank foreign direct…

Q: What is the basic obligation of a depositary bank to its depositor

A: Depositor means a person who deposits money into the bank for the purpose of savings. Depositary…

Q: Why is it necessary for the bank to have the right to assign a mortgage to a third party (for…

A: Assignment of mortgage to a third party :  It is referred to as an agreement in loan obligations are…

Q: What are the main differences between ARMs and FRMs loans? You need to highlight the differences in…

A: Loan which are provides to the borrower either in Adjusted Rate of Mortgage or Fixed Rate of…

Q: risk

A: Introduction: Banks & other financial institution play an important role in the economic…

Q: What are the main types of mortgages issued by financial institutions ?

A: Mortgage means taking title of the borrowers property in exchange of lending money which is repaid…

Q: In managing credit risk for banks what are the two main concerns that banks have when lending money?…

A: Credit risk: It is the risk involved in receiving the interest and principal payments from the…

Q: Explain commercial banks’ brokerage and intermediation functions. Clearly detail how these functions…

A: Commercial bank is defined as the place, where the individuals used to do banking. It makes the…

Q: Discuss the risk management for changing interest rates, asset-liability management and duration…

A: Asset Liability Management or ALM is a broad mechanism to address and manage the risk faced by a…

Q: How commercial loans and mortgages are structured in terms ofinterest and principal payments.

A: Commercial loan, as well as a mortgage, are being structured in terms of interest and principal…

Q: Describe how a bank ma

A: With their own securities trading account, a bank can get into proprietary trading. A Proprietary…

Q: What’s the difference between a commercial bank and an investment bank?

A: A financial institution that provides services such as accepting the deposits and providing the loan…

Q: Differentiate between leasing and long term bank loan as source of finance

A: Banks play an important role in financing; there are various types of bank financing one of them is…

Q: Explain the role of the banks in the financial system.

A: As the financial system’s key component, banks helpful in allocating the funds from the savers to…

Q: Define credit risk and its implications for banks and other financial institutions as well as ways…

A: Credit Risk means risk which is faced by the Banks and Financial Institutions who lend money to…

Q: How banks safeguard the deposits of customers from financial losses?

A: The banks safeguard the deposits of customers with the help of an independent agency.

Q: What are the risk associated with banking activities?

A: Bank's major activity involves collection of funds and lending credit. These activities involve huge…

Q: Explain liquidity risk and credit risk faced by banks and discuss how banks manage these risks

A: Liquidity risk It is characterized as the risk of bringing about misfortunes coming about because of…

Q: (a) Distinguish between the activities of retail and investment banks and discuss how this has an…

A: An investment is an asset or item purchased for the purpose of generating an increase in income or…

Q: "Describe what a line of credit involves, and explain the legal obligation of a bank to provide…

A: Line of credit is the understanding between the banks and its customers that defines the maximum…