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Securitized paper:
-
is not part of the
money market . -
is off
balance sheet financing. -
is guaranteed by security firms.
-
is backed by a variety of assets.
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- A bank has a positive repricing gap. This implies that a. some RSAs are financed by fixed-rate liabilities. b. some RSLs are financing fixed-rate assets. c. some RSAs are financing equity. d. the bank has no fixed-rate assets.Financial Institutions have Off-Balance-Sheet acitivities mainly (Commitment Loans; Letter of Credits; Loans slold, and Derivative contracts). What are the potential advantages and risks exposed of these activities?1.What are the benefits and costs to an FI of holding large amounts of liquid assets? Why are Treasury securities considered good examples of liquid assets? 2. What are the primary methods that insurance companies can use to reduce their exposure to liquidity risk?
- What is not an advantage of a Treasury (T) Note? Select one: a. Extremely liquid security. b. Loss of potential purchasing power (inflation > yield). c. An investor’s capital is secure. d. Better returns than a bank savings account.From the point of view of the borrowing business, loan capital tends to be cheap but risky. In what sense is it risky?Banks use gap analysis to measure interest rate risk in their balance sheets. If firm XYZ is said to have a positive gap, this means: Group of answer choices C. Rate-sensitive assets exceed rate-sensitive liabilities B. Long-term assets are funded with short-term liabilities D. Rate-sensitive assets equal rate-sensitive liabilities A. Liabilities reprice before assets
- TRUE OR FALSE 1. Short-term assets can always be financed with short-term debt, and long-term assets can be financed with long-term debt and equity, in an ideal economy. 2. Security for short-term or long-term loans usually consists of accounts receivable, inventories, or both.Which of the following is not true with Money Market? Select one: a. Deals in short term funds b. None of the options c. Provides funds for fixed capital d. Provides link between depositors and borrowersThe way in which the price of securities determined in Financial Markets is: a. By mobilization of savings b. Through frequent interaction between investors c. Providing liquidity to non- tradable assets d. None of these
- The "money mrket" is a misnomer. Money (currency) is not actually tradedin the money markets. The securities in the money market are short term with high liquidity, therefore, they are close to being money. Explain any four (4) purpose of money market.Organized securities markets a. are examples of financial intermediaries. b. are secondary markets. c. are not subject to regulation. d. transfer resources from savers to borrowers.Investment Banks operate and earn profits by: a) Purchasing undervalued securities on the market b) Creating and marketing new financial securities for issuers. c) Underwriting existing security issues, and selling them at a discount. d) Issuing stocks and bonds based on their own credit. e) Purchasing and reselling existing undervalued stocks and bonds. f) None of the other answers.