Loose-leaf For Accounting For Governmental & Nonprofit Entities
18th Edition
ISBN: 9781260190083
Author: Jacqueline L. Reck James E. Rooks Distinguished Professor, Suzanne Lowensohn, Daniel Neely
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 17.8EP
To determine
Identify the factors of bond rating used by the rating agencies.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Ratings issued by Nationally Recognized Statistical Rating Organizations (NRSROs)
are unrelated to the yield of the instrument.
are issued for all debt securities except for any government issued securities.
are based on the issue's default risk.
are influenced by the issue's liquidity risk.
Which of the following is not a main core function of the financial system?a. Provide a payments system for the exchange of goods and services.b. Provide mechanisms to separate funds for smaller-scale investmentc. Provide the channels to transfer funds and economic resources across industriesd. Provide ways to manage uncertainty and mitigate risk
According to the market segmentation theory of the term structure,a. the interest rate for bonds of one maturity is determined by the supply and demand for bonds of that maturity.b. bonds of one maturity are not substitutes for bonds of other maturities; therefore, interest rates on bonds of different maturities do not move together over time.c. investors' strong preference for short-term relative to long-term bonds explains why yield curves typically slope downward.d. only A and B of the above.
Costs associated with the correspondent bank process include:a. Interestb. Currency conversion spreadc. Reputation costsd. Payroll costs
Two depository institutions have composite CAMELS ratings of 1 or 2 and are "well capitalized." Thus, each institution falls into the FDIC Risk Category I deposit insurance assessment scheme. Further, the institutions have the following financial ratios and CAMELS ratings: Use Table 13–11.
Institution A
Institution B
Tier I leverage ratio (%)
8.80
7.93
Net income before taxes/risk-weighted assets (%)
2.33
1.95
Nonperforming loans and leases/gross assets (%)
0.53
0.68
Other real estate owned/gross assets (%)
0.15
0.45
Brokered deposits/total assets (%)
3.75
1.05
One year asset growth
7.35
4.65
Loans as a Percentage of Total Assets:
Construction & Development
0.00
0.00
Commercial & Industrial
18.36
11.40
Leases
2.05
1.75
Other Consumer
18.85
18.55
Loans to Foreign Government
0.30
0.30
Real Estate Loans Residual
0.00
0.00…
Chapter 10 Solutions
Loose-leaf For Accounting For Governmental & Nonprofit Entities
Ch. 10 - The GASB indicates that economic condition is...Ch. 10 - What is the Financial Trend Monitoring System and...Ch. 10 - The International City/County Management...Ch. 10 - Prob. 4QCh. 10 - Prob. 5QCh. 10 - Prob. 6QCh. 10 - Prob. 7QCh. 10 - Illustration 104, adapted front Crawford and...Ch. 10 - What is EMMA and when would someone want to use...Ch. 10 - Prob. 10Q
Ch. 10 - Prob. 11QCh. 10 - Prob. 17.1EPCh. 10 - Which of the following terms or concepts focuses...Ch. 10 - Prob. 17.3EPCh. 10 - Prob. 17.4EPCh. 10 - Prob. 17.5EPCh. 10 - Prob. 17.6EPCh. 10 - Prob. 17.7EPCh. 10 - Prob. 17.8EPCh. 10 - Prob. 17.9EPCh. 10 - Prob. 17.10EPCh. 10 - Prob. 17.11EPCh. 10 - Which of the following would be considered a sign...Ch. 10 - Prob. 17.13EPCh. 10 - Prob. 17.14EPCh. 10 - What is Electronic Municipal Market Access, or...Ch. 10 - Prob. 18EPCh. 10 - Examine the following tables from the Financial...Ch. 10 - Prob. 20EPCh. 10 - Prob. 21EP
Knowledge Booster
Similar questions
- 2. Two depository institutions have composite CAMELS ratings of 1 or 2 and are “well capitalized.” Thus, each institution falls into the FDIC Risk Category I deposit insurance assessment scheme. Further, the institutions have the following financial ratios and CAMELS ratings: Calculate the initial deposit insurance assessment for each institution. Institution A Institution B Finanical Ratios: Leverage Ratio 8.55 8.25 Nonperforming Loans and Lease/Gross Assets 0.35 5.12 Other Real Estate owned/Gross Assets 0.42 0.75 Net Income Before taxes/ Total Assets 2.00 1.65 Brokered Deposit Ratio 82.2 76.5 One-Year Asset Growth 4.35 6.8 Loans as a Percent of Total Assets Construction & Development 0 0 Commerical & Industrial 10.56 18.68 Leases 0.65 2.15 Other Consumer 17.55 18.95 Loans to Foreign Government 0 0.6 Real Estate Loans Residual 0 0 Mutlifamily Residential 0 1.1 Nonfarm Nonresidential 0 0 1-4…arrow_forwardWhich of the following statements is false? A. The sovereign credit rating is a risk of a national government becoming unable to satisfy its loan obligations. B. Bond prices are inversely related to spreads. C. Issuer credit ratings are based on the overall creditworthiness of the firm. D. Liquidity is observed when there is a large difference between the offered sale price and the bid price.arrow_forwardBased upon risk, which of the following financial assets is likely to have the highest required rate of return? Select one: A. A corporate bond B. A U.S. Treasury bill C. A bank certificate of deposit D. A share of common stockarrow_forward
- Analysts have suggested the management of a company to follow different annuity and perpetuity concepts while issuing and evaluating their bonds so that best options would be chosen while issuing new securities. Therefore there is also need to explain these concepts before Board of Directors to get in depth understanding of calculation of intrinsic value of securities by using different types of annuities as well as perpetuity plans. Q) Explain different types of Annuity and perpetuity concept with appropriate examples.arrow_forwardWhich of the following is the basis for fixing the price of securities in the financial market? a. Government b. Demand and Supply in the Market c. Seller of the Financial Instrument d. The issuer of the Instrumentsarrow_forwardBanks 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 assetsarrow_forward
- How do creditors assess risk when lending funds to a company? a. By establishing covenants in the borrowing agreement b. By monitoring the borrower’s debt-to-equity ratio c. By checking a prospective borrower’s credit rating before lending to it d. All of the above answers are correct.arrow_forwardWhich of the following is NOT a purpose of valuing financial securities? a. Valuation is used to provide sensible financial decisions.b. Valuation is used to get the intrinsic value of a financial security.c. Valuation is helpful for investors in order to determine whether to buy or sell their securitiesd. Valuation is used to predict the exact prices of financial securities.arrow_forwardThe implications of QE ( quantitative easing) for the cash rate; yields on federal treasury bonds; yields on bonds issued by state and territory governments and corporates; the stock market; and the economy.arrow_forward
- Explain how individual securities affect investment portfolio risk. In your answer, when discussing securities compare and contrast government securities, corporate debt securities and shares/stocks in terms of risk and return. Elaborate on the concept of risk. What type of risks should an investor (e.g. finance manager) be aware of when deciding on the investment options?arrow_forwardThese are ways in which depository financial institutions measure liquidity risk except: a. Liquid assets to total assets. b. Liquid assets to long term liabilities. c. Maturity gap analysis return. d. Net liquidity statement.arrow_forwardConside the following shocks to the bond market: (A) an increase in perceived risk, (B) an increase in the government deficit. Explain how the above shocks to the bond market affect the money market. Show your findings graphically, making sure that all is labeled correctly.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub