FIN350- Questions and Applictions

Aug 21st, 2015
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Price: $20 USD

Question description

Chapter 20: Questions and Applications 1, 7, 9, and 12; Problem 1

1. Interest Income- How can gross interest income rise while the net interest margin remains somewhat stable for a particular bank?

7. Bank Leverage hat does the assets/equity ratio of a bank indicate?

9. Loan Loss Provisions-Explain why loan loss provisions of most banks could increase in a particular period.

12. Bank Income Statement -Assume that SUNY Bank plans to liquidate Treasury security holdings and use the proceeds for small business loans. Explain how this strategy will affect the different income statement items. Also identify any income statement items for which the effects of this strategy are more difficult to estimate.

1. Assessing Bank Performance Select a bank whose income statement data are available. Using recent income statement information about the commercial bank, assess its performance. How does the performance of this bank compare to the performance of other banks? Compared with the other banks assessed in this chapter, is its return on equity higher or lower? What is the main reason why its ROE is different from the norm? (Is it due to its interest expenses? Its noninterest income?)

Chapter 21: Questions and Applications 1, 6, 7, 9, and 20

1. SI Sources and Uses of Funds -Explain in general terms how savings institutions differ from commercial banks with respect to their sources of funds and uses of funds. Discuss each source of funds for SIs. Identify and discuss the main uses of funds for SIs.

6. Liquidity and Credit Risk- Describe the liquidity and credit risk of savings institutions, and discuss how each is managed.

7. ARMs -What is an adjustable-rate mortgage (ARM)? Discuss potential advantages such mortgages offer a savings institution.

9. Use of Interest Rate Swaps -Explain how savings institutions could use interest rate swaps to reduce interest rate risk. Will SIs that use swaps perform better or worse than those that were unhedged during a period of declining interest rates? Explain.

20. Impact of the Credit Crisis- Explain how the credit crisis in the 2008–2009 period affected some savings institutions. Compare the causes of the credit crisis to the causes of the SI crisis in the late 1980s.

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