Questions from Financial Markets


Q: Two depository institutions have composite CAMELS ratings of 1 or 2 and

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 i...

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Q: Third Fifth Bank has the following balance sheet (in millions),

Third Fifth Bank has the following balance sheet (in millions), with the risk weights in parentheses. In addition, the bank has $20 million in commercial direct-credit substitute standby letters of...

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Q: Financial Fitness Bank reported a debt-to-equity ratio of

Financial Fitness Bank reported a debt-to-equity ratio of 1.75× at the end of 2018. If the firm’s total assets at yearend were $25 million, how much of its assets are financed with debt? How much with...

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Q: What is the contribution to the asset base of the following items

What is the contribution to the asset base of the following items under the Basel III requirements? a. $10 million cash reserves. b. $50 million 91-day U.S. Treasury bills. c. $25 million cash items i...

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Q: Disregarding the capital conservation buffer, what is the bank’s capital adequacy

Disregarding the capital conservation buffer, what is the bank’s capital adequacy level (under Basel III) if the par value of its equity is $225,000, surplus value of equity is $200,...

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Q: City Bank has estimated that its average daily net transaction accounts balance

City Bank has estimated that its average daily net transaction accounts balance over the recent 14-day computation period was $225 million. The average daily balance with the Fed over the 14-day maint...

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Q: A mutual fund plans to purchase $500,000 of 30

A mutual fund plans to purchase $500,000 of 30-year Treasury bonds in four months. These bonds have a duration of 12 years and are priced at 96-08 (32nds). The mutual fund is concerned about interest...

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Q: The average daily net transaction accounts of a local bank during the

The average daily net transaction accounts of a local bank during the most recent reserve computation period is $325 million. The amount of average daily reserves at the Fed during the reserve mainten...

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Q: How do monetary policy actions by the Federal Reserve impact interest rates

How do monetary policy actions by the Federal Reserve impact interest rates?

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Q: What is the re pricing gap? In using this model to

What is the re pricing gap? In using this model to evaluate interest rate risk, what is meant by rate sensitivity? On what financial performance variable does the re pricing gap model focus? Explain....

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