Questions from Financial Markets


Q: If a bank finds that its ROE is too low because it

If a bank finds that its ROE is too low because it has too much bank capital, what can it do to raise its ROE?

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Q: If a bank is falling short of meeting its capital requirements by

If a bank is falling short of meeting its capital requirements by $1 million, what three things can it do to rectify the situation?

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Q: If the president of a bank told you that the bank was

If the president of a bank told you that the bank was so well run that it has never had to call in loans, sell securities, or borrow as a result of a deposit outflow, would you be willing to buy stock...

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Q: If the bank you own has no excess reserves and a sound

If the bank you own has no excess reserves and a sound customer comes in asking for a loan, should you automatically turn the customer down, explaining that you don’t have any excess reserves to loan...

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Q: Why has the development of overnight loan markets made it more likely

Why has the development of overnight loan markets made it more likely that banks will hold fewer excess reserves?

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Q: Which components of operating expenses experience the greatest fluctuations? Why?

Which components of operating expenses experience the greatest fluctuations? Why?

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Q: What does the net interest margin measure, and why is it

What does the net interest margin measure, and why is it important to bank managers?

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Q: If a bank doubles the amount of its capital and ROA stays

If a bank doubles the amount of its capital and ROA stays constant, what will happen to ROE?

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Q: What are the benefits and costs for a bank when it decides

What are the benefits and costs for a bank when it decides to increase the amount of its bank capital?

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Q: Rank the following bank assets from most to least liquid:

Rank the following bank assets from most to least liquid: a. Commercial loans b. Securities c. Reserves d. Physical capital

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