Solution Library

Calculate Expected Return On Loans Portfolio For A Financial Institution

QuestionA. Borrower Rating                          Loan Amount   Expected Return  Standard Deviation    A           &nb ... Read More

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Calculate The Asset Allocation Proportion Of Banks Relative To National Bank Average

QuestionA.                               National Banks        Bank A             Bank BReal Estate Loans       ... Read More

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Interpretation Of Loan Losses Compared To Percentage Of Total Loans

QuestionA.    A regression of sectoral loan losses against total loans losses, both measured as a percentage of total loans, of a bank results in the following beta coefficients for the real estate (RE) and commercial (CL) loan variables: bRE = 1.2, bCL = 1.6. The intercept for both r ... Read More

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Limits Imposed By Bank on Unsecured Individual Loans

QuestionKansas Bank has a policy of limiting their loans to any single customer so that the maximum loss as a percent of capital will not exceed 20 percent for both secured and unsecured loans. The limit has been adopted under the assumption that if the unsecured loan is defaulted, there will be no ... Read More

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Calculate Standard Deviation of Asset Allocation Proportion of Two Banks Relative to National Benchmark

Question                            National Benchmark        Bank A        Bank BConsumer Loans       &n ... Read More

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Calculate The Expected Return On Loan With A Recovery Chance Of 90%

Question1. LNW Bank is charging a 12 percent interest rate on a $5,000,000 loan.  The bank also charged $100,000 in fees to originate the loan. The bank has a cost of funds of 8 percent. The borrower has a five percent chance of default, and if default occurs, the bank expects to recover 90 per ... Read More

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Calculate The Difference Between Assets And Liabilities Of Financial Institution

Question1. An FI has assets of $800 million and liabilities of $740 million. a. What is the balance sheet capital?      a. ‑$60 million; b. $60 million; c. $740 million; d. $800 million; e. This question cannot be answered without information about of balance sheet as ... Read More

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Calculate Savings And Asset Adjustment Made by Company Issuing Commercial Paper

Question A corporation is planning to issue $10 million worth of 180-day commercial paper. In order to reduce the interest rates by 25 basis points (per annum), it plans to back this issue with a standby letter of credit or a loan commitment. The standby letter of credit is available for 20 basis p ... Read More

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Calculate Size, Cost of Reducing Asset Base And Purchased Liquidity Management Of A Bank

Question Assets Liabilities and Equity Cash Required Reserves $2 million Deposits $8 million Loans $10 million Long-term Debt $2 million     Equity $2 million Total $12 million Total ... Read More

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Calculate Sources Of Liquidity, Uses Of Liquidity And Net Liquidity For A Company

Question An FI has $5 million in cash reserves with the Fed in excess of its reserve requirements, $5 million in T-Bills, and a credit line of $10 million to borrow in the repo market. It currently has lent $2 million in the Fed Funds market and borrowed $1 million from the Federal discount window ... Read More

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Calculate Average Implicit Interest Rate And Gross Interest Return Calculation

Question1. What is the average implicit interest rate on a $100,000 account if the bank's average management costs are $2,500 and annual fees average $1,750?    a.    4.25 percent.    b.    2.50 percent.    c.   &nb ... Read More

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Calculate Average Implicit Interest Rate And Gross Interest Return Calculation

QuestionThe following demand deposits and cash reserves at the Fed have been documented by a bank for the computation of reserve requirements (in millions). Reserves are vault cash and reserves at the Fed.   Monday Tuesday Wednesday Thursday Friday &nb ... Read More

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