Final Exam – Financial Institution

Money related Insitutions Closed book, Closed Notes 1. Last Examination Fall 2011 Roger Staiger III What is the contrast between the spot advertise and the prospects showcase In the spot advertise, exchanges are executed promptly, I. e. constant. In the prospects markets, which is a subsidiaries advertise, exchanges are settled upon today yet settled lat later dates later on. 2. What is the principle contrast between the currency markets and capital markets? Currency markets are for transient security trades, I. e. under 270 days. The capital markets are for long haul security trades, I. e. more prominent than one year. 3.What are four necessities to move capital inside an effective market? a. b. c. d. e. f. Stable Government Low Inflation Savings (individual, corporate, financial) Competition Disclosure (straightforwardness) Fair market rules (legitimate framework) 4. Draw the distinction among immediate and circuitous capital development process. Business Securities Dollars Savers Business 5. Budgetary Intermed. Savers Describe the motivation behind a venture banking house. a. Structure Sellable Securities b. Purchase protections from companies c. Exchange to ‘savers’ (merchant exchanges) 6. Name two wellsprings of assets for Financial Intermediaries. . Stores (loan specialists, credit associations, annuity reserves) b. Premiums (life coverage) c. Offer issuance (shared assets) Name four primary jobs for store foundations. a. Offer store accounts 7. All issues similarly weighted Page 1 of 7 Financial Insitutions Closed book, Closed Notes b. c. d. e. 8. Last Examination Fall 2011 Roger Staiger III Repackage (stockroom) store accounts Underwrite chance on advances â€Å"Expertise† in evaluating financial soundness Provide enhancement for set advances What are the interesting qualities for a credit association isolating it from other vault foundations? . b. c. d. Not revenue driven All business limited to individuals All individuals share a t ypical bond (geology, boss) Small (moderately) safe establishment 9. Name two of the protections found in the Money Markets. a. Treasuries b. Business Paper 10. Name two of the protections found in the Capital Markets. a. b. c. d. Fixed salary protections Mortgages Securitized items Equity 11. Characterize â€Å"Derivative†. A benefit for which the worth is gotten from a hidden resource. 12. A spouse buys protection on her significant other (the marriage is adoring). What kind of â€Å"trader† is the wife?A â€Å"hedger† as the spouse isn't buying the instrument to benefit from the loss of her better half however to give money related security should the husband terminate. The system is misfortune minimization and hence a support. 13. Name two enormous dangers when contributing abroad. a. Nation Risk b. Outside Exchange Risk c. Loan fee Risk Note: B&C could be viewed as equal because of financing cost equality. All issues similarly weighted Page 2 of 7 Finan cial Insitutions Closed book, Closed Notes 14. Last Examination Fall 2011 Roger Staiger III What is viewed as the main Federal District Bank?New York Federal Reserve 15. Name three activities performed by Federal District Banks. a. b. c. d. e. Clear Checks Replace old cash Provide advances through rebate window) Collect monetary information Research 16. What number of area banks are there in the Federal Reserve framework? 12 17. Name five wellsprings of information utilized by the FOMC. a. b. c. d. e. f. g. h. I. j. k. l. m. Wages Consumer costs Unemployment GDP Business inventories Foreign Exchange Rates Interest Rates Financial Market Conditions Production Levels Business Investment Residential Construction International Trade International Economic Growth 18.Why does the Federal Reserve perform Open Market Operations? a. Increment/decline level of assets in advertise b. Balance effect of different conditions that influence level of assets, e. g. occasion traffic 19. For what reas on is the save prerequisite proportion significant? Speaks to the extent of stores that must be held as stores for a budgetary organization. It is one of the determinants of the cash flexibly. 20. What are the two rates that the Federal Reserve sets? a. Government Funds Rate b. Rebate Rate All issues similarly weighted Page 3 of 7 Financial Insitutions Closed book, Closed Notes 21. Last Examination Fall 2011 Roger Staiger IIIWhat are the four parts of GDP? Gross domestic product = Consumption + Investment + Government Spending + Net Exports 22. What are the objectives of the Federal Reserve? a. Control swelling (value soundness) at 2. 00% b. Advance Growth 23. What are the objectives of the ECB? a. Control expansion (value solidness) at 2. 00% 24. What are the overall sizes of every benefit class in the U. S.? Fixed Income ($32,000bn) Real Estate ($20,000bn) Equities ($18,000bn) Note: In 2006, Real Estate was the biggest resource class yet has experienced over $10,000bn in misfortun es over the current money related emergency and still losing†¦ 25. What is LIBOR?London Interbank Offering Rate: Rate that 16 huge worldwide business banks loan 10 distinct monetary standards at 15 unique developments to one another in the overnight market. 26. The world is sheltered and development penetrates most economies. Clarify what this implies for the acquiring rate for the US government utilizing a Supply/Demand bend and income outline for Treasuries. Cost S P0 P1 D Quantity P As cost diminishing, yield builds, I. e. it costs more for the U. S. government to get. All issues similarly weighted Page 4 of 7 Financial Insitutions Closed book, Closed Notes 27. Last Examination Fall 2011 Roger Staiger IIIDraw the income graph for a zero coupon bond. 28. What are three techniques that a money related foundation uses to oversee loan fee hazard? a. b. c. d. e. Development coordinating Using drifting rate credits Using loan fee prospects contracts Using financing cost trades Usi ng financing cost tops 29. For what reason do money related establishments sell their own guaranteed credits? a. b. c. d. Look after administrations (charge based pay) Sell resource (procure positive spread) Sell resource (negative spread however essentially diminished hazard presentation) Turnover of capital 30. What are the three primary financial controllers in the U. S.? a. Controller of Currency b.Federal Deposit Insurance Corporation (FDIC) c. Central bank 31. What is the present protection limit by account offered to private speculators by the FDIC? $250,000 32. What was significant about Glass-Steagall? a. Isolated banking and protections exercises b. Forestalled any firm that acknowledged stores from guaranteeing stocks and obligations of company c. Proposed to forestall irreconcilable circumstances 33. What significant about Gramm-Leach-Bliley Act a. Revoked Glass-Steagall b. Permitted association between banks, protections firms, and insurance agencies 34. What was genera lly significant about Sarbanes-Oxley (SOX)? All issues similarly weightedPage 5 of 7 Financial Insitutions Closed book, Closed Notes a. b. c. d. 35. Last Examination Fall 2011 Roger Staiger III Increased straightforwardness of announcing Internal detailing forms required Central database of data required Executives expressly confirming (marking) budget summaries What was Basel? Basel I Accord 1988: 12 significant nations concurred on uniform capital norms Tier 1 and Tier 2 Capital sufficiency Basel II: Revision of the estimation of credit chance; expressly represent operational hazard; requires more revelation about introduction chance Basel III: Global administrative measures for capital ampleness and risk.Fully staged in by 2019. 36. What are CAMELs Ratings? Rating framework for banks: Capital Adequacy Asset Quality Management Earnings Liquidity Sensitivity 37. What is Value-at-Risk? Hazard measure that evaluates size of hazard to a given certainty level over a limited timeframe. 38. What is significant about Dodd-Frank? Dissimilar to SOX, it incorporates huge private elements under the cover of guideline, e. g. multifaceted investments, that present fundamental hazard. Likewise planned to include straightforwardness and power OTC items to exchange across trades for more prominent straightforwardness. Possibly separated inspirations of workers and enterprises for revealing misrepresentation, I. . representatives (perhaps previous) share in a part of a SEC fine recouped. (note: Dodd-Frank is 2319 pages such huge numbers of answers will be given full credit. The above are significant features, however once more, there is a broadness of right responses for this inquiry) 39. Who is the present Federal Reserve Chairperson? Ben Bernanke 40. Who is the present Treasurer AND Johns Hopkins University Graduate? All issues similarly weighted Page 6 of 7 Financial Insitutions Closed book, Closed Notes Tim Geithner Final Examination Fall 2011 Roger Staiger III All issues similarly weighted Page 7 of 7