Final Exam – Financial Institution

Budgetary Insitutions Closed book, Closed Notes 1. Last Examination Fall 2011 Roger Staiger III What is the contrast between the spot showcase and the prospects advertise In the spot advertise, exchanges are executed quickly, I. e. constant. In the fates markets, which is a subordinates advertise, exchanges are settled upon today however settled lat later dates later on. 2. What is the principle contrast between the currency markets and capital markets? Currency markets are for momentary 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 prerequisites to move capital inside a productive market? a. b. c. d. e. f. Stable Government Low Inflation Savings (individual, corporate, financial) Competition Disclosure (straightforwardness) Fair market rules (lawful framework) 4. Draw the contrast among immediate and roundabout capital development process. Business Securities Dollars Savers Business 5 . Monetary Intermed. Savers Describe the motivation behind a speculation banking house. a. Structure Sellable Securities b. Purchase protections from partnerships c. Exchange to ‘savers’ (merchant exchanges) 6. Name two wellsprings of assets for Financial Intermediaries. . Stores (loan specialists, credit associations, annuity reserves) b. Premiums (disaster protection) c. Offer issuance (common assets) Name four primary jobs for vault establishments. 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 (distribution center) store accounts Underwrite hazard on advances â€Å"Expertise† in measuring financial soundness Provide enhancement for put advances What are the remarkable attributes for a credit association isolating it from other safe foundations? . b. c. d. Not revenue driven All business limited to individuals All individu als share a typical bond (topography, manager) Small (generally) storehouse foundation 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 fundamental resource. 12. A spouse buys protection on her better half (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 monetary security should the husband terminate. The system is misfortune minimization and along these lines 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 Financial 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 markdown window) Collect monetary information Research 16. What number of region 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. Counterbalance effect of different conditions that influence level of assets, e. g. occasion traffic 19. For what reason is the save necessity proportion significant? Speaks to the extent of stores that must be held as stores for a money related 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. Markdown 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 steadiness) at 2. 00% 24. What are the general 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 h as experienced over $10,000bn in misfortunes over the current budgetary emergency and still losing†¦ 25. What is LIBOR?London Interbank Offering Rate: Rate that 16 enormous 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 pervades most economies. Clarify what this implies for the getting 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 outline for a zero coupon bond. 28. What are three strategies that a monetary organization uses to oversee loan fee hazard? a. b. c. d. e. Development coordinating Using drifting rate advances Using loan cost fates contra cts Using financing cost trades Using loan fee tops 29. For what reason do money related foundations sell their own guaranteed advances? a. b. c. d. Look after administrations (expense based pay) Sell resource (acquire positive spread) Sell resource (negative spread yet fundamentally diminished hazard presentation) Turnover of capital 30. What are the three primary financial controllers in the U. S.? a. Representative of Currency b.Federal Deposit Insurance Corporation (FDIC) c. Central bank 31. What is the present protection limit by account offered to private financial specialists 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 endorsing stocks and obligations of organization c. Proposed to forestall irreconcilable situations 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 generally 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 detailing Internal revealing procedures required Central database of data required Executives specifically confirming (marking) fiscal summaries What was Basel? Basel I Accord 1988: 12 significant nations concurred on uniform capital norms Tier 1 and Tier 2 Capital ampleness Basel II: Revision of the estimation of credit hazard; expressly represent operational hazard; requires more divulgence about presentation chance Basel III: Global administrative gauges for capital sufficiency 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 give n certainty level over a limited timeframe. 38. What is significant about Dodd-Frank? Not at all like SOX, it incorporates enormous private substances under the shroud of guideline, e. g. flexible investments, that present fundamental hazard. Additionally planned to include straightforwardness and power OTC items to exchange across trades for more noteworthy straightforwardness. Conceivably disengaged inspirations of representatives and organizations for revealing misrepresentation, I. . representatives (conceivably previous) share in a segment of a SEC fine recuperated. (note: Dodd-Frank is 2319 pages such a significant number of answers will be given full credit. The above are significant features, yet 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