Podcast
Questions and Answers
True or false: Commercial banks form their balance sheets in layers from most volatile to most stable.
True or false: Commercial banks form their balance sheets in layers from most volatile to most stable.
False
True or false: Wholesale funding is more stable than retail funding.
True or false: Wholesale funding is more stable than retail funding.
False
True or false: Wholesale funding based banks are more exposed to liquidity and interest rate risks.
True or false: Wholesale funding based banks are more exposed to liquidity and interest rate risks.
True
True or false: Transaction deposits are always interest bearing.
True or false: Transaction deposits are always interest bearing.
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True or false: Passbook savings deposits have a higher interest rate than transaction deposits.
True or false: Passbook savings deposits have a higher interest rate than transaction deposits.
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True or false: Relationship pricing promotes greater loyalty among customers.
True or false: Relationship pricing promotes greater loyalty among customers.
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True or false: The Fed Reserve requires collateral for every loan made through its discount window.
True or false: The Fed Reserve requires collateral for every loan made through its discount window.
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True or false: Secondary credit is available at a lower rate than primary credit.
True or false: Secondary credit is available at a lower rate than primary credit.
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True or false: Operational risk is the most important risk after credit risk.
True or false: Operational risk is the most important risk after credit risk.
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True or false: Most banks allocate a significant portion of their funds to investments in securities managed by investment officers.
True or false: Most banks allocate a significant portion of their funds to investments in securities managed by investment officers.
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True or false: Treasury bills have a high degree of safety, liquidity, and can be used for collateral borrowing.
True or false: Treasury bills have a high degree of safety, liquidity, and can be used for collateral borrowing.
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True or false: Corporate bonds generally have higher pre-tax yields compared to government bonds.
True or false: Corporate bonds generally have higher pre-tax yields compared to government bonds.
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True or false: Systemic risk is a risk that an event will trigger a loss of confidence in a substantial portion of the financial system that is serious enough to have adverse consequences for the real economy.
True or false: Systemic risk is a risk that an event will trigger a loss of confidence in a substantial portion of the financial system that is serious enough to have adverse consequences for the real economy.
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True or false: The asset quality of EU banks has been a major issue in recent years, with provisions on bad loans wiping out banks' core profitability.
True or false: The asset quality of EU banks has been a major issue in recent years, with provisions on bad loans wiping out banks' core profitability.
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True or false: Selling non-performing loans can lead to benefits such as release of risk-weighted assets, improvement of capital ratios, and potentially higher profits and return on equity.
True or false: Selling non-performing loans can lead to benefits such as release of risk-weighted assets, improvement of capital ratios, and potentially higher profits and return on equity.
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True or false: Liquidity deficit occurs when a financial firm has more liabilities than assets at a given moment in time?
True or false: Liquidity deficit occurs when a financial firm has more liabilities than assets at a given moment in time?
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True or false: Asset Liquidity Management involves storing liquidity in assets, predominantly in cash and marketable securities, and converting selected assets into cash when liquidity is needed?
True or false: Asset Liquidity Management involves storing liquidity in assets, predominantly in cash and marketable securities, and converting selected assets into cash when liquidity is needed?
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True or false: Borrowed Liquidity Management is a low-risk strategy because interest rates are stable and credit availability is always guaranteed?
True or false: Borrowed Liquidity Management is a low-risk strategy because interest rates are stable and credit availability is always guaranteed?
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True or false: Reclassification Methodology is a common method used to separate interest earning assets from interest bearing liabilities?
True or false: Reclassification Methodology is a common method used to separate interest earning assets from interest bearing liabilities?
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True or false: The IEA - IBL spread is a key component for a bank's income generation capacity?
True or false: The IEA - IBL spread is a key component for a bank's income generation capacity?
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True or false: The analysis of a bank's loan book is important in understanding the key element of interest earning assets?
True or false: The analysis of a bank's loan book is important in understanding the key element of interest earning assets?
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True or false: Due to customers is the most important indicator of a bank's funding strategy?
True or false: Due to customers is the most important indicator of a bank's funding strategy?
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True or false: Interbank funding is a more stable source of funding compared to deposits?
True or false: Interbank funding is a more stable source of funding compared to deposits?
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True or false: Securities issued by a bank are a higher cost source of funding compared to customer deposits?
True or false: Securities issued by a bank are a higher cost source of funding compared to customer deposits?
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True or false: The Loan to Deposit Ratio (LD Ratio) is calculated by dividing customer direct funding by customer deposits?
True or false: The Loan to Deposit Ratio (LD Ratio) is calculated by dividing customer direct funding by customer deposits?
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What are the three lending programs available from the Federal Reserve's discount window?
What are the three lending programs available from the Federal Reserve's discount window?
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What is the purpose of a bank's capital?
What is the purpose of a bank's capital?
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What is the Total Risk Based Capital Ratio?
What is the Total Risk Based Capital Ratio?
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What are the different types of transaction deposits?
What are the different types of transaction deposits?
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What are the different types of non-transaction savings deposits?
What are the different types of non-transaction savings deposits?
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What are the pricing strategies for deposits?
What are the pricing strategies for deposits?
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What are some reasons why banks allocate funds to investments in securities?
What are some reasons why banks allocate funds to investments in securities?
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What are some examples of money market instruments?
What are some examples of money market instruments?
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What are some strategies for managing investment maturities?
What are some strategies for managing investment maturities?
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What is systemic risk?
What is systemic risk?
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What are the benefits of selling non-performing loans?
What are the benefits of selling non-performing loans?
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What factors influence the price-to-book value ratio (PBV) of a stock?
What factors influence the price-to-book value ratio (PBV) of a stock?
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What are the three common methods for estimating financial institutions' liquidity needs?
What are the three common methods for estimating financial institutions' liquidity needs?
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What are the key principles for financial institutions' financial statement analysis?
What are the key principles for financial institutions' financial statement analysis?
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Which financial statements need to be analyzed for a comprehensive understanding of a bank's financial performance?
Which financial statements need to be analyzed for a comprehensive understanding of a bank's financial performance?
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Why is retail funding more stable than wholesale funding?
Why is retail funding more stable than wholesale funding?
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Why is wholesale funding more volatile than core deposits?
Why is wholesale funding more volatile than core deposits?
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What are the benefits and risks associated with wholesale funding?
What are the benefits and risks associated with wholesale funding?
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What is the purpose of reclassification methodology in a bank's balance sheet?
What is the purpose of reclassification methodology in a bank's balance sheet?
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What is the key element of interest earning assets?
What is the key element of interest earning assets?
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What is the key component of interest bearing liabilities?
What is the key component of interest bearing liabilities?
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What is the formula for calculating Net Interest Income Weight?
What is the formula for calculating Net Interest Income Weight?
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What is the formula for calculating Net Fees and Commissions Weight?
What is the formula for calculating Net Fees and Commissions Weight?
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What is the formula for calculating Net Trading and Other Operating Income Weight?
What is the formula for calculating Net Trading and Other Operating Income Weight?
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What is the formula for calculating Loan to Deposit Ratio?
What is the formula for calculating Loan to Deposit Ratio?
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