FIN 3005 FIN3005 Week 8 Individual Work 2 (Everest University)

FIN3005 Week 8 Individual Work 2 (Everest University)

QUESTIONS AND APPLICATIONS

7.  Borrowing from the Federal Reserve: Describe the process of “borrowing at the Federal Reserve.” What rate is charged, and who sets it? Why do banks commonly borrow in the federal funds market rather than through the Federal Reserve?

9.  Bullet Loan:  Explain the advantage of a bullet loan.

10. Bank Use of Funds: Why do banks invest in securities even though loans typically generate a higher return? Explain how a bank decides the appropriate percentage of funds that should be allocated to each type of asset.

QUESTIONS AND APPLICATIONS

1.  Regulation of Bank Sources and Uses of Funds: How are a bank’s balance sheet decisions regulated?

3.  Moral Hazard and the Credit Crisis: Explain why the moral hazard problem received so much attention during the credit crisis.

9.  Value at Risk: Explain how the value at risk (VaR) method can be used to determine whether a bank has adequate capital.