FINC 4320 Commercial Banking Quiz

Regarding the reserves and funding, which of the following statements are true?

-If a bank put all its excess reserves into the interbank lending market, it does not need to pay interest when use funding from the interbank borrowing market. -The first form of funding from central bank, the credit facility, has a lower interest rate, but it is limited in availability, whereas the last source of funding, the emergency credit has a higher interest rate and is unlimited. X -The first form of funding from central bank, the credit facility, has a lower interest rate, but it is limited in availability, whereas the last source of funding, the emergency credit has a higher interest rate and is unlimited. -Holding cash as reserves at the central bank is optional and there is no regulation imposed on the amount and holding period of the reserves. X

Which of the following statements are true?

-Increasing only your demand estimations to unrealistically high levels could increase your budgeted sales, but your actual sales would not be directly affected. -Your projections are updated automatically after each decision input. -Only the team decisions affect the actual results.

Regarding the SME loans, which of the following statements are true?

-The "Market" column shows all teams' average margin decision + reference rate in this round. -all SME loans are assumed to have five-year maturity and the reference rate is five-year Cesibor. X - All SME loans are assumed to have five-year maturity and the reference rate is five-year Cesibor. -The "Last round" column shows your margin decision + reference rate in previous round. X -All SME loans are assumed to have five-year maturity and the reference rate is five-year Cesibor. -The "Offers" column shows your margin decision + reference rate in this round. X

Regarding the practice round(s), which of the following statements are true?

-The practice round results have no impact on the actual game. -The decision inputs from the practice round are imported as the initial decisions to the first actual roun

Regarding the results, which of the following statements are true?

-You can access the results of all the previous rounds from the Results page. -You can download the results into an excel file using the "Download" button.

If the 12-month CESIBOR rate is 100 basis points, and the margin on a 12-month consumer loan is 270 basis points, what is the expected interest rate on the loan in percentage term

3.70%

Which of the following credit rating classes has the highest default probability?

AA rated X AAA rated X

Our group didn't manage to change the team decisions before the deadline. What will happen?

The results will be calculated using your previous round's decisions.

Regarding the projections, which of the following statements are true?

You may see a loss for the round in the Results page even if the projections for the round showed a profit.

The risk that borrowers being unable to repay their loans on time is called:

credit risk.

The risk that interest income will increase at a slower rate than interest expense is called:

interest rate risk

Customer deposits are classified on a bank's balance sheet as:

liabilities, because they are debts the bank owes to its customers

The risk that a debt security's price will fall, subjecting the investor to a potential capital loss is:

market risk