Unit 5 – Assignment 1
- Unit 5 – Assignment 1
· Chapter Seventeen:
· Question 2
Bank Sources of Funds What are four major sources of funds for banks? What alternatives does a bank have if it needs temporary funds? What is the most common reason that banks issue bonds?
· Question 5
Federal Funds Define federal funds, federal funds market, and federal funds rate. Who sets the federal funds rate? Why is the federal funds market more active on Wednesday?
· Question 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.
· Question 13
Credit Crisis Explain how some mortgage operations by some commercial banks (along with other financial institutions) played a major role in instigating the credit crisis.
· Chapter Eighteen:
· Question 5
Glass-Steagall Act Briefly describe the Glass- Steagall Act. Then explain how the related regulations have changed.
· Question 7
CAMELS Ratings Explain how the CAMELS ratings are used.
Economies of Scale How do economies of scale in banking relate to the issue of interstate banking?
· Question 16
16. Financial Services Modernization Act Describe the Financial Services Modernization Act of 1999. Explain how it affected commercial bank operations and changed the competitive landscape among financial institutions.
· Question 18
18. Conversion of Securities Firms to BHCs Explain how the conversion of a securities firm to a bank hold- ing company (BHC) structure might reduce its risk.
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