Essential Concepts in Banking`

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  • Created by: Fez_xx
  • Created on: 24-03-19 18:49

1. When DGAP > 0 what are the possible solutions to reduce interest risk?

  • shortening asset durations e.g. selling short term securities and buying long-term securities
  • Shortening asset duration e.g. buy short term securities and sell long-term securities
  • lengthening asset duration e.g.buy short term securities and sell long term securities
  • lengthening asset durations e.g. selling short term securities and buying long-term securities
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2. Which of the following can be described as involving direct finance?

  • people buy shares of common stock in the primary markets
  • a corporation takes out loans from a bank
  • a corporate buys a short-term corporate security in a secondary market
  • people buy shares in a mutual fund

3. ---- institutions are financial intermediaries that acquire funds at periodic intervals on a contractual basis

  • thrift
  • depository
  • contractual savings
  • investment

4. Which of the following is a contractual savings institution?

  • a savings and loan association
  • a life insurance company
  • a credit union
  • a mutual fund

5. A Financial crisis is

  • typically followed by an economic boom
  • a major disruption in the financial markets
  • a feature of developing economies only
  • not possible in the modern financial environment
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