Question 1

Securitized home loans are off-balance-sheet assets.

Accepted Answer

A) True 
 B)False

Question 2

When evaluating funding risk, it is important to note that certain types of loan
Commitments are irrevocable. According to the Bank for International Settlements,
An example of such a commitment is:

Accepted Answer

A)  asset sale and repurchase agreements 
B)  outright forward purchases 
C)  note issuance facilities 
D)  all of the above 
A)  asset sale and repurchase agreements 
B)  outright forward purchases 
C)  note issuance facilities 
D)  all of the above

Question 3

In floor-ceiling agreements buying a call option in terms of interest rates is the same as buying a put option in terms of prices.

Accepted Answer

A) True 
 B)False

Question 4

Entering into an offsetting swap is a way to control:

Accepted Answer

A)  market risk 
B)  funding risk 
C)  credit risk 
D)  denomination risk 
A)  market risk 
B)  funding risk 
C)  credit risk 
D)  denomination risk

Question 5

An OTC option that combines ceiling and floor mechanics is the interest rate collar.

Accepted Answer

A) True 
 B)False

Question 6

A bank's promise to make a future loan to a customer under certain conditions is a(n):

Accepted Answer

A)  indenture 
B)  loan commitment 
C)  network 
D)  Euronote 
A)  indenture 
B)  loan commitment 
C)  network 
D)  Euronote

Question 7

Lock boxes are an example of:

Accepted Answer

A)  networking 
B)  trade finance 
C)  acceptance participation 
D)  cash management services 
A)  networking 
B)  trade finance 
C)  acceptance participation 
D)  cash management services

Question 8

The risk that a large number of borrowers will take down their loans simultaneously is:

Accepted Answer

A)  funding risk 
B)  interest rate risk 
C)  commitment risk 
D)  aggregation risk 
A)  funding risk 
B)  interest rate risk 
C)  commitment risk 
D)  aggregation risk

Question 9

In a loan guarantee a bank promises to make a loan to firm when they demand funds.

Accepted Answer

A) True 
 B)False

Question 10

Revolving loan commitments subject banks to:

Accepted Answer

A)  availability risk 
B)  interest rate risk 
C)  a and b 
D)  none of the above 
A)  availability risk 
B)  interest rate risk 
C)  a and b 
D)  none of the above

Question 11

NIFs involve bank guarantees of short-term debt obligations issued by other firms.

Accepted Answer

A) True 
 B)False

Question 12

An agreement between a bank and its customer that specifies the maximum lending rate on a loan is a(n):

Accepted Answer

A)  interest rate swap 
B)  ceiling agreement 
C)  revolving loan commitment 
D)  stop-out clause 
A)  interest rate swap 
B)  ceiling agreement 
C)  revolving loan commitment 
D)  stop-out clause

Question 13

A ceiling agreement between a bank and a firm establishes a minimum lending rat on a loan.

Accepted Answer

A) True 
 B)False

Question 14

Financial guarantees are a type of off-balance sheet activity in which commercial banks may engage.

Accepted Answer

A) True 
 B)False

Question 15

Buying a forward rate agreement (FRA) is analogous to buying a call and selling a put option.

Accepted Answer

A) True 
 B)False

Question 16

When a bank agrees to cover the current obligation of a third party if the third party fails to do so, this is called a:

Accepted Answer

A)  derivative security 
B)  interest rate swap 
C)  financial guarantee 
D)  securitized asset 
A)  derivative security 
B)  interest rate swap 
C)  financial guarantee 
D)  securitized asset

Securitized home loans are off-balance-sheet assets.

When evaluating funding risk, it is important to note that certain types of loan Commitments are irrevocable. According to the Bank for International Settlements, An example of such a commitment is:

In floor-ceiling agreements buying a call option in terms of interest rates is the same as buying a put option in terms of prices.

Entering into an offsetting swap is a way to control:

An OTC option that combines ceiling and floor mechanics is the interest rate collar.

A bank's promise to make a future loan to a customer under certain conditions is a(n):

Lock boxes are an example of:

The risk that a large number of borrowers will take down their loans simultaneously is:

In a loan guarantee a bank promises to make a loan to firm when they demand funds.

Revolving loan commitments subject banks to:

NIFs involve bank guarantees of short-term debt obligations issued by other firms.

An agreement between a bank and its customer that specifies the maximum lending rate on a loan is a(n):

A ceiling agreement between a bank and a firm establishes a minimum lending rat on a loan.

Financial guarantees are a type of off-balance sheet activity in which commercial banks may engage.

Buying a forward rate agreement (FRA) is analogous to buying a call and selling a put option.

When a bank agrees to cover the current obligation of a third party if the third party fails to do so, this is called a:

Functions and Forms of Banking

The Bank Regulatory Environment

Evaluating Bank Performance

Bank Valuation

An Overview of Assetliability Management Alm

Techniques of Assetliability Management: Futures, Options, and Swaps

Investment Management

Credit Evaluation Process

Commercial and Industrial Lending

Real Estate and Consumer Lending

Liquidity Management

Capital Management

Managing Liabilities

Securities, Investment Insurance Products

Other Financial Services

Electronic Banking

Global Financial Services

Filters

Exam 14: Off-Balance Sheet Activities

Securitized home loans are off-balance-sheet assets.

When evaluating funding risk, it is important to note that certain types of loan Commitments are irrevocable. According to the Bank for International Settlements, An example of such a commitment is:

In floor-ceiling agreements buying a call option in terms of interest rates is the same as buying a put option in terms of prices.

Entering into an offsetting swap is a way to control:

An OTC option that combines ceiling and floor mechanics is the interest rate collar.

A bank's promise to make a future loan to a customer under certain conditions is a(n):

Lock boxes are an example of:

The risk that a large number of borrowers will take down their loans simultaneously is:

In a loan guarantee a bank promises to make a loan to firm when they demand funds.

Revolving loan commitments subject banks to:

NIFs involve bank guarantees of short-term debt obligations issued by other firms.

An agreement between a bank and its customer that specifies the maximum lending rate on a loan is a(n):

A ceiling agreement between a bank and a firm establishes a minimum lending rat on a loan.

Financial guarantees are a type of off-balance sheet activity in which commercial banks may engage.

Buying a forward rate agreement (FRA) is analogous to buying a call and selling a put option.

When a bank agrees to cover the current obligation of a third party if the third party fails to do so, this is called a:

Functions and Forms of Banking

The Bank Regulatory Environment

Evaluating Bank Performance

Bank Valuation

An Overview of Assetliability Management Alm

Techniques of Assetliability Management: Futures, Options, and Swaps

Investment Management

Credit Evaluation Process

Commercial and Industrial Lending

Real Estate and Consumer Lending

Liquidity Management

Capital Management

Managing Liabilities

Securities, Investment Insurance Products

Other Financial Services

Electronic Banking

Global Financial Services

Filters