Exam 15: The Management of Capital

Which of the following is an internal assessment tool that is used by the participating banks to ensure that they are prepared for the possibly damaging impact of ever changing market conditions?

Recently,the daily rate at which robberies have occurred in the U.S.has continued to climb.

The revised Basel I rules imposed capital requirements for market risk on:

The international treaty involving representatives from the U.S.and 12 other leading industrialized countries to impose common capital requirements on all banks is known as the ________________________.

One fundamental purpose for regulating capital is to limit losses to the government and other institutions arising from deposit insurance claims.

The Second National Bank of Lincoln has decided that,to raise funds it is going to issue new common equity through a pre-emptive rights offering,so that current owners will not have that ownership diluted.What way of meeting their capital needs is the bank taking?

The risk that has to do with banks trading in foreign currencies is called ________________________.

One defense against risk for a bank is to seek out customers located in different communities or in different countries.This defense is known as ________________________.

The largest component of capital among thrift institutions is ____________.

Along with the value at risk model,which is the other model that determines each bank's unique market risk exposure and the amount of capital it needs?

Which of the following would be an example of crime risk?

_____________ represents funds set aside for contingencies,such as legal action against the institution,as well as providing a reserve for dividends expected to be paid but not yet declared,and a sinking fund to retire stock or debt in the future.

A bank has $200 million in assets in the 0 percent risk-weight category.It has $400 million in assets in the 20 percent risk-weight category.It has $1,000 million in assets in the 50 percent risk-weight category and has $1,000 million in assets in the 100 percent risk-weight category.This bank has $96 million in Tier 1 capital and $48 million in Tier 2 capital.What is this bank's ratio of Tier 1 capital to risk assets?

The textbook discusses several alternative defenses banks have against risk.These defenses include:

A bank has capital to risk-weighted assets of 11.5%,Tier 1 capital to risk-weighted assets of 7.2% and a leverage ratio of 5.8%.What type of bank is this?

The last line of defense against bank failure is owner's capital,according to the textbook.

____________ models measure a lender's exposure to defaults or credit downgrades.

____________ models attempt to measure price or market risk of a portfolio of assets and attempt to determine the maximum loss they might sustain over a designated period of time.

Which of the following is in the 20 percent risk-weight (low credit risk)category?

The Norton Bank of Illinois,has just issued trust preferred stock.What defense against risk is this bank making?