Question 1

Unanticipated diseconomies of scale and scope are a result of:

Accepted Answer

A)  technology risk. 
B)  interest rate risk. 
C)  foreign exchange risk. 
D)  credit risk. 
A)  technology risk. 
B)  interest rate risk. 
C)  foreign exchange risk. 
D)  credit risk.

Question 2

Non-performing loans are defined as loans that:

Accepted Answer

A)  are either in default or close to being in default and are at least 90 days in arrears. 
B)  have been written off and loans that are at least 80 days in arrears. 
C)  are either in default or close to being in default and are at least 60 days in arrears. 
D)  have been written off and loans that are at least 60 days in arrears. 
A)  are either in default or close to being in default and are at least 90 days in arrears. 
B)  have been written off and loans that are at least 80 days in arrears. 
C)  are either in default or close to being in default and are at least 60 days in arrears. 
D)  have been written off and loans that are at least 60 days in arrears.

Question 3

Politically motivated limitations on payments of foreign currency may expose the FI to:

Accepted Answer

A)  sovereign or country risk. 
B)  interest rate risk. 
C)  credit risk. 
D)  foreign exchange risk. 
A)  sovereign or country risk. 
B)  interest rate risk. 
C)  credit risk. 
D)  foreign exchange risk.

Question 4

A decrease in interest rates means that the discount rate on cash flows is:

Accepted Answer

A)  decreased and thus the market value of an FI's assets and liabilities decreases. 
B)  increased and thus the market value of an FI's assets and liabilities decreases. 
C)  increased and thus the market value of an FI's assets and liabilities increases. 
D)  decreased and thus the market value of an FI's assets and liabilities increases. 
A)  decreased and thus the market value of an FI's assets and liabilities decreases. 
B)  increased and thus the market value of an FI's assets and liabilities decreases. 
C)  increased and thus the market value of an FI's assets and liabilities increases. 
D)  decreased and thus the market value of an FI's assets and liabilities increases.

Question 5

Event risks such as earthquakes, fraud and theft:

Accepted Answer

A)  do not have an impact on an FI's performance. 
B)  are easy to measure and to predict. 
C)  form a normal cost of doing business for FIs. 
D)  may have a significant and negative impact on an FI's performance but are difficult to measure and to predict. 
A)  do not have an impact on an FI's performance. 
B)  are easy to measure and to predict. 
C)  form a normal cost of doing business for FIs. 
D)  may have a significant and negative impact on an FI's performance but are difficult to measure and to predict.

Question 6

During periods of high and volatile inflation, an FI's:

Accepted Answer

A)  interest rate risk exposure and credit risk exposure tends to decrease. 
B)  interest rate risk exposure and credit risk exposure tends to increase. 
C)  interest rate risk exposure and credit risk exposure tends to be unaffected. 
D)  None of the listed options are correct. 
A)  interest rate risk exposure and credit risk exposure tends to decrease. 
B)  interest rate risk exposure and credit risk exposure tends to increase. 
C)  interest rate risk exposure and credit risk exposure tends to be unaffected. 
D)  None of the listed options are correct.

Question 7

If an FI is long-funded it means that the:

Accepted Answer

A)  maturity of assets equals the maturity of liabilities. 
B)  bank holds more long-term assets than short-term assets. 
C)  maturity of liabilities is less than the maturity of assets. 
D)  maturity of liabilities is longer than the maturity of its assets. 
A)  maturity of assets equals the maturity of liabilities. 
B)  bank holds more long-term assets than short-term assets. 
C)  maturity of liabilities is less than the maturity of assets. 
D)  maturity of liabilities is longer than the maturity of its assets.

Unanticipated diseconomies of scale and scope are a result of:

Non-performing loans are defined as loans that:

Politically motivated limitations on payments of foreign currency may expose the FI to:

A decrease in interest rates means that the discount rate on cash flows is:

Event risks such as earthquakes, fraud and theft:

During periods of high and volatile inflation, an FI's:

If an FI is long-funded it means that the:

Why Are Financial Institutions Special

The Financial Services Industry: Depository Institutions

The Financial Services Industry: Other Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: the Duration Model

Managing Interest Rate Risk Using Off Balance Sheet Instruments

Credit Risk I: Individual Loan Risk

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Sovereign Risk

Foreign Exchange Risk

Liquidity Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Technology and Other Operational Risk

Capital Management and Adequacy

Filters

Exam 4: Risk of Financial Institutions

Unanticipated diseconomies of scale and scope are a result of:

Non-performing loans are defined as loans that:

Politically motivated limitations on payments of foreign currency may expose the FI to:

A decrease in interest rates means that the discount rate on cash flows is:

Event risks such as earthquakes, fraud and theft:

During periods of high and volatile inflation, an FI's:

If an FI is long-funded it means that the:

Why Are Financial Institutions Special

The Financial Services Industry: Depository Institutions

The Financial Services Industry: Other Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: the Duration Model

Managing Interest Rate Risk Using Off Balance Sheet Instruments

Credit Risk I: Individual Loan Risk

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Sovereign Risk

Foreign Exchange Risk

Liquidity Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Technology and Other Operational Risk

Capital Management and Adequacy

Filters