Exam 16: Off-Balance-Sheet Risk

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An FI has assets of $800 million and liabilities of $740 million. If the FI had contingent assets of $40 million and contingent liabilities of $160 million,calculate the stockholder's true net worth (ignore the option mentioned in previous question).

(Multiple Choice)

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Question 21

Which of the following is a non-schedule L off-balance-sheet risk?

(Multiple Choice)

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Question 22

The aggregate commitment funding risk can increase the cost of funds above normal levels.

(True/False)

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Question 23

FIs generally include when-issued OBS items as part of their holdings of option contracts.

(True/False)

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Question 24

As compared to letters of credit (LCs),standby letters of credit (SLCs)typically are used to cover contingencies that potentially are more severe and which may not be trade related.

(True/False)

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Question 25

One way to completely protect the lender against interest rate risk on a loan commitment is for the lender to price the loan at a variable rate against some index.

(True/False)

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Question 26

If an FI enters into a loan commitment,it is essentially entering into a forward contract.

(True/False)

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Question 27

Which of the following is true of an 'adverse material change in conditions clause' used in a loan commitment?

(Multiple Choice)

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Question 28

Back-end fees on loan commitments are charged as a certain percentage of

(Multiple Choice)

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Question 29

If a future credit crunch is possible,a loan commitment may expose the FI to

(Multiple Choice)

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Question 30

Loans sold with recourse by an FI may have future contingent liability off-balance-sheet implications for the FI.

(True/False)

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Question 31

Even though an FI may have off-balance-sheet activities,the true net worth is equal to on-balance sheet assets minus on-balance sheet liabilities.

(True/False)

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Question 32

Off-balance-sheet items can generate cash flows that immediately impact the bank's financial performance.

(True/False)

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Question 33

Which of the following refers to the fee charged on the unused balance of a loan commitment.

(Multiple Choice)

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Question 34

Where are the contingent items disclosed in the financial statements?

(Multiple Choice)

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Question 35

Off-balance-sheet activities are an important source of fee income for many FIs.

(True/False)

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Question 36

The ability to form financial holding companies for the purpose of creating full-service financial institutions has caused an increase in affiliate risk.

(True/False)

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Question 37

In economic terms,the letters of credit (LCs)and stand-by letters of credit (SLCs)sold by an FI

(Multiple Choice)

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Question 38

Which of the following is true of the market price of a futures contract over time?

(Multiple Choice)

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Question 39

Up-front fees on loan commitments are charged as a certain percentage of

(Multiple Choice)

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Question 40

Showing 21 - 40 of 109

Exam 16: Off-Balance-Sheet Risk

An FI has assets of $800 million and liabilities of $740 million. If the FI had contingent assets of $40 million and contingent liabilities of $160 million,calculate the stockholder's true net worth (ignore the option mentioned in previous question).

Which of the following is a non-schedule L off-balance-sheet risk?

The aggregate commitment funding risk can increase the cost of funds above normal levels.

FIs generally include when-issued OBS items as part of their holdings of option contracts.

As compared to letters of credit (LCs),standby letters of credit (SLCs)typically are used to cover contingencies that potentially are more severe and which may not be trade related.

One way to completely protect the lender against interest rate risk on a loan commitment is for the lender to price the loan at a variable rate against some index.

If an FI enters into a loan commitment,it is essentially entering into a forward contract.

Which of the following is true of an 'adverse material change in conditions clause' used in a loan commitment?

Back-end fees on loan commitments are charged as a certain percentage of

If a future credit crunch is possible,a loan commitment may expose the FI to

Loans sold with recourse by an FI may have future contingent liability off-balance-sheet implications for the FI.

Even though an FI may have off-balance-sheet activities,the true net worth is equal to on-balance sheet assets minus on-balance sheet liabilities.

Off-balance-sheet items can generate cash flows that immediately impact the bank's financial performance.

Which of the following refers to the fee charged on the unused balance of a loan commitment.

Where are the contingent items disclosed in the financial statements?

Off-balance-sheet activities are an important source of fee income for many FIs.

The ability to form financial holding companies for the purpose of creating full-service financial institutions has caused an increase in affiliate risk.

In economic terms,the letters of credit (LCs)and stand-by letters of credit (SLCs)sold by an FI

Which of the following is true of the market price of a futures contract over time?

Up-front fees on loan commitments are charged as a certain percentage of

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