Question
1. A savings and loan has a return on assets (ROA) of 1.5 percent, and an equity to asset ratio of 8%. What is its
1. A savings and loan has a return on assets (ROA) of 1.5 percent, and an equity to asset ratio of 8%. What is its ROE?
a. 18.75%
b.15.75%
c.12.75%
d.10.75%
2. A bank has rate-sensitive assets of $100 and rate-sensitive liabilities of $200, which of the following answers is correct for this bank's funding gap and interest rate risk?
a. It has a positive funding gap, and hence, interest rate risk if interest rates fall. |
b. | It has a negative funding gap, and hence risk of a fall in its NIM if interest rates fall. |
c. | It has a negative funding gap, and hence risk of a fall in its NIM if interest rates rise |
d. | it has a zero funding gap, and hence no change in its NIM if interest rates change.
3. To measure credit risk, which of the following are indicators of great credit risk for a bank's loan portfolio relative to other peer banks.
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