An FI manager observes that the credit ratings of a number of firms in the manufacturing sector decline faster than has been historically experienced. In response, the manager curtail lending to that sector. What credit risk measurement model the manage is using? a. Concentration limits. b. Migration analysis. c. Moody's Analytics portfolio manager model. d. Loan loss ratio-based model.

As of October 2018, according to Regulation D of the Federal Reserve Act of 1913, a DI with $349 million of net transaction accounts during the computational period is required to hold how much cash reserves during the maintenance period?

a.

38.569

b.

26.339

c.

38.089

d.

25.859

What was the result of the establishment of FDIC in 1933?

a.

It provides incentives to liability holders to engage in bank runs.

b.

It provides preference to those who are first in line to withdraw funds over those last in line.

c.

It decreases the likelihood contagious runs.

d.

It increases concerns about the asset quality of FI.

e.

It increases concerns about solvency of an FI.

FIs' holding of liquid assets is a constrained optimization because

a.

An FI facing little risk of liquidity withdrawals is allowed by regulators to hold less reserve

b.

The liquid asset reserve requirements imposed by regulators set a maximum bound on the level of long-term loans

c.

Regulators may require FIs to hold more reserves than the privately optimal amount

d.

An FI may increase their liquidity risk taking without the reserve requirements