Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Banks, Thrifts and Credit Unions all are faced with low Return-on-Assets ratios. This fact makes it critical that the management of these institutions manage their

Banks, Thrifts and Credit Unions all are faced with low Return-on-Assets ratios. This fact makes it critical that the management of these institutions manage their income and expenses very closely. Speak to this low ROA as it relates to the management of interest rate margin, noninterest income and expenses, and loan loss reserves. Your explanation should clarify why it is that these financial institutions must be conservative as they chose where to invest their funds. You may be helped in your answer by the following information provided by Investopedia.

1. Explain what Return-on-Assets mean to the bank manager and/or bank owner when reviewing the relationship between the ROA and ROE?

2. How does this affect the credit decision in the loan portfolio and the investment portfolio?

Please explain in your own words. Thanks

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Mathematics Of Finance

Authors: Robert Brown, Steve Kopp, Petr Zima

8th Edition

0070876460, 978-0070876460

More Books

Students also viewed these Finance questions

Question

Verify that f xy = f yx for the following functions. f(x, y) = xy

Answered: 1 week ago

Question

preparing for and completing job interviews and considering offers.

Answered: 1 week ago