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1)i) prepare down 3 kinds of commercial bank charters and point out which federal agency has main regulatory responsibility for each.

ii) prepare down 3 broad categories of consumer protection laws in banking and provide suitable ex of each type.

iii) What are two methods in which equity capital reduces bank risk?

iv) prepare down 3 reasons why banks are regulated.

v) When is a bank “critically undercapitalized” and prepare down the consequences?

2) Assume that each of 2 investments has a 4% chance of loss of $10 million, a 2% chance of loss of $1 million, and a 94% chance of a profit of $1 million. They are independent of each other.

i) Determine VaRfor one of investments when confidence level is= 95%?

ii) Determine expected shortfall when confidence level is= 95%?

iii) Determine VaRfor a portfolio consisting of two investments when confidence level is= 95%?

iv) Find out the expected shortfall for portfolio consisting of two investments when confidence level is= 95%?

v) Illustarte that, in this ex, VaRdoes not satisfy subadditivity condition while expected shortfall does.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M914638

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