Chapter 17: Questions: 2 and 12

Chapter 18: Quantitative Problem 3

Chapter 18: Web Exercise 1

Chapter 19: Web Exercise 1 and Web Exercise 2--Note that Bank and thrift Failures
is now listed as Failures and Assistance Transactions.

1.

Rank the following bank assets from most liquid to least liquid:

a.

Commercial Loans 3

b.

Securities 2

c.

Reserves 1

d.

Physical Capital 4

12.
If a bank doubles the amount of its capital and ROA stays constant,
what will happen to ROE?
ROE will be divided in half.

Chapter 18: Quantitative Problem 3

3. The bank commits to a loan agreement for $10 million to a commercial
customer. Calculate the banks capital ratio before and after the
agreement. Calculate the banks risk-weighted assets before and after the
agreement
Before the agreement
Capital ratio = 6/106 = 5.66%.

After the loan agreement

Commercial loans will carry a 100% Risk Weight with a riskweighted assets = $60 million.

Chapter 18: Web Exercise 1

Summary
From the website the FDIC will periodically review its regulations and statements of
policy to ensure that they are current, effective, efficient, and continue to meet
principles of the Statement of Policy. The FDIC as well is looking into reviewing the
1998 policies to help come up with a plan on how to update some of their listed
principles mostly on cost benefit analysis. The FDIC as also implemented some rules
and regulations to help promote transparency and openness from the rule makers.

Chapter 19: Web Exercise 1 and Web Exercise 2

According to the website https://www2.fdic.gov/hsob/HSOBRpt.asp there

were 14,146 commercial institutions with 0 branches in America and today
there are 5,876 commercial institutions and 83,394 branches. This trend
shows that commercial banking institutions are consolidating and branching
out.

From the website https://www2.fdic.gov/hsob/HSOBSummaryRpt.asp?

BegYear=2014&EndYear=2015&State=2&Header=1 there is a combined
failures of 4 charter type institutions in the year 2014-15 alone with a total
assets of $6,299,357 and total deposits of $4,487,038