nks offer overdraft facilities and term loans, among other services, to their corporate clien plain the nature and use of overdrafts and term loans and give examples where a compa oht wish to use overdraft or a term loạn, (p.42-43)
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- Customer loans are classified on a Depository Institution (DI)'s balance sheet as Select one: A. liabilities, because the customer may default on the loan. B. assets, because the DI earns servicing fees on the loan. C. assets, because the DI's major asset is its client base. D. assets, because DIs originate and monitor loan portfolios. E. liabilities, because the DI must transfer funds to the borrower at the initiation of the loan.(AACSB) AnalysisIdentify the categories used on a classified balance sheet to report assets and liabilities. How do youdetermine what goes into each category? Why would a banker considering a loan to your company want toknow whether an asset or liability is current or long-term?Discuss in detail about the Loan securitization as a tool for managing risks by banks. Discuss about the parties involved in securitization process and the benefits of the securitization.
- (a). Distinguish Commercial banks and Micro-Finance Institutions (MFIs) by function and objective. (b). How insolvency risk can be managed or mitigated by financial institutionsA bank that grants loans to firms in a many different lines of business: will increase its information cost and decrease its credit risk will increase both its information cost and its credit risk will decrease its information cost and decerase its credit risk will decrease its information costs and increase its credit riskExplain how the bank’s decisions to increase loan loss provision will affect the above balance sheet and income statement.
- Which of the following is an example of faithful representation? A Showing lease payments as a rental expense B Being prudent by recording the entire amount of a convertible loan as a liability C Creating a provision for staff relocation costs as part of a planned restructuring D Recording a sale and repurchase transaction with a bank as a loan rather than a saleExplain commercial banks’ brokerage and intermediation functions. Clearly detail how these functions help overcome the information costs, liquidity risk and price risk arising from financial investments.Loan structuring is the process of designing a loan to satisfy the financing demands of a business borrower. At the same time, it tries to protect the lender against losses caused by the borrower's refusal to repay the debt, as well as the interest and fees associated with it. Determine the process of credit facilities structuring that takes place in the bank.
