《bank,money课件》HO_MB2e_ch10.pptVIP

* * * * * * The value-at-risk (VAR) approach uses statistical models to estimate the maximum losses a portfolio’s value is likely to sustain over a particular time period—hence the name “value at risk.” * * Teaching Tips: Use this Making the Connection to help students better understand the dynamic nature of the banking system. Ask students the various ways they have engaged in banking in the last month (going to a bank branch, using an ATM, electronic banking, etc.). Discuss the factors that are resulting in increased use of ATMs as well as those that are reducing the use of ATMs. This should help them to see how what was once considered an innovative way to do banking is being surpassed by new ways, such as various forms of electronic banking. * * * Notes: CDs of less than $100,000 are called small-denomination time deposits, and CDs of $100,000 or more are called large-denomination time deposits. CDs worth $100,000 or more are negotiable, which means that investors can buy and sell them in secondary markets prior to maturity. * Recall that counterparty risk is the risk that the other party to the transaction will default on its obligation. During the financial crisis, bankruptcies of large firms left the counterparties to their repos with significant losses or a delay in accessing their funds, or both. * During the 2007-2009 financial crisis, checking account deposits increased. They provide a safe haven for households and small businesses because their funds are safe up to the $250,000 federal deposit insurance ceiling. * Reserves are the most liquid of all bank assets. * * * * Notes: Real estate loans have grown from less than one-third of bank loans in 1973 to 60% of bank loans in 2012. Commercial and industrial (CI) loans have fallen from more than 40% of bank loans to less than 20%. Consumer loans have fallen from more than 27% of all loans to about 21%. * * * * * * * Notes: The difference between the average interest rate banks receive on their asse