金融市场与金融机构基础(第3章) 英文版答案_31695.docVIP

ANSWERS TO QUESTIONS FOR CHAPTER 3 (Questions are in bold print followed by answers.) 1. Explain the ways in which a depository institution can accommodate withdrawal and loan demand. A depository institution can accommodate loan and withdrawal demands first by having sufficient cash on hand. In addition it can attract more deposits, borrow from the Fed or other banks, and liquidate some of its other assets. 2. Why do you think a debt instrument whose interest rate is changed periodically based on some market interest rate would be more suitable for a depository institution than a long-term debt instrument with a fixed interest rate? This question refers to asset-liability management by a depository institution. An adjustable rate can eliminate or minimize the mismatch of maturity risk. As interest rates rise, the institution would have to pay more for deposits, but would also receive higher payments from its loan. 3. What is meant by: individual banking institutional banking global banking Individual banking is retail or consumer banking. Such a bank emphasizes individual deposits, consumer loans and personal financial trust services. An institutional bank caters more to commercial, industrial and government customers. It issues deposits to them and tries to meet their loan needs. A global bank encompasses many financial services for both domestic and foreign customers. It is much involved in foreign exchange trading as well as the financial of international trade and investment. 4. What is the Basel Committee for Bank Supervision? What do the two frameworks, Basel I and Basel II, published by the Basel Committee for Bank Supervision, address regarding banking? It is the organization that plays the primary role in establishing risk and management guidelines for banks throughout the world. The frameworks set forth minimum capital requirements and standards. 5. Explain each of the following: reserve ratio required reserves The reserve ratio is the percentage of d