Methods used by banks to administer interest rate risk


1) Write down the methods of regulation of banks which would be suitable for regional banks and money center banks? Describe why? Estimate the methods used to administer liquidity by banks. Explain the methods used by banks to administer interest rate risk? Which method do you think to be the most effective? Describe Why?

2) Describe the pros and cons of using the examination of return on assets as part of process to estimate bank performance. Describe how do the sources and uses of funds by thrifts vary from those used by commercial banks? Compare the kinds of finance companies. Describe how are mutual funds managed?

3) Assume the bank earns $200 million in interest revenue but pays 156 million in interest expense. It also has $801 million in earning assets. Determine the net interest margin?

4) If the bank earns $168 million net profit after tax and has $17 billion invested in assets, what is its return on assets? If the bank earns $70 million net profit after tax and has $7.5 billion invested in assets and $602 million equity investment, determine its return on equity?

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Finance Basics: Methods used by banks to administer interest rate risk
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