For delegated monitoring to work, the bank must be sufficiently diversified. What happens if the bank is not well-diversified? (two answers)

In Exhibit 3, Crestview’s deposit composition shifted from $20,400M (51.0%) to $15,200M (38.0%), while fed funds purchased rose from $2,400M (6.0%) to $5,600M (14.0%). Which conclusions follow from this pattern? (select all that apply)

Based on the data in Exhibit 4, which bank would likely have the highest total liquidity creation (LC) as a percentage of total assets, and why?

A bank computes operational risk capital using the Basic Indicator Approach (BIA) and reports average gross income of $800 million over the past three years. Which of the following are correct? (select all that apply)

In Exhibit 3, Crestview’s equity declined from $3,600M (9.0% of TA) to $1,920M (4.8% of TA), while the ALLL increased from $400M to $2,400M. What is the primary mechanism driving equity erosion?

Under the Basel framework, why is the leverage ratio considered a necessary complement to the risk-based capital ratio, rather than a substitute?

Based on the loan composition data in Exhibit 4, suppose consumer loan default rates doubled across all banks. Which bank would experience the largest loss relative to its equity?

The prediction error is the sum of which two errors.

Which of the following is true about the type of font used in writing with APA formatting?

What is the most interesting thing you have learned in this second half of the course?