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Panel C of Exhibit 2 shows that Pinnacle’s Net Interest Marg…

Panel C of Exhibit 2 shows that Pinnacle’s Net Interest Margin (NIM) fell from 2.8% to 1.1% while Northern Trust’s NIM actually rose from 2.5% to 3.1%. What explains this divergent behavior?

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Calculate Harborview Savings Bank’s total liquidity creation…

Calculate Harborview Savings Bank’s total liquidity creation. Which value is closest to its LC/TA ratio?

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Consider the Pinnacle Growth Bank scenario from Exhibits 2 a…

Consider the Pinnacle Growth Bank scenario from Exhibits 2 and 3. Pinnacle’s deposits fell from 55% to 36% of TA while 92% of its deposits were uninsured. Apply the Diamond-Dybvig framework: which model elements are present in this scenario? (select all that apply)

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Bayshore Community Bank ($550M) shows the mildest deteriorat…

Bayshore Community Bank ($550M) shows the mildest deterioration across all six panels of Exhibit 2 despite being the smallest bank. Which characteristics of its balance sheet profile most likely explain its resilience? (select all that apply)

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Summit Trust’s liability structure shows foreign deposits at…

Summit Trust’s liability structure shows foreign deposits at 3.0% of TA. Under the LC framework, how should foreign deposits be classified and why?

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The Diamond-Dybvig model produces two equilibria. In the bad…

The Diamond-Dybvig model produces two equilibria. In the bad equilibrium, even patient depositors rush to withdraw. What specific model assumption creates the incentive for patient depositors to run?

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Using Exhibit 3, calculate the approximate change in Pinnacl…

Using Exhibit 3, calculate the approximate change in Pinnacle’s total liquidity creation between Q1Y1 and Q3Y2. Consider asset-side, liability-side, and off-balance-sheet components. Which statement best describes the net effect?

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Which of the following correctly describes the four competit…

Which of the following correctly describes the four competitive advantages that give banks their distinct value? (select all that apply)

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A bank holds $4.5 trillion of the $6.5 trillion in Treasury…

A bank holds $4.5 trillion of the $6.5 trillion in Treasury securities available to private US investors. In the context of the Distinct Value Model, this crowding-out effect represents:

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Qualitative Asset Transformation (QAT) describes how banks t…

Qualitative Asset Transformation (QAT) describes how banks transform risky, illiquid, long-term assets into safe, liquid, short-term claims. Which of the following is an example of QAT?

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