Kansas Bank has a policy of limiting their loans to any single customer so that the maximum loss as a percent of capital will not exceed 20 percent for both secured and unsecured loans. The limit has been adopted under the assumption that if the unsecured loan is defaulted, there will be no recovery of interest or principal payments. For loans that are secured (collateralized), it is expected that 40 percent of interest and principal will be recovered in the event of default.

What is the concentration limit (as a percent of capital) for secured loans made by Kansas Bank? (NOTE: Recovery rate + Loss rate = 100%)

The least expensive source of funds for a typical bank is:

According to Altman's credit scoring model, which of the following Z scores would indicate a low default risk firm?

The balance sheet of XYZ Bank appears below. All figures in millions of US Dollars.

Suppose that interest rates rise by 2% on both Rate-Sensitive Assets and Rate-Sensitive Liabilities in one-year time. The expected annual change in net interest income of the bank is:

The deposit pricing method that focuses on the added cost of bringing in new funds is called:

If the amount lost per dollar on a defaulted loan is 40 percent, then a bank that does not permit the loss of a loan to exceed 10 percent of its bank capital should set its concentration limit (as a percentage of capital) to:

Which of the following liability products has the lowest withdrawal risk?

All other things equal, longer term loans are more likely to be: