Liquidity and capital risks

Intrinsic risk and concentration risk

Interest rate, operational and market risks.

Concentration risk only as per APRA regulations

Intrinsic, selection, portfolio and market risks

it is deficient in its capital ratio requirement 

its liability costs are more sensitive to changing market interest rates than are its asset yields 

its liability costs are less sensitive to changing market interest rates than are its asset yields 

it is deficient in its required reserves

Depository institutions and must have a pool of assets covering the bonds equal to at least 105% of the face value of the outstanding covered bonds.

Non-bank financial institutions and must have a pool of assets covering the bonds equal to at least 105% of the face value of the outstanding covered bonds.

Depository institutions and must have a pool of assets covering the bonds equal to at least 100% of the face value of the outstanding covered bonds.

Depository institutions and must have a pool of assets covering the bonds equal to at least 103% of the face value of the outstanding covered bonds.

The bank can request repayment of a loan at any time in the contract period.

The interest rate risk is transferred to the borrower.

The default risk is completely eliminated.

The pre-specified interest rate remains in force over the loan contract period no matter what happens to market interest rates.

Stable interest payments will be received throughout the loan period.

Term deposits; wholesale certificates of deposit; demand deposits. 

Demand deposits; term deposits; wholesale certificates of deposit.

Interbank funds; demand deposits; wholesale certificates of deposit. 

Repurchase agreements; demand deposits; wholesale certificates of deposit.

Demand deposits; interbank funds; term deposits.

Periodic cash flow of interest and principal amortization payments on long-term assets that can be reinvested at market rates.

The effect that a change in the spread between rates on RSAs and RSLs has on net interest income as interest rates change.

The effect of mismatch of asset and liabilities within a maturity bucket.

The premium paid to compensate for the future uncertainty in a security's value.

The value of an FI to its owners.

They serve as asset transformers by purchasing primary securities and issuing secondary securities and by purchasing secondary securities and issuing primary securities.

They specialise as brokers between savers and borrowers and they directly control the quantity of outside money in the economy.

They specialise as brokers between savers and borrowers and they serve as asset transformers by purchasing primary securities and issuing secondary securities. 

They serve as asset transformers by purchasing secondary securities and issuing primary securities and they directly control the quantity of outside money in the economy.

Secondary claims often have superior liquidity attributes compared to primary securities.

There is no general relationship between the liquidity attributes of primary and secondary claims.

Secondary claims often have inferior liquidity attributes compared to primary securities.

Secondary claims and primary claims often have the same liquidity attributes.

The net margin equals the asset utilisation.

The ROA equals ROE times Leverage Multiplier.

Banks hold a lot of debt and have a small mark up, and the DuPont illustrates this relationship.

Banks have a similar financial structure as non-finance firms.