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(TCO A) Of the following, the most likely effect of an increase in income tax rates would be to

  • FIN 564 Management of Financial Institutions Midterm Answers
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  1. (TCO A) Of the following, the most likely effect of an increase in income tax rates would be to
  2. (TCO A)  An individual actually earned a 4% nominal return last year. Prices went up by 3% over the year. Given that the investment income was subject to a federal tax rate of 28% and a state, and local tax rate of 6%, what was the investor's actual real after tax rate of return?
  3. (TCO B)  A 10-year annual payment corporate coupon bond has an expected return of 11% and a required return of 10%. The bond's market price is
  4. (TCO B) Convexity arises because
  5. (TCO B) The major liability of the Federal Reserve is _____
  6. (TCO B)  The Fed increases bank reserves in the system by $75 million. If there are no drains, the expected change in bank deposits is _____.
  7. (TCO C) Oceanside bank converts a dollar of equity into 10 cents of net income and has $9.50 in assets per dollar of equity capital. Oceanside also has a profit margin of 15%. What is Oceanside's AU ratio?
  8. (TCO C) Loans past due 90 days or more, and loans that are not accruing interest because of problems of the borrower are called _____.
  9. (TCO C) Which one of the following is the definition of the NIM?
  10. (TCO C) A bank that has an equity to asset ratio equal to 12% can normally lend no more than _____ of its assets to any one borrower.

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