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Final-Examination Sample NHTM2 Tam-Update With-Solution

1. The document is a test on commercial banking with 5 parts assessing students' knowledge on topics related to bank management, liquidity, risk, and financial performance. 2. Part 1 contains 5 true/false statements relating to topics like net interest margin, liquidity problems, use of collateral, CAMELS ratings, and the "6 C's" of lending. 3. Part 2 contains 2 short answer assignments on the links between capital and risk exposure, and capital adequacy ratios in Vietnam. 4. Part 3 contains 3 calculation exercises finding return on assets, interest paid on a loan, and analyzing a bank's net liquidity position.

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81 views

Final-Examination Sample NHTM2 Tam-Update With-Solution

1. The document is a test on commercial banking with 5 parts assessing students' knowledge on topics related to bank management, liquidity, risk, and financial performance. 2. Part 1 contains 5 true/false statements relating to topics like net interest margin, liquidity problems, use of collateral, CAMELS ratings, and the "6 C's" of lending. 3. Part 2 contains 2 short answer assignments on the links between capital and risk exposure, and capital adequacy ratios in Vietnam. 4. Part 3 contains 3 calculation exercises finding return on assets, interest paid on a loan, and analyzing a bank's net liquidity position.

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pthieuanh123
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© © All Rights Reserved
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Download as DOCX, PDF, TXT or read online on Scribd
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TRƯỜNG ĐH KINH TẾ ĐỀ THI HỌC PHẦN: Ngân hàng thương mại 2

QUỐC DÂN Hệ: CQ-CLC


Ngày thi:
Chương trình Chất lượng
cao Ca thi:
Thời gian làm bài: 90 phút

ĐỀ SỐ: 305

Part 1: These statements are True or False? Please explain shortly (40 points) (CLO 1.1;
CLO 2.1; CLO 2.2)
1.1. Banks with Interest Sensitive Assets always have greater NIM when interest rates decrease.
F – With positive gap, when interest rates declines, NIM declines
Banks have to pay less interests to interest-sensitive liabilities, but earn much less interests
from interest-sensitive liabilities.
(NIM = (Changes in interest rates * GAP)/Total earning assets).

1.2. The only way to solve with liquidity problems of banks is to provide more short-term loans.
F – Liquidity problem comes from either higher demand for liquidity, or lower supply of
liquidity. Short-term loans mean clients pay back the loan in short period, but it does not
solve any mentioned problem of supply or demand, because banks still can get cash back fast
by negotiating with long-term loan borrowers to pay in instalment.

1.3. Collaterals should be considered as the second source to pay off the loans.
T – Collaterals are important in bank credit grant because (i) they create the psychological
pressure to clients to pay on time; (ii) in case clients can not pay back the loans from first
source (the borrowing project, client’s income), banks can ask clients to sell collaterals, or
the banks sell by themselves to cover the loans given.

1.4. CAMELS rating system should be used in evaluating bank’s performances rather than the
credit worthiness of loan proposal.
T – CAMELS stands for: capital adequacy, assets quality, management, earnings, liquidity,
sensitivity to market risks.
CAMELS cover all key aspects of bank’s performance, while credit worthiness of loan
proposal only cover the credit activity of bank.

1.5. Cash is one of the 6 C’s of lending and refers to the fact that the lender wants to make sure
the borrower has the ability to generate enough cash to repay the loan
T – This feature of any loan application centers on the question: Does the borrower have the
ability to generate enough cash-in the form of cash flow-to repay the loan. lenders have a
strong preference for cash flow as the principal source of loan repayment because asset sales
can weaken a borrowing customer and make the lender's position as creditor less secure.
Moreover, shortfalls in cash flow are common indicators of failing businesses and troubled
loan relationships.
Part 2: Assignments (30 points, up to 400 words) (CLO2.1; CLO 3.2)
2.1. (10 points) What are the links between capital and risk exposure among financial service
providers?
2.2. (20 points) CAR is a measurement of a bank's available capital expressed as a percentage of
a bank's risk-weighted exposures. Explain situation of CAR in Vietnam banks, and propose
solutions for Vietnam banks to comply with CAR standard in Basel II.

Part 3: Exercises (30 points) (CLO 2.1; CLO 1.1; CLO2.2)


3.1(10 points) Using the information listed below for Carter State Bank, what is this bank's
ROA?
Net income $55 million
Total operating revenue $650 million
Total assets $4,055 million
Total equity capital $350 million

ROA = net income/total average assets = 55/4,055

3.2 (10 points) A bank has a prime rate of 6 percent for its best customers. It has determined
that the default risk premium for a particular customer is 0.4% and the term-risk premium for this
loan is 0.25 percent. If this customer wants to borrow $5.0 million from the bank, how much in
interest will this customer pay in one year?
Answer:
Interest rate = prime rate + default risk premium + term risk premium = 6 + 0.4 + 0.25 =
6.65%/year
Interest paid to bank for borrowing one year = $5.0 * 6.65% = ??

3.3 (10 points) A bank expects in the week about to begin $30 million in incoming deposits, $20
million in deposit withdrawals, $15 million in revenues from the sale of non-deposit services,
$25 million in customer loan repayments, $5 million in sales of bank assets, $45 million in
money market borrowings, $60 million in acceptable loan requests, $10 million in repayments of
bank borrowings, $5 million in cash outflows to cover other operating expenses, and $10 million
in dividend payments to its stockholders. What is the bank's net liquidity position for the week?
Answer:

Liquidity demand = Cash outflow = deposit withdrawal + acceptable loan requests +


repayments of bank borrowings + cash outflows to cover other operating expenses + dividend
payments to its stockholders
= 20 + 60+ 10 + 5 + 10 = $ 105 mil

Liquidity supply = Cash inflow = incoming deposit + revenues from the sale of non-deposit
services + customer loan repayments + sales of bank assets + million in money market
borrowings
30+15+25 + 5 + 45= 120

 The bank net liquidity position of the week is


Liquidity supply – liquidity demand = 120 – 105 = + 15.
The bank has a positive liquidity position (liquidity surplus).
The bank may have to invest surplus liquid funds profitably until they are needed to cover the
future cash needed. If the surplus is insignificant, the bank can do nothing, as new demand of
liquidity can arise anytime.

If the bank has a negative liquidity position (liquidity deficit), it should find funding sources to
meet this gap, e.g. borrow more from interbank market, or borrow from Central Bank, or further
sale of assets.

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