term1 Definition1term2 Definition2term3 Definition3
Please sign in to your Google account to access your documents:
Assets
Liabilities
Basic Equation
C+ S + L + MA = D + NDB + EC
C =Cash AssetsS =Security HoldingsL =LoansMA =Miscellaneous Assets
D =DepositsNDB =Nondeposit Borrowings EC =Equity Capital
*Cash assets = primary reserves
*Securities = secondary reserves
Securities
Liquid Securities (secondary reserves):
Loan Accounts
Themajor Asset category: many types:
Federal Funds Sold and Reverse Repurchase Agreements
Liabilities:
Non Deposit Borrowings
Equity Capital:
•Perpetual Preferred Stock
–perpetual (as opposed to preferred stockwith a given maturity which would be treated as a liability)
CommonStock
Banks value assets and liabilities at original (historical, book-value) cost. Problem?
Assumed A or L held to maturity and ignores changing risk and therefore valuation.
“Gains trading” sellassets that appreciate, hang on to those that deprecate = accumulation of risk
Need help typing ? See our FAQ (opens in new window)
Please sign in to create this set. We'll bring you back here when you are done.
Discard Changes Sign in
Please sign in to add to folders.
Sign in
Don't have an account? Sign Up »
You have created 2 folders. Please upgrade to Cram Premium to create hundreds of folders!