Question

True or False Questions

Note: Please state whether each of the following statements is true
or false and

provide a short explanation.

3. In Risk adjusted Return on Capital (RAROC) calculation, we use
duration model to

assess the loan risk and adjust the interest rate risk of the
return.

6. FDIC is an ex-post deposit insurance scheme.

Thank you so much!

Answer #1

3.FALSE

EXPLANATION:

DURATION MODELS ARE USED TO DESCRIBE THE AMOUNT OF TIME THAT ELAPSES UNTIL A GIVEN EVENT, OR THE LENGTH OF TIME SPENT IN A GIVEN STATE.NOT TO LOAN RISK AND ADJST RATE RISK OF THE RETUTN

6.TRUE

EXPLANATION:

THE FEDERAL DEPOSIT INSURANCE CORPORATION IS ONE OF TWO AGENCIES THAT PROVIDE DEPOSIT INSURANCE TO DEPOSITORS IN U.S. DEPOSITORY INSTITUTIONS, THE OTHER BEING THE NATIONAL CREDIT UNION ADMINISTRATION, WHICH REGULATES AND INSURES CREDIT UNIONS.

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