Briefly explain why a bank’s capital – or net worth – is important when it comes to possible losses, such as during the 2008-09 financial crisis. Briefly explain one of the risks banks face. Why is this risk significant for banks? Select and briefly explain one way banks may manage interest rate risk. Why might it be impossible to eliminate the risk completely? Select one notable bank failure during the 2008-2009 credit crisis. What was the primary reason for this failure? Briefly explain how a credit union differs from a traditional commercial bank. Finance Questions

You must answer the questions in separate documents. For mathematical calculations, you can show the work or explain your reasoning. Use the Assignment Link to submit your assignment.
For a bank valuation, choose one factor that has an impact on cash flows. What is the significance of this factor for bank operations?
Choose one factor that has an impact on the return required for commercial bank investors. This factor is important for investors.
Differ between non-interest and interest income. Is there any difference in importance between non-interest income and interest income for the bank’s long-term sustainability (in your opinion),? Why?
See Exhibit 20.5. Briefly describe how bank managers can minimize loan losses in the face of economic uncertainty.
Problem 1: Assessing bank performance (chapter 20 page 576).
Explain briefly why bank capital (or net worth) is so important in case of losses such as the 2008-09 financial crises.
Briefly, explain one of these risks that banks must face. This risk is important for banks.
Briefly explain how banks might manage interest rate risk. Is it possible to completely eliminate this risk?
Pick one noteworthy bank collapse during the 2008-2009 credit crises. Which was the main reason this bank failed?
Briefly describe the differences between a credit union and a commercial bank.


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A bank’s ability to make loans to the public is one of its most significant factors in cash flow. Because customers are assets, financial institutions can make money by making sure they pay off their loans. Since it is their primary revenue source, this is vital to bank operations. Depositors pay less interest when banks lend money to them than they receive.

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