RSM230H1 Lecture Notes - Lecture 4: Liquidity Risk, Interest Rate Risk, Credit Risk

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8 Dec 2016
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Basic assets and liabilities of a chartered bank. Deposits (demand & term) hold reserves/liquidity requirement for unexpected withdrawals. Shareholder equity (preferred shares/ common shares basel) Money multipliers: mm = deposits/ reserves = 1/%reserves. Off balance sheet activities (ba, letter of credit) Cooke ratio: - ccf for off balance sheet numbers. Nothing to account for market risk and operational risk. Capital (tier 1 and 2) / rwa. Common equity and non-cumulative perpetual preferred shares. Tighter definitions tier 1 and tier 2. Leverage ratio being reintroduced as a new capital ratio. Office of the superintendent of financial institutions (osfi) Number of units varies daily depending on purchases and redemptions. Shareholders trade directly with the mutual fund, p = nav, at 4pm daily. The number of shares or units is fixed. Fund units are bought & sold only on a stock exchange or over-the- counter, not with a fund company (as for open-ended funds) For individuals: age, occupation, wealth, risk tolerance etc.

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