Financial institutions and Mines

Question 1

2. Which ratio does a bank usually not calculate?

Answer 1

Current

Question 2

3. What is another name for the cost to income ratio?

Answer 2

The efficiency ratio

Question 3

What is the capital adequacy ratio?

Answer 3

The CET1 ratio

Question 4

For an insurance company, what is the largest expense you would expect to find in the Statement of Comprehensive Income?

Answer 4

Claims made by policyholders

Question 5

6. A banks assets are arranged in terms of ………………….. on the Statement of Financial Position?

Answer 5

Liquidity

Question 6

7. The Mining ………………… contains 5 items which all mining companies are trying to promote?

Answer 6

Charter

Question 7

What is the impact of SA banks charging a variable rate (a prime interest
rate that is 3.5% higher than repo) ?

Answer 7

The Impact is that SA banks have best of
both worlds:

– Not exposed to interest rate changes with
regards to loans.
– Earning almost as much interest as they would
have earned if charging a fixed rate.

Question 8

What is the difference between what bank managers want and what society wants?

Answer 8

Bank (managers) want minimum capital levels
and liquidity (maximise ROE)

Society wants high capital and liquidity levels and
thus low probability of bank failure