Question & Answer

Explain in general terms how savings institutions differ from commercial banks with respect to their sources of funds and uses of funds. Discuss each source of funds for SIs. Identify and discuss the main uses of funds for SIs. (LO2)

In recent years, many banks have been relying more heavily on noninterest income as a proportion of their total income. Write a short essay explaining whether banks that rely more heavily on noninterest income will have better or worse performance than banks that rely more heavily on traditional sources of income (such as loans)? 

Assume that SUNY Bank plans to liquidate its Treasury security holdings and use the proceeds for small business loans. Explain how this strategy will affect the different income statement items. Also identify any income statement items for which the effects of this strategy are more difficult to estimate. (LO2)

What are likely reasons for weak bank performance? (LO3)

Why do you think some banks suffered larger losses than other banks during the credit crisis? (LO1) 

Explain why the loan loss provisions of most banks could increase in a particular period. (LO2)

What are some of the more common reasons why a bank may experience a low ROA? (LO3)

 What does the assets/equity ratio of a bank indicate? (LO3)

Why have large banks’ noninterest income levels typically been higher than those of smaller banks? (LO2)

Suppose the net income generated by a bank is equal to 1.5 percent of its assets. Based on past experience, would the bank experience a loss or a gain? Explain. (LO2)

How could a bank generate higher income before tax (as a percentage of assets) when its net interest margin has decreased? (LO2)

What has been the trend in noninterest income in recent years? Explain. (LO2)

If a bank shifts its loan policy to pursue more credit card loans, how will its net interest margin be affected? (LO2)

How can gross interest income rise while the net interest margin remains somewhat stable for a particular bank? (LO2)

1.      : What suggestions do you have for the CIO to help her turn this collection of individual regional and departmental heads into a top-performing team? Explain.

: How do you think that the team evolved to this low level of cooperation and cohesiveness? 

1.      : What type of team does the new CIO have? What do you see as the key problem with the team?

1.      : Vote to reduce each of the three students’ penalties. Instead of a zero, each student will receive only half of the possible total points for the project, which would be an F. You’re still holding students responsible for the group project, but not imposing catastrophic punishment. This compromise both undercuts the professor’s policy and punishes “innocent” team members to some extent, but not as severely.

1.      Vote in support of Hank Schmidt’s decision to hold each individual member accountable for the entire project. The professor clearly stated his policy at the beginning of the semester, and the students should have been more vigilant. The committee should not undercut a professor’s explicit policy.

1.      : Vote to exonerate the three group members who didn’t cheat. You’re convinced they had no reason to suspect Conrad Novak of dishonesty. Exonerating them is the right thing to do.

1.       : If you were the leader of a newly formed team, what might you do to make sure the team developed norms of high performance?

1.       : Discuss how the dilemma of teamwork versus individual work might be intensified in a virtual team. What dilemmas do you encounter when you have to do class assignments as part of a team? Discuss.

1.       : Some people argue that the presence of an outside threat correlates with a high degree of team cohesiveness. Would you agree or disagree? Explain your answer.

1.       : Experts say that for teams to function well, members must get to know one another in some depth. What specifically would you do to facilitate this when team members are located together? What about in a global virtual team?

1.       : If you were the leader of a special-purpose team developing a new computer game and conflicts arose related to power and status differences among team members, what would you do? Of the conflict-handling styles described in this chapter, which do you think might be most effective? Explain your answer.