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money and banking - Assignment Example
Finance & Accounting
Pages 4 (1004 words)
Money and Banking Name Institution Money and Banking Net Interest Margin A Gap is the difference between the quantity of liabilities and assets on which interest rates are reorganized in a given range of time. A bank with a similar amount of liabilities as the assets in a given period means that the changes in its interest rates will not change the net interest margin…
In this context, Commerce National Bank reports interest-sensitive assets of $870 million and interest-sensitive liabilities of $625 million during the coming month. This implies that Commerce National Bank is an asset sensitive one. Since Commercial National Bank is asset sensitive, if interest rates rise, the bank will definitely enjoy a net interest margin. The bank’s productivity on interest income and earning interest will raise its basis point for basis point in line with the market. If the rates fall, it will have its net interest margin compressed. Securitization Securitization of assets refers to the process of collecting various sorts of debts such as car loans, mortgages, or credit card debts and packaging them as bonds, collateralized mortgage obligations, or as pass-through securities. They are then sold to investors. This process can consist of any type of financial assets and it is aimed at reinforcing liquidity in the marketplace. It is also vital for smaller investors to buy shares in a more complex pool. The most amenable assets used in the securitization process include equipment, trucks, automobiles, home equity loans, recreational vehicles, and credit cards. ...
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