Discuss the implications of a weakened real estate market

Assignment Help Finance Basics
Reference no: EM131414393

Publicly traded companies release financial statements (unaudited) on a quarterly basis. For the quarter ended December 31, 2009, MarketWatch reported that Bank of America (B of A) and Wells Fargo had improved their results over the same period in 2008 but that "lingering signs of credit trouble" still existed for the banks. B of A reported a smaller loss than in 2008, but past-due loans in home mortgages, home equity loans, and commercial real estate loans all grew, as did past-due loans in its business loan portfolio. At Wells, the company showed a quarterly profit versus the prior year's loss, but its net write-offs as a percentage of loans rose to 2.71 percent from 2.11 percent for the same period a year earlier. MarketWatch quoted an analyst who follows the banking industry as saying that he believes the problem loan situation is worse than what the banks have been disclosing.


Discuss the implications of a weakened real estate market on bank profitability. How would high unemployment, in addition to soft housing prices, affect banks' earnings? How does the provision for loan loss affect the balance sheet and the income statement of banks? Why do banks adjust the provision when market conditions change, and why do analysts sometimes question the amount of the reserve set aside by the banks?

Reference no: EM131414393

Flotation costs and npv analysis-weighted average cost

The Faraway Moving Company is involved in a major plant expansion that involves the expenditure of $181 million in the coming year. The firm plans on financing the expansion

What is the cost of common from retained earnings

Rivoli Inc. hired you as a consultant to help estimate its cost of common equity. You have been provided with the following data: D0 = $0.80; P0 = $22.50; and g = 8.00% (con

How much will you have saved for retirement

You are 25 years old and decide to start saving for your retirement. You plan to save $5000 at the end of each year (so the first deposit will be one year from now), and will

What is it that convergence must occur at maturity

What is meant by financial engineering? What is the role of derivative instruments in financial engineering? differentiate between On Balance Sheet versus Off Balance Sheet he

Retirement and estate planning business estate planning

FINC 355- Retirement and Estate Planning Business Estate Planning. Your goals, on the other hand, are much more ambitious: 1) eliminate or reduce as much as possible the pote

Why stock market indicated by various market indexes

Why do you think the stock market, as indicated by various market indexes, can experience significant gains while unemployment stays high? Be sure to base your response on s

What then is the cross rate between francs and pounds

7.5 Suppose that the exchange rate is .60 dllars per swiss franc. if the franc appreciates 10% against the dollar, how many francs would a dollar buy tomorrow?7.6 Suppose the

What is the return for stock d

The portfolio has a return of 17.3 percent. The return for Stock A is 8.9 percent, for Stock B is 34.6 percent, and for Stock C is 17.7 percent. What is the return for Stock


Write a Review

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd