Discusses the role of the federal reserve board

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Reference no: EM13750164

Assignment one

Southwestern Bank and Trust Company is a nationally chartered bank that is subject to the supervision of the Office of the Comptroller of the Currency in addition to the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC). As a new employee of the bank, you have been asked to prepare a research paper that discusses the role of the Federal Reserve Board. Specifically, your research paper will:

• Discuss the major functions of the Federal Reserve Board
• Recognize the role of the FED as the commercial bank of the US Treasury
• Analyze the supervisory and regulatory authority of the FED over the activities of banks in their district
• Explain the FED responsibility in the collection and replacement of damaged currency from circulation
• Describe the FED role in the processing, routing, and transfer of funds from one bank to another
• Explain the Federal Reserve Communication System for wire transfers between the FED and the commercial banks
• Evaluate the role of the FED in conducting research and interpreting economic data
• Evaluate the role of the FED in setting discount rates and the effect of the rate changes on the US Financial System
• Discuss the role of The Office of the Comptroller of Currency, regulation 9, and the impact on trust departments

Present your findings as a 4-5 page Word document formatted in APA style.

Assignment two

The Capital Asset Pricing Model (CAPM) is one of the primary financial measures used by banks to determine how assets are performing. The CAPM is used to determine the expected security return which equals the risk free rate of return plus Beta times the expected market risk premium (RM-RF).
r = RF+ Beta x (RM-RF)

Consider the following scenario:

Western Bank and Trust owns several physical properties in three western states. The bank wants to measure its return but is concerned about market risk (Beta). Write a 750-report that provides a recommendation for using or not using the CAPM. Make sure to address the following:

1. Is this measurement a good indicator of an assets performance? Why or why not?
2. In your response, be sure to define the following:

o Risk-free rate of return
o Beta (as a risk measure)
o Expected market risk premium

Assignment three

Consider the following scenario:

Franklin Commercial Bank is looking at hedging strategies to protect its earnings from changes in economic conditions.

Write a 750-word report to the management team of Franklin that answers the following questions:

1. Are hedging strategies effective given the volatility in the future contracts, swaps, and derivatives markets in general?

2. Are there any alternatives to contractual hedging strategies?

3. Be sure to provide definitions for the following hedging strategies in your response:

o Futures contracts

o Interest rate Swaps

o (3) Other derivatives such as strips

Assignment four

Consider the following scenario:

Milford Bank and Trust Company is revamping its credit management department to more effectively manage credit analysis. As the credit manager for the bank, draft a 750-word report for the board of directors explaining the three C's of credit. Make sure to address the following:

1. Character

2. Capacity

3. Capital

4. Also, explain what the acronym CAMEL means, which is used with the third C (capital)?

Assignment five

Consider the following scenario:

Freeman Bank is concerned about liquidity issues with its investment portfolio.

1. As an investment manager for Freeman, prepare a 750-word report for senior management that explains liquidity.

2. How does the liquidity preference theory affect Freeman Bank's overall financial plans?

3. Be sure to include an explanation of the following in your response:

o Debt capacity

o Quality of assets

o Character of a market

Reference no: EM13750164

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