Stanford Bank Game Manual Questions:
Use the data for period 2.2
1) What is the allowable range of interest rates for the following types of loans:
a. Prime
b. High
c. Medium
d. Real Estate
2) How is the optimal dividend determined?
3) How many branches are you allowed to open (maximum) in a given period? How
many branches are you allowed to close (maximum) in a given period?
4) Your bank decides to sell 100 futures contracts.
a. Does your bank benefit if interest rates increase or decrease?
b. Is this a hedging or speculative position for your bank?
c. How long does the position last? (I.e., what is its time to maturity)?
5) Assume that your bank decides to issue $20 million in new stock. How is this
accomplished (be specific). How long will it take to issue the new stock?
6) What are the costs and benefits associated with closing branches?
7) How would you describe the yield curve? (humped, upward sloping, inverted,
relatively flat). What does this suggest about future interest rate changes?
8) How is the optimal salary policy determined?
9) Your bank decides to sell all of their Series B state and municipal bonds expiring
in period 6.3. What is the capital gain or loss associated with these sales?
10) How much stock would you need to issue (or repurchase) to achieve a FRB
capital adequacy ratio of exactly 1.0?
11) What is your bank’s interest rate on 90 day CDs? What is your bank’s interest rate
on 1-year CDs? What is your bank’s Federal Funds borrowing rate? How many
CDs are available for your bank (in $ millions)? How much Fed Funds is
available for your bank (in $ millions)?
12) Have interest rates increased or decreased since period 2.1?
13) How have housing starts changed since period 2.1? What does this imply about
the change in demand for real estate loans?