Skip to content

FRM Part II · FRM Exam Part II · The US Dollar Shortage in Global Banking and the International Policy Response

A risk manager at a Japanese bank notes that the bank has $60 billion of dollar assets, only $15 billion of dollar deposits and $10 billion of dollar long-term debt. The remainder is funded by short-term wholesale dollars and FX swaps. If 70% of the remaining funding must be rolled over within one month, how much dollar funding must be refinanced within one month?

The bank must refinance $24.5 billion within one month. Short-term dollar funding is 60 minus 15 deposits minus 10 long-term debt, which is 35 billion, and 70 percent of that, or 24.5 billion, matures within the month.

  1. A$24.5 billionCorrect
  2. B$35.0 billion
  3. C$17.5 billion
  4. D$31.5 billion

Explanation

Remaining funding = 60 - 15 - 10 = 35 billion. Portion rolling within one month = 0.70 x 35 = 24.5 billion. The $35.0 billion option ignores the 70% share, and $17.5 billion applies 50% instead.

Did you get it right without looking?

One question tells you little. A timed set on The US Dollar Shortage in Global Banking and the International Policy Response shows your real accuracy, how long you take and where you lose marks.

Practise The US Dollar Shortage in Global Banking and the International Policy ResponseFree diagnostic mock

More The US Dollar Shortage in Global Banking and the International Policy Response questions