Latest posts
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🧭 Value Investing and Macroeconomic Risk Factors
💸 $($1$)$ Value Investing – Buying a $1$ Bill for $50$ Cents Value Investing is like thrift shopping in the stock market. You’re not buying the flashiest thing — you’re buying what’s undervalued. 📘 Book Value per Share: $\text{Book Value per Share} = \frac{\text{Assets} – \text{Liabilities}}{\text{Shares Outstanding}}$ 🔍 Value Stocks: High book-to-market ratio🚀 Growth Stocks:…
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🏛️ Governance and Risk Management: Who Guards the Guards?
The Three Lines of Defense: Who’s Watching Whom? Let’s imagine your organization is a castle. You have treasure inside $($your assets$)$, but you also have pesky dragons outside (risks). So how do you keep the fire-breathing chaos at bay? Enter the Three Lines of Defense Framework: 1. 🛡️ First Line: The Business Warriors These are…
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💼 Surviving the Risk Jungle: A Fun Guide to Operational Risk Regulation and Governance
Imagine running a bank is like running a Jurassic Park… but instead of dinosaurs, you’re dealing with financial disasters. You need fences $($controls$)$, tranquilizers $($capital$)$, and a watchtower $($governance$)$. Enter Basel II and III – the park rangers of the financial world. 🧱 Basel’s Three Pillars: The Foundation of Risk Defense Basel’s risk regulation is…
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🚀 “Risk on Repeat” — A Bootstrap Journey Through Nonparametric Risk Estimation
Let’s imagine you’re trying to guess how badly your investments might behave on a bad day. You gather data from past performance, hoping history will be a good $($or bad$)$ teacher. But instead of just looking back once, you decide to ask history over and over — like a clingy ex who keeps showing up.…
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💣 Risk Measures: When VaR Leaves You Guessing
1. What’s the Big Deal with VaR Anyway? Let’s begin with a bold truth: Value at Risk $($VaR$)$ is like your GPS saying “You may hit traffic… but I won’t tell you how bad it gets after that.” It tells you the maximum loss you might incur with a certain level of confidence, say $99…
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💣 Loan Loss Provisioning and Credit Risk Assessment: From Bad Loans to Smart Boards
🎯 Setting the Scene: Why Do Banks Fear Defaults? Imagine you lent your friend \$1,000 and he told you, “Bro, I might pay you back…”That might is the starting point of credit risk. Banks face this risk every day—but they don’t just sit and hope for the best. They plan for it. And that plan…
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🏦 Credit Risk Policies and Credit Asset Classification: The Bank’s Defensive Playbook
If a bank were a superhero, credit risk would be its sneaky arch-nemesis — disguised in nice suits, smiling borrowers, and well-written business plans. But behind those smiles lies the ever-present threat: What if they don’t pay back? Let’s unravel how banks protect themselves from this ever-lurking danger. 🎯 The Foundations of Lending: Why Policies…
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🍕 I. CHOICE OF FUNDS — WHO YOU GONNA CALL WHEN DEPOSITS GHOST YOU?
Factors affecting the choice of non-deposit funding sources. When deposits aren’t enough, banks knock on the doors of the money and capital markets. But choosing the right funding source is like picking the right topping: it depends on price, taste, shelf life, and how spicy it can get. 🧮 Key factors include: ❓What’s the cheapest…
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CHALLENGES TO OFFERING DEPOSIT ACCOUNTS
💰 1. Deposit Insurance The Federal Deposit Insurance Corporation $($FDIC$)$, established in 1934, insures deposits in member banks. The current insurance limit is \$250,000 per depositor per insured bank. This means if Bank A fails, the FDIC steps in and reimburses customers—up to the insured amount. Key Point: You can increase your coverage by having…
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💰 Methods of Pricing Deposits – Turning Dollars into Strategy
Banks aren’t just piggy banks in suits. They’re financial jugglers trying to balance paying you just enough interest so you hand over your $($money$)$—but not so much that they end up broke. So how do they decide what to offer you on your $($savings$)$? Enter: deposit pricing. Let’s explore the main methods banks use to…