RSM428H1 Chapter Notes - Chapter 2,10: Cash Flow Statement, Merchant Bank, Corporate Finance
Document Summary
Chapter 2: nature and reputation of depository institutions. Large banks may borrow in federal funds market or repo market for short term reserve requirements. Large banks tend to borrow reserves, small banks tend to lend. Funds through larger higher-interest-bearing deposits and other managed liabilities. Operates in number of states with retail/domestic focus. Provides corporate finance services (m&a advice, bridge finance) Balance sheet: no distinction between current and non-current assets. Listed in order of liquidity (from intent to hold and term to maturity: loans and securities are 80% of assets, liabilities largely from deposits, highly leveraged. Larger banks have greater ability to diversify risk across portfolio, possibly have higher risk tolerance. Cash flow statement: distinction between cash flows from operating, investing, and financing are arbitrary because most relate to financial instruments.
