CHAPTER 8 Off-Balance Sheet Banking and Contingent Claims Products
“Has the attention paid to simple capital-asset ratios driven risks off balance sheet, and is off-balance sheet also out of mind?”
Paul Volcker, Chairman of the Board of Governors of the Federal Reserve system, in an address to the American Bankers Association, October 1985
Glossary of Terms
Cost of Funds: The effective rate paid by the bank to fund its assets. Source of funds include retail deposits, large-denomination certificates of deposit (CDs), senior and junior debt, preferred stock, and common stock.
Sunk Cost: A cost that has already been incurred and cannot be recovered. Such a cost is irrelevant to a current decision because no matter what the decision, the sunk ...
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