What are deferred acquisition costs

Question

Answer the questions below:

Question 1: What are deferred acquisition costs? How are deferred acquisition costs computed? Should deferred acquisition costs be treated the same way that amortization are treated in the firm's accounting statements? Should deferred acquisition costs be treated the same way as amortization costs in the computation of enterprise value?

Question 2: Why do banks (depositories) have such high ratios of debt to assets (heavy use of financial or debt leverage)?

Question 3: Given the capital structure of a bank, why must it keep a low degree of credit risk exposure?

Question 4: How are the liabilities of banks related to monetary aggregates, that is, different measures of money?

Question 5: Explain why banks are better off when interest rates are falling than when interest rates are on the rise.

Question 6: What is meant by the following statement: When banks create credit, they can do so by creating money (monetary liabilities) and lending it out.

Question 7: In the context of claims transformation, explain why there is an inevitable mismatch between the bank's portfolio of assets and its portfolio of liabilities.