Chapter 9 - Chapter 9 Exercise: .Key terms 1. discount...

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Chapter 9 Exercise: .Key terms 1. discount loan 2. capital adequancy management 3. interest-rate risk 4. discount rate 5. ROA 6. EM 7. ROE 8. Compensating balance 9. Gap analysis 10. Off-balance-sheet activities . Multiple Choiceh 1. A bank’s balance sheet a. shows that total assets equals total liabilities plus equity capital. b. lists sources and uses of bank funds. c. indicates whether or not the bank is profitable. d. does all of the above. e. does only (a) and (b) of the above. 2. Which of the following are reported as liabilities on a bank’s balance sheet? a. Reserves b. Small denomination time deposits c. Loans d. Deposits with other banks 3. Checkable deposits and money market deposit accounts are a. payable on demand. b. liabilities of the banks. c. assets of the banks. d. only (a) and (b) of the above. e. only (a) and (c) of the above. 4. Large-denomination CDs are _____, so that like a bond they can be resold in a _____ market before they mature. a. nonnegotiable; secondary b. nonnegotiable; primary c. negotiable; secondary d. negotiable; primary 5. Banks acquire funds from such sources as a. bank capital. b. cash items in the process of collection. c. reserves. d. only (a) and (b) of the above. 6. Bank reserves include a. deposits at the Fed. b. vault cash. c. short-term Treasury securities. d. all of the above. e. both (a) and (b) of the above. 7. Which of the following are not reported as assets on a bank’s balance sheet? a. Cash items in the process of collection b. Deposits with other banks
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c. U.S. Treasury securities d. Checkable deposits 8. Of the following bank assets, the most liquid is a. consumer loans. b. state and local government securities. c. physical capital. d. U.S. government securities. e. commercial loans. 9. In general, banks make profits by selling _____ liabilities and buying _____ assets. a. long-term; shorter-term b. short-term; longer-term c. illiquid; liquid d. risky; risk-free 10. When you deposit $50 in your account at First National Bank and a $100 check you have written on this account is cashed at Chemical Bank, then a. the liabilities of First National decrease by $50. b. the reserves at First National increase by $50. c. the liabilities at Chemical Bank increase by $50. d. only (a) and (b) of the above occur. 11. When $1 million is deposited at a bank, the required reserve ratio is 20 percent, and the bank chooses not to hold any excess reserves but makes loans instead, then, in the bank’s final balance sheet, a. the assets at the bank increase by $800,000. b. the liabilities of the bank increase by $1,000,000.
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This note was uploaded on 01/10/2011 for the course FSD 201 taught by Professor Huong during the Spring '10 term at Beacon FL.

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Chapter 9 - Chapter 9 Exercise: .Key terms 1. discount...

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