BBA-QUIZ-2-A-D2-4 - FIN 301 QUIZ 2 D2-4 Class: D _ Name:_...

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FIN 301 QUIZ 2 D2-4 Class: D ____ Name:___________________ Student I.D.:___________________________ A. Multiple Choice (90%) ( ) 1. Which of the following statements is false? A) A bank's assets are its uses of funds. B) A bank issues liabilities to acquire funds. C) The bank's assets provide the bank with income. D) Bank capital is recorded as an asset on the bank balance sheet. ( ) 2. Which of the following is not a non-transaction deposit? A) Savings accounts B) Small-denomination time deposits C) Negotiable order of withdrawal accounts D) Certificate of deposit. ( ) 3. Bank reserves include A) deposits at the Fed and short-term treasury securities. B) vault cash and short-term Treasury securities. C) deposits at other banks and deposits at the Fed. D) vault cash and deposits at the Fed. ( ) 4. Which of the following are reported as assets on a bank's balance sheet? A) Borrowings B) Reserves C) Savings deposits D) Bank capital ( ) 5. Secondary reserves include A) short-term Treasury securities. B) deposits at other large banks. C) deposits at Federal Reserve Banks. D) state and local government securities. ( ) 6. Asset transformation can be described as A) borrowing short and lending long B) .borrowing long and lending short. C) borrowing and lending only for the short term. D) borrowing and lending for the long term. 1
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( ) 7. Holding all else constant, when a bank receives the funds for a deposited check, A) cash items in the process of collection fall by the amount of the check. B) bank assets increase by the amount of the check. C) bank liabilities decrease by the amount of the check. D) bank reserves increase by the amount of required reserves. ( ) 8. 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 assets of First National rise by $50. B) the assets of Chemical Bank rise by $50. C) the reserves at First National fall by $50. D) the liabilities at Chemical Bank rise by $50. ( ) 9. When $1.5 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 $1,200,000. B) the liabilities of the bank increase by $1,200,000. C) the liabilities of the bank increase by $1,500,000. D) reserves increase by $240,000. ( ) 10. Which of the following are primary concerns of the bank manager? A) Maintaining sufficient reserves to minimize the cost to the bank of deposit outflows B) Extending loans to borrowers who will pay low interest rates, but who are poor credit risks C) Acquiring funds at a relatively high cost, so that profitable lending opportunities can be realized D) Maintaining high levels of capital and thus maximizing the returns to the owners. ( ) 11. A $5 million deposit inflow to bank has the immediate effect of
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This note was uploaded on 04/16/2011 for the course ECON 121 taught by Professor Lily during the Spring '11 term at Clinton Community College.

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BBA-QUIZ-2-A-D2-4 - FIN 301 QUIZ 2 D2-4 Class: D _ Name:_...

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