Quiz_3_Answers_Fall_2010_FIN_353_Version_B[1]

Quiz_3_Answers_Fall_2010_FIN_353_Version_B[1] - FIN 353...

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Unformatted text preview: FIN 353 Quiz 3 Version B Student: ___________________________________________________________________________ 1. When $1 million is deposited at a bank, the required reserve ratio is 10 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 liabilities of the bank increase by $900,000. B. the loans of the bank increase by $900,000 C. reserves increase by $200,000 D. All of the above. 2. If a bank has $100,000 of deposits, a required reserve ratio of 14 percent, and $40,000 in reserves, then the maximum deposit outflow it can sustain without altering its balance sheet is? A. $25,000. B. $30,000. C. $20,000. D. $10,000. 3. Banks can protect themselves from the disruption caused by deposit outflows by? A. holding excess reserves. B. borrowing from the Fed C. buying securities. D. all of the above. E. A and B. 4. In general, banks would prefer to meet deposit outflows by _________ rather than _________ A. calling in loans, selling securities. B. selling loans, borrowing from the Fed. C. selling loans, selling securities. D. borrowing from the Fed, selling loans. 5. A bank has 100 million dollars in deposits and 15 million dollars in reserves. The required reserve ratio is 10%. There is a deposit outflow of 10 million. What is the shortfall in reserves? A. 4 million. B. 5 million. C. 6 million. D. 7 million. 6. Assuming a person cannot identify the quality of the used cars offered for sale. They know the low quality car should cost $10,000 and the high quality should cost $16,000. What is the price they will offer and the end result? A. $16,000, only good quality cars are sold. B. $10,000, only bad quality cars are sold. C. $13,000, only good quality cars are sold....
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Quiz_3_Answers_Fall_2010_FIN_353_Version_B[1] - FIN 353...

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