Chap005 - Chapter 5 The Financial Statements of Banks and...

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Chapter 5 The Financial Statements of Banks and Their Principal Competitors Fill in the Blank Questions 1. Fed funds purchased is an example of _______________________ along with Eurodollar borrowings. Answer: nondeposit borrowings 2. The short term securities of the bank, including T-Bills and commercial paper, are often called __________________________ because they are the second line of defense to meet demands for cash. Answer: secondary reserves 3. __________________________ is a noncash expense on the bank's income statement which allows the bank to account for future bad loans. Answer: Provision for loan losses 4. __________________________ is the difference between interest income and interest expenses for a financial institution. Answer: Net interest income 5. __________________________ are the primary long term liabilities of the bank. These liabilities are paid only after deposits have been paid in the event of bankruptcy. Answer: Subordinated notes and debentures 6. A(n)__________________________ is where the financial institution agrees to guarantee repayment of a customer's loan received from a third party. Answer: standby credit agreement 7. A(n)__________________________ is a short term collateralized loan. The collateral that is used generally consists of T-Bills. Answer: repurchase agreement 8. A(n)__________________________ is a deposit account which pays an interest rate competitive with money market mutual funds and which generally has limited check Rose/Hudgins, Bank Management and Financial Services, 8/e 57
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writing ability. Answer: money market deposit account 9. _____________________ is the sum of all outstanding IOU's owed to the bank in the form of consumer, real estate, commercial and agriculture loans as well as other types of credit extensions. Answer: gross loans 10. A financial institution often records the value of its assets and liabilities at _______________ which is the original or historical cost of the asset. Answer: book value 11. The principal types of__________________________ include fee income, income from fiduciary activities and services charges on deposits. Answer: noninterest income 12. The__________________________ shows the amount of revenues received and expenses incurred over a specific time period. Answer: Report of Income (income statement) 13. The__________________________ lists the assets, liabilities and equity capital held by the bank on a given date. Answer: Report of Condition (balance sheet) 14. ______________ is labeled "Accounting for Derivative Instruments and Hedging Activities." Answer: FASB 133 15. ________________ labeled “Accounting for Derivative Instruments and Hedging Activities” and its recent amendments, FASB 138, are designed to make derivatives more publicly visible on corporate financial statements. Answer: FASB 133
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This note was uploaded on 10/16/2011 for the course FINANCE 101 taught by Professor Sanghoonlee during the Three '11 term at University of Wollongong, Australia.

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Chap005 - Chapter 5 The Financial Statements of Banks and...

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