Chapter 12 - Answers to Chapter 12 Questions 1. The Report...

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Answers to Chapter 12 Questions 1. The Report of Condition refers to the bank's balance sheet which presents information about the accumulation of assets, liabilities, and equity as of a specific point in time. The Report of Income refers to the bank's income statement which presents information about the flow of revenues and expenses between two points in time. 2. a-3; b-1; c-2. 3. a-5,6,12; b-2,10; c-3, 13; d-1,8,15; e-9,14; f-4,7,11. 4. Generally, the assets near the top of the balance sheet, cash accounts, represent the most liquid and lowest expected return assets. Those near the bottom, loans, and leases are less liquid and yield higher expected returns. 5. A repurchase agreement is an asset if bank-1 "purchased" securities from (or sent excess reserves to) some other bank-2 with the understanding that the bank-2 would repurchase these securities from (or send the reserves to) bank-1 in the near future. If the bank-1 had instead "sold" the securities to (or received excess reserves from) bank-2 and promised to repurchase them from (or send the reserves to) bank-2 in the near future, then this would represent a liability for bank-1. 6. A NOW account is a checking account that pays interest; a demand deposit is a checking account that pays no interest. 7.
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Chapter 12 - Answers to Chapter 12 Questions 1. The Report...

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