chapter11-15 - Chapter 11 True/False Questions 1. The...

Download Document
Showing pages : 1 - 3 of 44
This preview has blurred sections. Sign up to view the full version! View Full Document
Chapter 11 True/False Questions 1. The merger of banks with assets of $1 billion or more in total assets is called a megamerger. Answer: True Page: 326 Level: Easy 2. The primary source of funds for a bank is equity capital. Answer: False Page: 316 Level: Easy 3. Loans comprise the single largest asset category for a bank. Answer: True Page: 316 Level: Easy 4. The major risk faced by commercial banks today is credit risk. Answer: True Page: 318 Level: Easy 5. Banks are more highly leveraged than most non-financial firms. Answer: True Page: 318 Level: Easy 6. Revenue economies of scale are cost reductions that occur as banks add related product lines. Answer: False Page: 326 Level: Medium 7. Time deposits of more than $100,000 with a maturity of at least fourteen days are negotiable instruments and may be sold before maturity. Answer: True Page: 320 Level: Easy 1 Saunders, Financial Markets and Institutions , 2/e
Background image of page 1
8. Technology has had the greatest impact on wholesale banking in the area of cash management. Answer: True Page: 335 Level: Easy 9. Since 1980 the number of banks in the U.S. has been increasing dramatically due to deregulation of the industry. Answer: False Page: 325-326 Level: Medium 10. If average costs to produce a given product are lower for larger firms, cost economies of scope exist. Answer: False Page: 326-327 Level: Medium 11. The proportion of industry assets controlled by small banks has increased over the last 10 years. Answer: False Page: 331 Level: Easy 12. Commercial letters of credit are off balance sheet items that are used to back issues of commercial paper by corporate borrowers. Answer: False Page: 322-324 Level: Difficult 13. All banks having total assets over $1 billion are considered money center banks. Answer: False Page: 331 Level: Medium Multiple Choice Questions 14. Major liabilities for banks include A) Business loans B) Interest expense paid on deposits C) Deposits D) Equity capital E) Securities held for sale Answer: C Page: 318 Level: Medium 2Saunders, Financial Markets and Institutions , 2/e
Background image of page 2
A decline in the average cost of producing bank services as the size of the bank expands is called A) Cost economies of scope B) Revenue economies of scope C) Cost economies of scale D) Revenue economies of scale E) X efficiencies Answer: C Page: 326 Level: Medium 16. A decrease in unit costs after a merger due to joint use of inputs in producing multiple products is an example of: A) Cost economies of scope B) Revenue economies of scope C) Cost economies of scale D) Revenue economies of scale E) X efficiencies Answer: A Page: 326-327 Level: Medium 17. Revenue or cost reduction resulting in gains from mergers that are not due to scale or scope economies are called A) Cost economies of scope B) Revenue economies of scope C) Cost economies of scale D) Revenue economies of scale E) X efficiencies Answer: E Page: 326-327 Level: Medium 18. Banks with total assets under _____ are normally called community banks. A) $50 million
Background image of page 3
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.