FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 9: Bank Management

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

Multiple Choice

Review LaterAdd Note

Review Later

A bank suffers defaults on some loans. Hence, the _____ decreases.

A) level of capital
B) quantity of excess reserves
C) ROA
D) all of the above

E) A) and C)
F) A) and B)

Correct Answer

verified

Show Answer

Question 2

True/False

Review LaterAdd Note

Review Later

Bank capital is the difference between the values of its assets and liabilities.

A) True
B) False

Correct Answer

verified

Show Answer

Question 3

Multiple Choice

Review LaterAdd Note

If the gap on a bank's balance sheet is -$10,000 and interest rates rise by 4%, then bank profits

Which of the following balance sheet entries is not sensitive to changes in market interest rates?

When a bank issues relatively safe debt and uses it to fund relatively risky assets it is creating:

Banks should strive to raise their level of equity as high as possible.

The gap is the difference between interest-rate-sensitive liabilities and interest-rate-sensitive assets.

If the value of a bank's liabilities exceeds the value of its assets, the bank is:

For the following seven questions, use the following bank balance sheet. Values are millions of dollars. -If the reserve requirement is 10%, the bank has _____ in excess reserves.

What is the maximum amount of write-downs (defaults) the bank could sustain without becoming insolvent (bankrupt) ?

Mortgages are a type of off-balance-sheet activity.

In banking, the gross spread is:

An employee who is primarily concerned with making sure the bank has enough capital to cover potential loan defaults is involved in _____ management.

When a bank refuses to lend at high interest rates, it is

For the bank balance sheet below, find the gap. If market interest rates rise by 4%, find the change in profit for the bank.

Banks use third party verification of application information to help decrease the problems of adverse selection.

To ensure solvency in case of defaults, a bank could issue stock.

If a bank is not meeting the reserve requirement, it must take a loan from the Fed or another bank.

The gross spread is the most important aspect of bank profitability.

For the following seven questions, use the following bank balance sheet. Values are millions of dollars. -If $100 in transaction deposits were withdrawn and the bank called the minimum amount of loans to meet the reserve requirement, what is the value of the loans remaining on the balance sheet if there were no other changes?