Exam 10: Banking and the Management of Financial Institutions

Banks develop statistical models to calculate their maximum loss over a given time period.This approach is known as the

In general,banks make profits by selling ________ liabilities and buying ________ assets.

The amount of checkable deposits that banks are required by regulation to hold are the

Bank capital has both benefits and costs for the bank owners.Higher bank capital ________ the likelihood of bankruptcy,but higher bank capital ________ the return on equity for a given return on assets.

When $1 million is deposited at a bank,the required reserve ratio is 20 percent,and the bank chooses not to make any loans but to hold excess reserves instead,then,in the bank's final balance sheet,

When a lender refuses to make a loan,although borrowers are willing to pay the stated interest rate or even a higher rate,the bank is said to engage in

In recent years the interest paid on checkable and time deposits has accounted for around ________ of total bank operating expenses,while the costs involved in servicing accounts have been approximately ________ of operating expenses.

When banks offer borrowers smaller loans than they have requested,banks are said to

Unanticipated moral hazard contingencies can be reduced by

Assuming that the average duration of its assets is four years,while the average duration of its liabilities is three years,then a 5 percentage point increase in interest rates will cause the net worth of First National to ________ by ________ of the total original asset value.

With a 10% reserve requirement ratio,a $100 deposit into New Bank means that the maximum amount New Bank could lend is

A reason why rogue traders have bankrupt their banks is due to

If a bank has $10 million of checkable deposits,a required reserve ratio of 10 percent,and it holds $2 million in reserves,then it will not have enough reserves to support a deposit outflow of

Through correspondent banking,large banks provide services to small banks,including

For banks,

Banks earn profits from off-balance sheet loan sales

Which of the following statements is false?

Long-term customer relationships ________ the cost of information collection and make it easier to ________ credit risks.

Which of the following statements is false?

Net profit after taxes per dollar of assets is a basic measure of bank profitability called