Exam 10: Banking and the Management of Financial Institutions

When you deposit $50 in currency at Old National Bank,

The quantity interest income minus interest expenses divided by assets is a measure of bank performance known as

How can specializing in lending help to reduce the adverse selection problem in lending?

Property promised to the lender as compensation if the borrower defaults is called

All of the following are operating expenses for a bank except

If a bank has $200,000 of checkable deposits,a required reserve ratio of 20 percent,and it holds $80,000 in reserves,then the maximum deposit outflow it can sustain without altering its balance sheet is

When you deposit a $50 bill in the Security Pacific National Bank,

Most of a bank's operating income results from

The most important category of assets on a bank's balance sheet is

Of the following,which would be the first choice for a bank facing a reserve deficiency?

Measuring the sensitivity of bank profits to changes in interest rates by multiplying the gap times the change in the interest rate is called

Because of their ________ liquidity,________ U.S.government securities are called secondary reserves.

Secondary reserves include

Of the following methods that banks might use to reduce moral hazard problems,the one not legally permitted in the United States is the

Banks hold capital because

To reduce moral hazard problems,banks include restrictive covenants in loan contracts.In order for these restrictive covenants to be effective,banks must also

Off-balance sheet activities involving guarantees of securities and back-up credit lines

Banks face the problem of ________ in loan markets because bad credit risks are the ones most likely to seek bank loans.

When Jane Brown writes a $100 check to her nephew and he cashes the check,Ms.Brown's bank ________ assets of $100 and ________ liabilities of $100.

Bank capital is listed on the ________ side of the bank's balance sheet because it represents a ________ of funds.