Exam 12: Banking and the Management of Financial Institutions

If interest rates increase from 9 percent to 10 percent, a bank with a duration gap of 2 years would experience a decrease in its net worth of ________.

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

When banks calculate the losses the institution would incur if an unusual combination of bad events happened, the bank is using the ________ approach.

When Jane Brown writes a $100 cheque to her nephew (who lives in another province), Ms. Brown's bank ________ assets of $100 and ________ liabilities of $100.

Secondary reserves are so called because ________.

Which of the following bank assets is the most liquid?

If a bank has ________ rate-sensitive assets than liabilities, a ________ in interest rates will reduce bank profits, while a ________ in interest rates will raise bank profits.

Which of the following statements is true?

Which of the following is not a source of borrowings for a bank?

Most of a bank's operating income results from ________.

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

Which of the following statements is false?

Because ________ are less liquid for the depositor than ________, they earn higher interest rates.

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

Which of the following statements most accurately describes the task of bank asset management?

Because of an expected rise in interest rates in the future, a banker will likely ________.

The share of chequable deposits in total bank liabilities has ________.

Assume a bank has $200 million of assets with a duration of 2.5, and $190 million of liabilities with a duration of 1.05. The duration gap for this bank is ________.

A bank will want to hold more excess reserves (everything else equal) when ________.