Question 1

The Bank of Bird-in-Hand is a(n)________ bank which concentrates on making loans to ________.

Accepted Answer

A)  commercial; large businesses 
B)  investment; large business 
C)  community; small businesses 
D)  community; individual households for mortgages. 
A)  commercial; large businesses 
B)  investment; large business 
C)  community; small businesses 
D)  community; individual households for mortgages.

Question 2

Required reserves are

Accepted Answer

A)  the portion of demand deposits and NOW accounts banks must hold. 
B)  zero on demand deposits. 
C)  zero on NOW accounts. 
D)  imposed on all deposits at commercial banks. 
A)  the portion of demand deposits and NOW accounts banks must hold. 
B)  zero on demand deposits. 
C)  zero on NOW accounts. 
D)  imposed on all deposits at commercial banks.

Question 3

What percentage of bank assets were in security holdings in 2016?

Accepted Answer

A)  11% 
B)  22% 
C)  37% 
D)  59% 
A)  11% 
B)  22% 
C)  37% 
D)  59%

Question 4

During a banking panic,a lender of last resort will

Accepted Answer

A)  purchase banks which are having difficulty but appear sound. 
B)  make loans to solvent but temporality illiquid banks. 
C)  make loans to insolvent but liquid banks. 
D)  make loans to any banks which request them. 
A)  purchase banks which are having difficulty but appear sound. 
B)  make loans to solvent but temporality illiquid banks. 
C)  make loans to insolvent but liquid banks. 
D)  make loans to any banks which request them.

Question 5

As a result of the financial crisis,checkable deposits

Accepted Answer

A)  became a smaller portion of overall liabilities. 
B)  experienced little change. 
C)  hit a new record high in terms of the percent of liabilities. 
D)  roughly doubled in terms of the percent of liabilities. 
A)  became a smaller portion of overall liabilities. 
B)  experienced little change. 
C)  hit a new record high in terms of the percent of liabilities. 
D)  roughly doubled in terms of the percent of liabilities.

Question 6

Which of the following is NOT considered a cash item by banks?

Accepted Answer

A)  U.S. Treasury bills 
B)  deposits at other banks 
C)  deposits at the Federal Reserve 
D)  vault cash 
A)  U.S. Treasury bills 
B)  deposits at other banks 
C)  deposits at the Federal Reserve 
D)  vault cash

Question 7

If a bank has a leverage ratio of 0.1 and a return on assets of 2%,what is its return on equity?

Accepted Answer

A)  0.2% 
B)  2.1% 
C)  5% 
D)  20% 
A)  0.2% 
B)  2.1% 
C)  5% 
D)  20%

Question 8

A bank's revenue comes from all of the following EXCEPT

Accepted Answer

A)  interest earned on vault cash. 
B)  fees for services provided. 
C)  interest on loans. 
D)  interest on securities. 
A)  interest earned on vault cash. 
B)  fees for services provided. 
C)  interest on loans. 
D)  interest on securities.

Question 9

Which of the following is a type of risk faced by commercial banks?

Accepted Answer

A)  liquidity risk 
B)  interest-rate risk 
C)  credit risk 
D)  all of the above 
A)  liquidity risk 
B)  interest-rate risk 
C)  credit risk 
D)  all of the above

Question 10

Securitization refers to

Accepted Answer

A)  changing the mix in a financial portfolio away from stocks and toward bonds. 
B)  selling directly to investors loans or securities that were formerly held by financial intermediaries. 
C)  banks insisting that collateral be supplied on previously unsecured loans. 
D)  reducing the exposure of a bank's portfolio to interest rate risk. 
A)  changing the mix in a financial portfolio away from stocks and toward bonds. 
B)  selling directly to investors loans or securities that were formerly held by financial intermediaries. 
C)  banks insisting that collateral be supplied on previously unsecured loans. 
D)  reducing the exposure of a bank's portfolio to interest rate risk.

Question 11

The United States has a dual banking system in the sense that

Accepted Answer

A)  the public may deposit money in either commercial banks or savings-and-loan associations. 
B)  banks offer both demand deposits and time deposits to savers. 
C)  banks are chartered by the federal government and by state governments. 
D)  banks both take in deposits and make loans. 
A)  the public may deposit money in either commercial banks or savings-and-loan associations. 
B)  banks offer both demand deposits and time deposits to savers. 
C)  banks are chartered by the federal government and by state governments. 
D)  banks both take in deposits and make loans.

Question 12

Which of the following represented the largest liability on the balance sheet of U.S.commercial banks in 2016?

Accepted Answer

A)  checkable deposits 
B)  loans 
C)  nontransaction deposits 
D)  borrowings 
A)  checkable deposits 
B)  loans 
C)  nontransaction deposits 
D)  borrowings

Question 13

A cash item in the process of collection is

Accepted Answer

A)  a U.S. Treasury bill that has matured, but for which the bank has not yet received payment. 
B)  a car loan payment that is due but not yet received by the bank. 
C)  a check drawn against another bank, from whom the funds have not yet been collected. 
D)  currency that has been deposited in the bank, but not yet formally counted and entered into the bank's balance sheet. 
A)  a U.S. Treasury bill that has matured, but for which the bank has not yet received payment. 
B)  a car loan payment that is due but not yet received by the bank. 
C)  a check drawn against another bank, from whom the funds have not yet been collected. 
D)  currency that has been deposited in the bank, but not yet formally counted and entered into the bank's balance sheet.

Question 14

Where do the FDIC's funds come from?

Accepted Answer

A)  Congress appropriates money for the FDIC, just as it does for other federal agencies. 
B)  The FDIC earns income through the insurance premiums paid by insured banks and from investment earnings. 
C)  The FDIC sells bonds in the financial markets. 
D)  The FDIC relies on voluntary contributions from the banking community. 
A)  Congress appropriates money for the FDIC, just as it does for other federal agencies. 
B)  The FDIC earns income through the insurance premiums paid by insured banks and from investment earnings. 
C)  The FDIC sells bonds in the financial markets. 
D)  The FDIC relies on voluntary contributions from the banking community.

Question 15

Banks in the United States have been prohibited from investing deposits in significant equity holdings since the passage of the

Accepted Answer

A)  Bank Reform Act of 1980. 
B)  Securities and Exchange Acts of 1933 and 1934. 
C)  National Banking Acts of 1863 and 1864. 
D)  Sherman Antitrust Act of 1890. 
A)  Bank Reform Act of 1980. 
B)  Securities and Exchange Acts of 1933 and 1934. 
C)  National Banking Acts of 1863 and 1864. 
D)  Sherman Antitrust Act of 1890.

Question 16

What are the advantages of bank deposits compared to other types of assets?

Accepted Answer

Compared to cash,bank deposits offer saf

Question 17

Given that most banks have positive gap and negative durations,banks prefer

Accepted Answer

A)  lower market interest rates. 
B)  higher market interest rates. 
C)  higher market fixed rates but lower market floating rates. 
D)  either higher or lower market interest rates since interest rates have little effect on bank profits. 
A)  lower market interest rates. 
B)  higher market interest rates. 
C)  higher market fixed rates but lower market floating rates. 
D)  either higher or lower market interest rates since interest rates have little effect on bank profits.

Question 18

When a bank issues a checkable deposit and loans the funds out to a business,it has transformed

Accepted Answer

A)  a financial asset for a saver into a liability for a borrower. 
B)  a financial liability for a saver into a financial asset for a borrower. 
C)  a short-term liability to a borrower into a long-term asset to a saver. 
D)  one liability into another liability. 
A)  a financial asset for a saver into a liability for a borrower. 
B)  a financial liability for a saver into a financial asset for a borrower. 
C)  a short-term liability to a borrower into a long-term asset to a saver. 
D)  one liability into another liability.

Question 19

Credit risk is the risk that

Accepted Answer

A)  an insufficient number of borrowers will apply for loans or credit. 
B)  interest rates will rise after a loan has been granted. 
C)  interest rates will fall after a loan has been granted. 
D)  borrowers might default on their loans. 
A)  an insufficient number of borrowers will apply for loans or credit. 
B)  interest rates will rise after a loan has been granted. 
C)  interest rates will fall after a loan has been granted. 
D)  borrowers might default on their loans.

Question 20

The most important factor in determining your FICO score is

Accepted Answer

A)  your history of making payments. 
B)  how long you have been using credit. 
C)  the amount you owe on loans and credit cards. 
D)  how many different types of credit you have. 
A)  your history of making payments. 
B)  how long you have been using credit. 
C)  the amount you owe on loans and credit cards. 
D)  how many different types of credit you have.

The Bank of Bird-in-Hand is a(n) bank which concentrates on making loans to .

Required reserves are

What percentage of bank assets were in security holdings in 2016?

During a banking panic,a lender of last resort will

As a result of the financial crisis,checkable deposits

Which of the following is NOT considered a cash item by banks?

If a bank has a leverage ratio of 0.1 and a return on assets of 2%,what is its return on equity?

A bank's revenue comes from all of the following EXCEPT

Which of the following is a type of risk faced by commercial banks?

Securitization refers to

The United States has a dual banking system in the sense that

Which of the following represented the largest liability on the balance sheet of U.S.commercial banks in 2016?

A cash item in the process of collection is

Where do the FDIC's funds come from?

Banks in the United States have been prohibited from investing deposits in significant equity holdings since the passage of the

What are the advantages of bank deposits compared to other types of assets?

Given that most banks have positive gap and negative durations,banks prefer

When a bank issues a checkable deposit and loans the funds out to a business,it has transformed

Credit risk is the risk that

The most important factor in determining your FICO score is

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I- the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters

Exam 10: The Economics of Banking

The Bank of Bird-in-Hand is a(n)________ bank which concentrates on making loans to ________.

Required reserves are

What percentage of bank assets were in security holdings in 2016?

During a banking panic,a lender of last resort will

As a result of the financial crisis,checkable deposits

Which of the following is NOT considered a cash item by banks?

If a bank has a leverage ratio of 0.1 and a return on assets of 2%,what is its return on equity?

A bank's revenue comes from all of the following EXCEPT

Which of the following is a type of risk faced by commercial banks?

Securitization refers to

The United States has a dual banking system in the sense that

Which of the following represented the largest liability on the balance sheet of U.S.commercial banks in 2016?

A cash item in the process of collection is

Where do the FDIC's funds come from?

Banks in the United States have been prohibited from investing deposits in significant equity holdings since the passage of the

What are the advantages of bank deposits compared to other types of assets?

Given that most banks have positive gap and negative durations,banks prefer

When a bank issues a checkable deposit and loans the funds out to a business,it has transformed

Credit risk is the risk that

The most important factor in determining your FICO score is

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I- the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters

The Bank of Bird-in-Hand is a(n) bank which concentrates on making loans to .