Exam 9: Banking and the Management of Financial Institutions

In general,banks would prefer to acquire funds quickly by ________ rather than ________.

Which of the following statements are TRUE?

When a new depositor opens a checking account at the First National Bank,the bank's assets ________ and its liabilities ________.

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

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

Interest income minus interest expenses divided by assets is a measure of bank performance known as the

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

If a bank's liabilities are more sensitive to interest rate movements than are its assets,then

Secondary reserves are so called because

Use the following table to answer the question : -If interest rates rise by 5 percentage points,say,from 10 to 15%,bank profits (measured using gap analysis)will

In the absence of regulation,banks would probably hold

Banks earn profits by selling ________ with attractive combinations of liquidity,risk,and return,and using the proceeds to buy ________ with a different set of characteristics.

Because borrowers,once they have a loan,are more likely to invest in high-risk investment projects,banks face the

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

Use the following table to answer the question : -If interest rates rise by 5 percentage points,say from 10 to 15%,bank profits (measured using gap analysis)will

Large-denomination CDs are ________,so that like a bond they can be resold in a ________ market before they mature.

Using T-accounts show what happens to reserves at Security National Bank if one individual deposits $1,000 in cash into her checking account and another individual withdraws $750 in cash from her checking account.

Banks' asset portfolios include state and local government securities because

One of the problems in conducting a duration gap analysis is that the duration gap is calculated assuming that interest rates for all maturities are the same. That means that the yield curve is

All else the same,if a bank's liabilities are more sensitive to interest rate fluctuations than are its assets,then ________ in interest rates will ________ bank profits.