Exam 9: Banking and the Management of Financial Institutions

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

In one sense ________ appears surprising since it means that the bank is not ________ its portfolio of loans and thus is exposing itself to more risk.

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.

In order to reduce the ________ problem in loan markets,bankers collect information from prospective borrowers to screen out the bad credit risks from the good ones.

If a bank needs to raise the amount of capital relative to assets,a bank manager might choose to

If a bank has excess reserves greater than the amount of a deposit outflow,the outflow will result in equal reductions in

From the standpoint of ________,specialization in lending is surprising but makes perfect sense when one considers the ________ problem.

For a given return on assets,the lower is bank capital

When banks involved in trading activities attempt to outguess markets,they are

Which of the following would a bank NOT hold as insurance against the highest cost of deposit outflow-bank failure?

Bankers' concerns regarding the optimal mix of excess reserves,secondary reserves,borrowings from the Fed,and borrowings from other banks to deal with deposit outflows is an example of

If a bank has ________ rate-sensitive assets than liabilities,then ________ in interest rates will increase bank profits.

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

A $5 million deposit outflow from a bank has the immediate effect of

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

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

When a $10 check written on the First National Bank of Chicago is deposited in an account at Citibank,then

If,after a deposit outflow,a bank needs an additional $3 million to meet its reserve requirements,the bank can

Assuming that the average duration of its assets is five 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 decline by ________ of the total original asset value.

Duration analysis involves comparing the average duration of the bank's ________ to the average duration of its ________.