Exam 9: Banking and the Management of Financial Institutions

Banks hold capital because

Credit risk management tools include

If a bank has $100,000 of checkable deposits,a required reserve ratio of 20 percent,and it holds $40,000 in reserves,then the maximum deposit outflow it can sustain without altering its balance sheet is

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

The amount of assets per dollar of equity capital is called the

The largest percentage of banks' holdings of securities consist of

Bank capital has both benefits and costs for the bank owners.Higher bank capital ________ the likelihood of bankruptcy,but higher bank capital ________ the return on equity for a given return on assets.

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

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

Which of the following are transaction deposits?

Conditions that likely contributed to a credit crunch during the global financial crisis include

A bank failure occurs whenever

When $1 million is deposited at a bank,the required reserve ratio is 20 percent,and the bank chooses not to make any loans but to hold excess reserves instead,then,in the bank's final balance sheet

A deposit outflow results in equal reductions in

In the absence of regulation,banks would probably hold

All of the following are operating expenses for a bank EXCEPT

All of the following are examples of off-balance sheet activities that generate fee income for banks EXCEPT

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

Bank's make their profits primarily by issuing

Net profit after taxes per dollar of equity capital is a basic measure of bank profitability called