Exam 10: Banking and the Management of Financial Institutions

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

Which of the following are reported as liabilities on a bank's balance sheet?

Banks face the problem of ________ in loan markets because bad credit risks are the ones most likely to seek bank loans.

When a bank suspects that a $1 million loan might prove to be bad debt that will have to be written off in the future the bank

The amount of checkable deposits that banks are required by regulation to hold are the

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

The quantity interest income minus interest expenses divided by assets is a measure of bank performance known as

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

In general,banks make profits by selling ________ liabilities and buying ________ assets.

Bank reserves include

Examples of off-balance-sheet activities include

Banks' asset portfolios include state and local government securities because

Bruce the Bank Manager can reduce interest rate risk by ________ the duration of the bank's assets to increase their rate sensitivity or,alternatively,________ the duration of the bank's liabilities.

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

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

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

Holding large amounts of bank capital helps prevent bank failures because

Because checking accounts are ________ liquid for the depositor than passbook savings,they earn ________ interest rates.

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.

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