Exam 13: Banking and the Management of Financial Institutions

Banks hold excess and secondary reserves to ________.

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

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

Explain the relationship between return on assets and return on equity.What incentives does this relationship give a bank manager? Is this the desired outcome preferred by regulators? Discuss.

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

When you deposit $50 in your account at First National Bank and a $100 cheque you have written on this account is cashed at Chemical Bank,then ________.

Off-balance sheet activities involving guarantees of securities and back-up credit lines ________.

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.If interest rates increase from 5 percent to 6 percent,the net worth of the bank falls by ________.

When Jane Brown writes a $100 cheque to her nephew (who lives in another province),Ms.Brown's bank ________ assets of $100 and ________ liabilities of $100.

When banks calculate the losses the institution would incur if an unusual combination of bad events happened,the bank is using the ________ approach.

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.

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

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

A bank with insufficient reserves can increase its reserves by ________.

A bank failure occurs whenever ________.

A bank's commitment to provide a firm with loans up to pre-specified limit at an interest rate that is tied to a market interest rate is called ________.

If the First National Bank has a gap equal to a negative $30 million,then a 5 percentage point increase in interest rates will cause profits to ________.

Traders working for banks are subject to the ________.

Through correspondent banking,large banks provide services to small banks,including ________.

The fraction of chequable deposits that banks choose to hold are ________.