Exam 13: Banking and the Management of Financial Institutions

Which of the following are bank assets?

A T-account represents ________.

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

Your bank has the following balance sheet: Assets Liabilities Reserves $ 50 million Deposits $200 million Securities 50 million Loans 150 million Bank capital 50 million If the desired reserve ratio is 10 percent,what actions should the bank manager take if there is an unexpected deposit outflow of $50 million?

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

If interest rates rise by 5 percentage points,say from 10 to 15 percent,bank profits (measured using basic gap analysis)will ________.

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

Risk that is related to the uncertainty about interest rate movements is called ________.

Holding large amounts of bank capital helps prevent bank failures because ________.

If interest rates rise by 5 percentage points,say,from 10 to 15 percent,bank profits (measured using basic gap analysis)will ________.

What is a loan sale and how does it work?

________ may antagonize customers and thus can be a very costly way of acquiring funds to meet an unexpected deposit outflow.

When a $10 cheque written on the First National Bank is deposited in an account at CIBC,then ________.

If a bank has $10 million of demand deposits,a desired reserve ratio of 10 percent,and it holds $2 million in reserves,then it will not have enough reserves to support a deposit outflow of ________.

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.

If interest rates increase from 9 percent to 10 percent,a bank with a duration gap of 2 years would experience a decrease in its net worth of ________.

Most of a bank's operating income results from ________.

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

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

When you deposit a $50 bill in the New National Bank,________.