Exam 12: Depository Institutions: Banks and Bank Management

If you focus on interest-rate risk, can you explain why banks offer higher interest rates on longer-term CDs than they do on short-term CDs?

If a bank has customer deposits of $150 million, $15 million in reserves and the amount of excess reserves equals 0 (zero):

A bank that does not want to hold a lot of excess reserves but wants to manage liquidity risk is likely to:

One thing that is common for all bank loans is that they are:

Secondary reserves for banks are:

If a bank's return on equity remains constant, but the ratio of bank assets to bank capital increases:

Considering the balance sheet for all commercial banks in the U.S., the net worth of banks is:

A category of assets for banks is cash items in the process of collection.This is:

If a bank's return on equity remains constant, but the ratio of bank assets to bank capital decreases:

A bank has $100 million in assets and 50 percent of its assets are interest sensitive.The bank has $75 million in liabilities, 50 percent of which are interest sensitive.What is the bank's gap between interest-sensitive assets and liabilities?

Which of the following bank assets would be categorized as secondary reserves?

Which of the following is not a bank liability?

A bank's assets tend to be long-term while its liabilities are short-term.Therefore, when interest rates rise, the value of the bank's assets:

Considering that, on average, the return on assets is the same for small and large banks, and the return on equity is higher for large banks than small banks, what can be one of the explanations for the trend toward bank mergers?

One of the cash items included on the asset side of banks' balance sheets is reserves.What makes up reserves and what is their purpose?

Which of the following is a bank liability?

A bank's Return on Assets (ROA) is calculated by dividing:

The federal funds market:

As the end of the year 1999 approached, many people worried that banks and more specifically the banks' computers would not be able to read the year 2000 correctly.This was commonly known as the Y2K problem.Many people were concerned that their bank would lose the record of their deposits etc., and made plans to take most of their funds out of the bank.Address the potential Y2K problem from the standpoint of bank risk.What two types of risk potentially could have been involved?

If bank with leverage of 8 to 1 increases its assets by adding $1 to capital for every $1 added to assets: