Exam 10: The Economics of Banking

Suppose First National Bank has $200 million of assets and $20 million of equity capital. If First National has a 2% return on assets (ROA), what is its return on equity (ROE)? Suppose First National's equity capital declines to $10 million, while its assets and ROA are unchanged. What is First National's ROE now?

All of the following have contributed to increased use of ATMs EXCEPT:

In the current U.S. economy, who plays the role of lender of last resort?

The Federal Reserve System was created in response to

For a bank, the ration of after-tax profit to assets is its:

Which of the following is NOT an example of off-balance-sheet lending?

Explicit provisions in a loan agreement that prohibit the borrower from engaging in certain activities is called:

If you have a checking account at First National Bank, the account is

Which of the following things do banks do with the funds they acquire from savers?

Which of the following is a hybrid of a checking and savings account?

A bank's remaining value after it has met all its liabilities is known as a

A bank run involves

Businesses hold substantial balances in demand deposits for all of the following reasons EXCEPT:

Compare the characteristics of loans and marketable securities in terms of liquidity, risk, and information costs.

Since most banks have positive gaps and negative duration gaps, an increase in market interest rates will

The difference between a savings deposit and a time deposit is

What is the current limit on balances that are covered by federal deposit insurance?

Customers who have long-term relationships with banks

Why do households hold less in checking accounts then they once did?

National banks are chartered by the