Exam 13: Managing Nondeposit Liabilities

Large banks depend more on nondeposit borrowings than small banks.

In the United States,legal reserve requirements on certificates of deposits is currently:

Money market suppliers of funds typically have a(n)______________ response to changes in the market interest rates.

The First State Bank of Summerville needs to raise $500,000 in nondeposit sources of funds.It knows that the Eurodollar market requires a minimum denomination of $1 million.What factor that affects a bank's use of nondeposit sources of funds is this bank concerned about?

According to the FDIC Improvement Act,undercapitalized U.S.banks cannot be granted discount window loans for more than 60 days in each 120-day period.

A repurchase agreement (RP)in which the collateral is specifically identified is known as a(n):

Loans from the Fed funds market must be backed by collateral.

Longer-term federal funds contracts which are automatically renewed each day unless either the borrower or the lender decides to end the agreement are called term loans.

One of the three types of loans in the Fed Funds market,__________________ contracts are automatically renewed each day unless either the borrower or lender decides to end this agreement.

When a foreign branch lends a Euro deposit to its home office in the U.S. ,how is this listed on the balance sheet of the home office?

The First State Bank of Summerville knows that,if it issues a large amount of the negotiable CD,the interest cost on the CD may be very high due to tight money supply conditions.As a result,it chooses to ration the credit and lend only to its most loyal clients.What risk factor that affects a bank's use of nondeposit sources of funds is the concern here?

Asset management is regarded as an interest-sensitive approach to raising funds.

When a bank buys funds from other financial institutions in order to cover good quality loan demand and to satisfy deposit reserve requirements,it is practicing _________________________ management.

Which of the following source of bank funding is considered a hybrid account because though legally a deposit,it is considered as just another form of IOU?

The Lawrence Bank of Cleveland is planning on issuing $60 million in negotiable CDs.Currently other similar CDs bear an interest rate of 5.15 percent.The bank has estimated that its noninterest costs of issuing these CDs will be 0.2 percent,and expects to pay a deposit insurance premium of 0.0023 per dollar of insured funds.Due to other immediate cash needs,only $50 million of the funds raised will be fully invested.What is the effective cost rate for the Lawrence Bank of Cleveland to borrow in the CD market? (Round your answer to the nearest .01 percent)

The spread between current and expected loans and investments and the current and expected inflows from deposits and other sources of funds is known as the __________.

Originally,__________________ funds consisted exclusively of deposits held by U.S.banks at the Federal Reserve banks which were loaned from one bank to another.

Liability management banking calls for using price (the interest rate offered)as the control lever to regulate incoming funds.

The CDs that large foreign banks sell through their U.S.branches are called ________________________.

The securities most often used in a repurchase agreement are ____________________.