Exam 4: Establishing New Banks, Branches, ATMs, Telephone Services, and Websites

Research indicates that states with more liberal chartering standards experience a higher rate of bank failures.

The Cassil National Bank charges its customers $0.50 per transaction for using the ATM machine,if their deposit balance is below $500.It charges $0.25 per transaction for using the ATM if their deposit balance is between $500 and $1,000.If its customers' deposit balance is over $1,000,there is no charge for using the ATM machine.This is an example of:

One of the benefits of applying for a federal (national)bank charter over a state charter is that:

Higher levels of savings deposits are usually found in those bank branch office locations where there is a higher proportion of residents with above-average age and residents who own their own homes.

The _____________ of setting up a new ATM is the present value of the future stream of cash savings discounted at the firm's required rate of return less the total cash outlay for the ATM.

Following charter approval,a bank's stock can be legally offered to the public through a(n)___________________ that describes the charter's business plan and terms of sale.

Computer terminals which allow customers to make cash withdrawals,check deposit balances,and make deposits without dealing with a teller are known as:

The Clearwater National Bank is planning to set up a new branch.This new branch is anticipated to generate 5 percent of the total business of the bank after it is opened.The bank also expects the return for this branch to be 15 percent with a standard deviation of 5 percent.Currently the bank has a 10 percent rate of return with a standard deviation of 5 percent.The correlation between the bank's current return and returns on the new branch is expected to be -0.3.What is this bank's expected risk (measured by the standard deviation)after adding this branch?

An average new bank branch today reaches the break-even point in:

A common approach adopted by banks to decide on whether or not to install a new ATM is to estimate _____________ that the new machine is expected to generate.

A group of six investors wants to open a new bank.In their application to the Comptroller of the Currency,they discuss that new housing starts in the area are up 19% from a year ago with an additional 25 families moving into the community every month.School enrollment has also increased 14% from the previous year.Which decision factor are the investors discussing for seeking a new charter?

Third State Bank wants to add a new branch office.It has determined that the cost of construction of the new facility will be $1.5 million with another $500,000 in organizational costs.The bank has estimated that it will generate $319,522 per year in net revenues for 20 years.If Third State requires a 17% return on its money,what is this project's net present value?

The FDIC Improvement Act requires that all depository institutions must have FDIC insurance.

The Chahad Bank wants to open a new branch in a distant city with very different economic conditions.Currently,the bank has an expected return of 15% with a standard deviation of 7%.The new branch is expected to have a return of 20% with a standard deviation of 10%.The correlation between the bank's returns and the returns from the new branch is -0.3.The new branch is expected to contribute 10% of the bank's revenues.What is the standard deviation of returns for the bank if they add the new branch? (Round your answer to the nearest 0.1%)

A(n)______________________ combines a computer terminal,record keeping system,and vault cash in one unit allowing customers to withdraw money,check deposit balances,and other limited services 24 hours a day.

Which of the following is true concerning branch offices?

The Boyer Bank wants to add a new ATM machine in a busy mall.It knows the new machine will cost $60,000 and another $30,000 is required to install it in the mall.It expects to save $0.27 per transaction and generate 100,000 transactions per year.Also,it expects the new machine to last 8 years.What is the expected rate of return or internal rate or return of this project?

Most new banks:

The Clearwater National Bank is planning to set up a new branch.This new branch is anticipated to generate 5 percent of the total business of the bank after it is opened.The bank also expects the returns on this branch to be 15 percent with a standard deviation of 5 percent.Currently the bank has a 10 percent rate of return with a standard deviation of 5 percent.The correlation between the bank's current return and returns on the new branch is expected to be -0.3.What is the bank's total expected return after adding this branch?

Payments made by electronic direct deposit now comprise over 50 percent of all transactions in the U.S.