Exam 12: Depository Institutions: Banks and Bank Management

A bank's Return on Equity (ROE) is calculated by:

If a bank has deposits of $250 million, reserves that total $30 million and has a required reserve rate of 10 percent:

The total assets of commercial banks in 2010 amounted to:

What are the securities that U.S.banks are allowed to own and why are they often referred to as secondary reserves?

Bank's hold marketable securities as part of their assets.For U.S.banks these marketable securities include:

The risks that banks are exposed to include each of the following, except:

Repurchase agreements are usually used by banks that:

Secondary reserves for banks are:

Money Center Banks differ from community banks in all of the following ways except:

Japanese banks from the 1990's to the present have lost considerable amounts of capital.If you were hired to clean up the Japanese banking sector, what reforms would you prescribe?

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

Everything else equal, if the ratio of bank assets to bank capital decreases, the bank's return on equity should:

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?

Considering U.S.commercial banks, loans account for:

Identify the four broad categories that make up the asset side of the balance sheet for banks and which category is usually the largest.

A bank's reserves include:

We saw in Chapter 12 that initially savings and loans were created to make home mortgages, and their main source of funds was deposits from savers.In the late 1970s and into the 1980s, the U.S.experienced rising interest rates that had depositors looking for higher returns.Congress quickly removed the interest rate ceilings that savings and loans could offer.Explain the initial impact this had on the interest rate spread and the net interest margin for the savings and loans.

Which of the following statements regarding checkable deposits is most accurate?

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?

The weighted average difference between the interest received on assets and the interest rate paid for liabilities for a bank is the banks: