Exam 12: Depository Institutions: Banks and Bank Management

The credit risk a bank faces is the risk resulting specifically from:

A bank that makes most of its long-term loans at adjustable interest rates is:

Savings and loan institutions:

If Bank A sells some its loans to Bank B for cash, everything else equal:

A repurchase agreement is:

Suppose a particular bank is very large in terms of assets, and makes consumer and residential loans as well as commercial and industrial loan.The bank is probably a:

Trading risk faced by U.S.banks results from:

A bank's net interest margin is calculated by taking net interest income and:

Banks do not hold a lot of their assets in the form of cash mainly because of:

When interest rates fall a bank's capital will usually:

Over the past half century, the proportion of banks' total assets held as securities has:

Savings and loans primarily provide:

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?

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

For every $100 in assets, a bank has $40 in interest-rate sensitive assets, and the other $60 in non-interest-rate sensitive assets.The same bank has $50 for every $100 in liabilities in interest-rate sensitive liabilities, the other $50 are in liabilities that are not interest-rate sensitive.If the interest rate on assets increases from 5 to 6 percent, and the interest rate on liabilities increases from 3 to 4, percent the impact on the bank's profits per $100 of assets will be:

A bank has the following assets: Reserves of $15 million; Loans of $150 million; and Securities of $50 million.Their liabilities include Deposits of $150 million; Borrowed funds of $35 million and Bank Capital of $30 million.If the required reserve rate is 10 percent, answer the following: What is the amount of excess reserves the bank is currently holding? What are the options available to the bank if customers decide to withdraw $10 million in deposits?

Explain why a bank with a high debt-to-equity ratio may be more profitable than a bank with a lower ratio but would also have a higher level of risk.

Suppose that a bank initially has a leverage ratio of 8 to 1.If this bank increases its capital by $1million and its assets by $10 million, then the bank's:

The procedure that estimates the interest-rate sensitivity of a bank's assets and liabilities is called:

Which of the following is a bank liability?