Exam 17: Banking and the Management of Financial Institutions

Banks earn profits by selling ________ with attractive combinations of liquidity, risk, and return, and using the proceeds to buy ________ with a different set of characteristics.

A bank failure is more likely to occur when

A bank manager has which of the following concerns?

Which of the following are not reported as assets on a bank's balance sheet?

Banks fail when the value of bank ________ falls below the value of ________, causing the bank to become insolvent.

The largest source of bank income is

On a bank's income statement, the provision for loan losses is an ________ item and represents the amount of ________ in the bank's loan loss reserves.

Loans

A bank's balance sheet

Explain how a capital crunch can lead to a credit crunch in our economy.

The danger of banks engaging in activities such as trading in financial futures and interest-rate swaps is that these activities allow banks to

Secondary reserves ________

The share of checkable deposits in total bank liabilities has

If a bank has $1 million of deposits, a required reserve ratio of 20 percent, and $300,000 in reserves, it need not rearrange its balance sheet if there is a deposit outflow of

A bank can reduce its total amount of loans outstanding by

With large banks beginning to explore ways in which the liabilities on their balance sheets could provide them with reserves and liquidity, this led to

Which of the following statements is true?

Because passbook savings are ________ liquid for the depositor than checking accounts, they earn ________ interest rates.

Which of the following are reported as liabilities on a bank's balance sheet?

Net profit after taxes per dollar of equity capital is a basic measure of bank profitability called