Question 1

A bank's remaining value after it has met all its liabilities is known as a

Accepted Answer

A)  bank's assets. 
B)  bank's liabilities. 
C)  bank capital. 
D)  bank's income. 
A)  bank's assets. 
B)  bank's liabilities. 
C)  bank capital. 
D)  bank's income.

Question 2

A cash item in the process of collection is

Accepted Answer

A)  a U.S. Treasury bill that has matured, but for which the bank has not yet received payment. 
B)  a car loan payment that is due but not yet received by the bank. 
C)  a check drawn against another bank, from whom the funds have not yet been collected. 
D)  currency that has been deposited in the bank, but not yet formally counted and entered into the bank's balance sheet. 
A)  a U.S. Treasury bill that has matured, but for which the bank has not yet received payment. 
B)  a car loan payment that is due but not yet received by the bank. 
C)  a check drawn against another bank, from whom the funds have not yet been collected. 
D)  currency that has been deposited in the bank, but not yet formally counted and entered into the bank's balance sheet.

Question 3

Which of the following represented the largest liability on the balance sheet of U.S.commercial banks in 2010?

Accepted Answer

A)  checkable deposits 
B)  loans 
C)  nontransaction deposits 
D)  borrowings 
A)  checkable deposits 
B)  loans 
C)  nontransaction deposits 
D)  borrowings

Question 4

National banks are supervised by the

Accepted Answer

A)  Office of the Comptroller of the Currency. 
B)  Office of Bank Supervision. 
C)  Securities and Exchange Commission. 
D)  Office of Management and the Budget. 
A)  Office of the Comptroller of the Currency. 
B)  Office of Bank Supervision. 
C)  Securities and Exchange Commission. 
D)  Office of Management and the Budget.

Question 5

The difference between a demand deposit and a NOW account is that

Accepted Answer

A)  checks may not be written against NOW account balances. 
B)  demand deposits pay no interest. 
C)  NOW accounts pay no interest. 
D)  checks may not be written against demand deposit balances. 
A)  checks may not be written against NOW account balances. 
B)  demand deposits pay no interest. 
C)  NOW accounts pay no interest. 
D)  checks may not be written against demand deposit balances.

Question 6

On a bank's balance sheet,"borrowings" are

Accepted Answer

A)  loans to households. 
B)  loans to businesses. 
C)  nondeposit liabilities. 
D)  U.S. Treasury securities. 
A)  loans to households. 
B)  loans to businesses. 
C)  nondeposit liabilities. 
D)  U.S. Treasury securities.

Question 7

What are federally chartered banks called?

Accepted Answer

A)  federal banks 
B)  Federal Reserve banks 
C)  national banks 
D)  central banks 
A)  federal banks 
B)  Federal Reserve banks 
C)  national banks 
D)  central banks

Question 8

Why do households hold less in checking accounts then they once did?

Accepted Answer

As wealth has increased,households have

Question 9

Moral hazard can contribute to high bank leverage in all of the following ways EXCEPT

Accepted Answer

A)  having high capital requirements. 
B)  bank managers are compensated in part on providing shareholders with high returns on equity. 
C)  high bank leverage provides shareholders with a potential for a higher return on equity. 
D)  federal deposit insurance has reduced the incentive of depositors to monitor the behavior of bank managers. 
A)  having high capital requirements. 
B)  bank managers are compensated in part on providing shareholders with high returns on equity. 
C)  high bank leverage provides shareholders with a potential for a higher return on equity. 
D)  federal deposit insurance has reduced the incentive of depositors to monitor the behavior of bank managers.

Question 10

Suppose First National Bank has $200 million of assets and $20 million of equity capital.If First National has a 2% return on assets (ROA),what is its return on equity (ROE)? Suppose First National's equity capital declines to $10 million,while its assets and ROA are unchanged.What is First National's ROE now?

Accepted Answer

ROE = ROA × (Bank as

Question 11

If you deposit $300 in your bank and the required reserve ratio is 10%,your bank will have

Accepted Answer

A)  an increase in required reserves of $300. 
B)  an increase in required reserves of $270. 
C)  an increase in required reserves of $3000. 
D)  an increase in required reserves of $30 and an increase in excess reserves of $270. 
A)  an increase in required reserves of $300. 
B)  an increase in required reserves of $270. 
C)  an increase in required reserves of $3000. 
D)  an increase in required reserves of $30 and an increase in excess reserves of $270.

Question 12

States that restrict banks to having a single branch are said to require

Accepted Answer

A)  mono banking. 
B)  nonbank banking. 
C)  unit banking. 
D)  semi-banking. 
A)  mono banking. 
B)  nonbank banking. 
C)  unit banking. 
D)  semi-banking.

Question 13

In 2010,net worth was about what percentage of total funds raised by banks?

Accepted Answer

A)  2% 
B)  7% 
C)  12% 
D)  35% 
A)  2% 
B)  7% 
C)  12% 
D)  35%

Question 14

Collateral is

Accepted Answer

A)  the interest rate that banks charge high-quality borrowers. 
B)  assets pledged to the bank in the event the borrower defaults. 
C)  the difference between the value of a bank's assets and the value of a bank's liabilities. 
D)  required reserves minus excess reserves. 
A)  the interest rate that banks charge high-quality borrowers. 
B)  assets pledged to the bank in the event the borrower defaults. 
C)  the difference between the value of a bank's assets and the value of a bank's liabilities. 
D)  required reserves minus excess reserves.

Question 15

Securitization refers to

Accepted Answer

A)  changing the mix in a financial portfolio away from stocks and toward bonds. 
B)  selling directly to investors loans or securities that were formerly held by financial intermediaries. 
C)  banks insisting that collateral be supplied on previously unsecured loans. 
D)  reducing the exposure of a bank's portfolio to interest rate risk. 
A)  changing the mix in a financial portfolio away from stocks and toward bonds. 
B)  selling directly to investors loans or securities that were formerly held by financial intermediaries. 
C)  banks insisting that collateral be supplied on previously unsecured loans. 
D)  reducing the exposure of a bank's portfolio to interest rate risk.

Question 16

How does moral hazard contribute to high bank leverage?

Accepted Answer

First,bank managers are typically compen

Question 17

The difference between the interest a bank earns on loans and securities and the interest paid on deposits and debt divided by the total value of its assets is called

Accepted Answer

A)  interest spread. 
B)  net interest margin. 
C)  return on assets. 
D)  return on equity. 
A)  interest spread. 
B)  net interest margin. 
C)  return on assets. 
D)  return on equity.

Question 18

All of the following are reasons that small businesses had difficulty receiving credit in the late 2000s EXCEPT

Accepted Answer

A)  declining commercial real estate value resulted in a decline in he value of their collateral. 
B)  many banks feared adverse selection and moral hazard and thus tightened lending standards. 
C)  banks reduce business credit card limits. 
D)  banks tried to reduce their reserves making lending more difficult. 
A)  declining commercial real estate value resulted in a decline in he value of their collateral. 
B)  many banks feared adverse selection and moral hazard and thus tightened lending standards. 
C)  banks reduce business credit card limits. 
D)  banks tried to reduce their reserves making lending more difficult.

Question 19

A checkable deposit that pays no interest is known as a

Accepted Answer

A)  demand deposit. 
B)  certificate of deposit. 
C)  NOW account. 
D)  time deposit. 
A)  demand deposit. 
B)  certificate of deposit. 
C)  NOW account. 
D)  time deposit.

Question 20

Which of the following is a bank asset?

Accepted Answer

A)  checkable deposits 
B)  savings deposits 
C)  borrowings in the federal funds market 
D)  cash items in the process of collection 
A)  checkable deposits 
B)  savings deposits 
C)  borrowings in the federal funds market 
D)  cash items in the process of collection

A bank's remaining value after it has met all its liabilities is known as a

A cash item in the process of collection is

Which of the following represented the largest liability on the balance sheet of U.S.commercial banks in 2010?

National banks are supervised by the

The difference between a demand deposit and a NOW account is that

On a bank's balance sheet,"borrowings" are

What are federally chartered banks called?

Why do households hold less in checking accounts then they once did?

Moral hazard can contribute to high bank leverage in all of the following ways EXCEPT

If you deposit $300 in your bank and the required reserve ratio is 10%,your bank will have

States that restrict banks to having a single branch are said to require

In 2010,net worth was about what percentage of total funds raised by banks?

Collateral is

Securitization refers to

How does moral hazard contribute to high bank leverage?

The difference between the interest a bank earns on loans and securities and the interest paid on deposits and debt divided by the total value of its assets is called

All of the following are reasons that small businesses had difficulty receiving credit in the late 2000s EXCEPT

A checkable deposit that pays no interest is known as a

Which of the following is a bank asset?

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

Investment Banks, mutual Funds, hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I: the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters

Exam 10: The Economics of Banking

A bank's remaining value after it has met all its liabilities is known as a

A cash item in the process of collection is

Which of the following represented the largest liability on the balance sheet of U.S.commercial banks in 2010?

National banks are supervised by the

The difference between a demand deposit and a NOW account is that

On a bank's balance sheet,"borrowings" are

What are federally chartered banks called?

Why do households hold less in checking accounts then they once did?

Moral hazard can contribute to high bank leverage in all of the following ways EXCEPT

If you deposit $300 in your bank and the required reserve ratio is 10%,your bank will have

States that restrict banks to having a single branch are said to require

In 2010,net worth was about what percentage of total funds raised by banks?

Collateral is

Securitization refers to

How does moral hazard contribute to high bank leverage?

The difference between the interest a bank earns on loans and securities and the interest paid on deposits and debt divided by the total value of its assets is called

All of the following are reasons that small businesses had difficulty receiving credit in the late 2000s EXCEPT

A checkable deposit that pays no interest is known as a

Which of the following is a bank asset?

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

Investment Banks, mutual Funds, hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I: the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters