Question 1

Which of the following is NOT a bank liability?

Accepted Answer

A)  checkable deposits 
B)  CDs 
C)  mortgage loans 
D)  borrowings from the Federal Reserve 
A)  checkable deposits 
B)  CDs 
C)  mortgage loans 
D)  borrowings from the Federal Reserve

Question 2

Banks are exposed to interest rate risk primarily because

Accepted Answer

A)  interest rates are very difficult to forecast. 
B)  the maturities of banks' assets and liabilities differ. 
C)  borrowers from banks are prone to default. 
D)  depositors are always searching for a slightly higher interest rate. 
A)  interest rates are very difficult to forecast. 
B)  the maturities of banks' assets and liabilities differ. 
C)  borrowers from banks are prone to default. 
D)  depositors are always searching for a slightly higher interest rate.

Question 3

The ratio of bank capital to bank assets is known as the bank's

Accepted Answer

A)  leverage ratio. 
B)  net interest margin. 
C)  return on equity. 
D)  return on capital. 
A)  leverage ratio. 
B)  net interest margin. 
C)  return on equity. 
D)  return on capital.

Question 4

Compare the characteristics of loans and marketable securities in terms of liquidity,risk,and information costs.

Accepted Answer

Loans are less liquid than mar

Question 5

The interest rate on unsecured loans between banks is called the

Accepted Answer

A)  discount rate. 
B)  repurchase rate. 
C)  T-bill rate. 
D)  federal funds rate. 
A)  discount rate. 
B)  repurchase rate. 
C)  T-bill rate. 
D)  federal funds rate.

Question 6

The sensitivity of bank capital to market interest rates is measured by

Accepted Answer

A)  gap analysis. 
B)  duration analysis. 
C)  leverage ratio. 
D)  capital analysis. 
A)  gap analysis. 
B)  duration analysis. 
C)  leverage ratio. 
D)  capital analysis.

Question 7

A person takes out a car loan at a bank,but actually uses the money to play the lottery.This situation is an example of which problem banks face in lending?

Accepted Answer

A)  adverse selection 
B)  moral hazard 
C)  interest rate risk 
D)  illiquidity 
A)  adverse selection 
B)  moral hazard 
C)  interest rate risk 
D)  illiquidity

Question 8

Banks make use of the federal funds market in part to

Accepted Answer

A)  pay their tax liabilities. 
B)  manage liquidity risk. 
C)  deal with moral hazard. 
D)  deal with adverse selection. 
A)  pay their tax liabilities. 
B)  manage liquidity risk. 
C)  deal with moral hazard. 
D)  deal with adverse selection.

Question 9

Which of the following is NOT an example of off-balance-sheet lending?

Accepted Answer

A)  a swap 
B)  a standby letter of credit 
C)  a loan commitment 
D)  a loan sale 
A)  a swap 
B)  a standby letter of credit 
C)  a loan commitment 
D)  a loan sale

Question 10

In the current U.S.economy,who plays the role of lender of last resort?

Accepted Answer

A)  The Securities and Exchange Commission 
B)  The Federal Deposit Insurance Corporation 
C)  The Federal Reserve System 
D)  The Social Security Administration 
A)  The Securities and Exchange Commission 
B)  The Federal Deposit Insurance Corporation 
C)  The Federal Reserve System 
D)  The Social Security Administration

Question 11

What is an important difference between certificates of deposits (CDs)worth less than $100,000 compared to those worth $100,000 or more?

Accepted Answer

CDs of $100,000 or more are ne

Question 12

All of the following are examples of borrowings by a bank EXCEPT

Accepted Answer

A)  federal funds. 
B)  repurchase agreements. 
C)  discount loans. 
D)  commercial loans. 
A)  federal funds. 
B)  repurchase agreements. 
C)  discount loans. 
D)  commercial loans.

Question 13

Banks use repurchase agreements to

Accepted Answer

A)  ensure that payments on consumer loans are made on time. 
B)  borrow funds from business firms or other banks. 
C)  guard against price fluctuations on long-term bonds. 
D)  ensure that they always have enough funds on hand to meet their federal tax liabilities. 
A)  ensure that payments on consumer loans are made on time. 
B)  borrow funds from business firms or other banks. 
C)  guard against price fluctuations on long-term bonds. 
D)  ensure that they always have enough funds on hand to meet their federal tax liabilities.

Question 14

Which of the following is a checkable deposit?

Accepted Answer

A)  a NOW account 
B)  a money market deposit account 
C)  a certificate of deposit 
D)  a savings account 
A)  a NOW account 
B)  a money market deposit account 
C)  a certificate of deposit 
D)  a savings account

Question 15

By 2009,what share of U.S.assets were held by the 10 largest banks in the United States?

Accepted Answer

A)  10% 
B)  29% 
C)  45% 
D)  68% 
A)  10% 
B)  29% 
C)  45% 
D)  68%

Question 16

What steps can a bank take to deal with a significant outflow of deposits?

Accepted Answer

Banks need to manage their assets so as

Question 17

Which of the following is NOT considered a cash item by banks?

Accepted Answer

A)  U.S. Treasury bills 
B)  deposits at other banks 
C)  deposits at the Federal Reserve 
D)  vault cash 
A)  U.S. Treasury bills 
B)  deposits at other banks 
C)  deposits at the Federal Reserve 
D)  vault cash

Question 18

Any reserves beyond what is required are called

Accepted Answer

A)  required reserves. 
B)  excess reserves. 
C)  secondary reserves. 
D)  bank capital. 
A)  required reserves. 
B)  excess reserves. 
C)  secondary reserves. 
D)  bank capital.

Question 19

During a banking panic,a lender of last resort will

Accepted Answer

A)  purchase banks which are having difficulty but appear sound. 
B)  make loans to solvent but temporality illiquid banks. 
C)  make loans to insolvent but liquid banks. 
D)  make loans to any banks which request them. 
A)  purchase banks which are having difficulty but appear sound. 
B)  make loans to solvent but temporality illiquid banks. 
C)  make loans to insolvent but liquid banks. 
D)  make loans to any banks which request them.

Question 20

In what ways does a certificate of deposit (CD)differ from a savings deposit?

Accepted Answer

Unlike savings deposits,CDs ha

Which of the following is NOT a bank liability?

Banks are exposed to interest rate risk primarily because

The ratio of bank capital to bank assets is known as the bank's

Compare the characteristics of loans and marketable securities in terms of liquidity,risk,and information costs.

The interest rate on unsecured loans between banks is called the

The sensitivity of bank capital to market interest rates is measured by

A person takes out a car loan at a bank,but actually uses the money to play the lottery.This situation is an example of which problem banks face in lending?

Banks make use of the federal funds market in part to

Which of the following is NOT an example of off-balance-sheet lending?

In the current U.S.economy,who plays the role of lender of last resort?

What is an important difference between certificates of deposits (CDs)worth less than $100,000 compared to those worth $100,000 or more?

All of the following are examples of borrowings by a bank EXCEPT

Banks use repurchase agreements to

Which of the following is a checkable deposit?

By 2009,what share of U.S.assets were held by the 10 largest banks in the United States?

What steps can a bank take to deal with a significant outflow of deposits?

Which of the following is NOT considered a cash item by banks?

Any reserves beyond what is required are called

During a banking panic,a lender of last resort will

In what ways does a certificate of deposit (CD)differ from a savings deposit?

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

Which of the following is NOT a bank liability?

Banks are exposed to interest rate risk primarily because

The ratio of bank capital to bank assets is known as the bank's

Compare the characteristics of loans and marketable securities in terms of liquidity,risk,and information costs.

The interest rate on unsecured loans between banks is called the

The sensitivity of bank capital to market interest rates is measured by

A person takes out a car loan at a bank,but actually uses the money to play the lottery.This situation is an example of which problem banks face in lending?

Banks make use of the federal funds market in part to

Which of the following is NOT an example of off-balance-sheet lending?

In the current U.S.economy,who plays the role of lender of last resort?

What is an important difference between certificates of deposits (CDs)worth less than $100,000 compared to those worth $100,000 or more?

All of the following are examples of borrowings by a bank EXCEPT

Banks use repurchase agreements to

Which of the following is a checkable deposit?

By 2009,what share of U.S.assets were held by the 10 largest banks in the United States?

What steps can a bank take to deal with a significant outflow of deposits?

Which of the following is NOT considered a cash item by banks?

Any reserves beyond what is required are called

During a banking panic,a lender of last resort will

In what ways does a certificate of deposit (CD)differ from a savings deposit?

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