TEST BANK CHAPTER 9 BANKING AND
MANAGEMENT OF FINANCIAL INSTITUTIONS
LATEST UPDATE!
QUESTIONS AND ANSWERS
Which of the following statements are TRUE?
A) A bank's assets are its sources of funds.
B) A bank's liabilities are its uses of funds.
C) A bank's balance sheet shows that total assets equal total liabilities plus equity capital.
D) A bank's balance sheet indicates whether or not the bank is profitable.. ANSWER - C)
A bank's balance sheet shows that total assets equal total liabilities plus equity capital.
Which of the following statements is FALSE?
A) A bank's assets are its uses of funds.
B) A bank issues liabilities to acquire funds.
C) The bank's assets provide the bank with income.
D) Bank capital is recorded as an asset on the bank balance sheet.. ANSWER - D) Bank
capital is recorded as an asset on the bank balance sheet.
Which of the following are reported as liabilities on a bank's balance sheet?
A) reserves
B) checkable deposits
C) consumer loans
D) deposits with other banks. ANSWER - B) checkable deposits
Which of the following are reported as liabilities on a bank's balance sheet?
A) discount loans
,B) reserves
C) U.S. Treasury securities
D) real estate loans. ANSWER - A) discount loans
The share of checkable deposits in total bank liabilities has
A) expanded moderately over time.
B) expanded dramatically over time.
C) shrunk over time.
D) remained virtually unchanged since 1960.. ANSWER - C) shrunk over time.
Which of the following statements is FALSE?
A) Checkable deposits are usually the lowest cost source of bank funds.
B) Checkable deposits are the primary source of bank funds.
C) Checkable deposits are payable on demand.
D) Checkable deposits include NOW accounts.. ANSWER - B) Checkable deposits are the
primary source of bank funds.
In recent years the interest paid on checkable and nontransaction deposits has accounted
for around ________ of total bank operating expenses, while the costs involved in servicing
accounts have been approximately ________ of operating expenses.
A) 45 percent; 55 percent
B) 55 percent; 4 percent
C) 25 percent; 50 percent
D) 50 percent; 30 percent. ANSWER - C) 25 percent; 50 percent
Which of the following statements are TRUE?
, A) Checkable deposits are payable on demand.
B) Checkable deposits do not include NOW accounts.
C) Checkable deposits are the primary source of bank funds.
D) Checkable deposits are assets for the bank.. ANSWER - A) Checkable deposits are
payable on demand.
Because checking accounts are ________ liquid for the depositor than savings accounts,
they earn ________ interest rates.
A) less; higher
B) less; lower
C) more; higher
D) more; lower. ANSWER - D) more; lower
Which of the following are transaction deposits?
A) savings accounts
B) small-denomination time deposits
C) checkable deposits
D) certificates of deposit. ANSWER - C) checkable deposits
All of the following are nontransaction deposits EXCEPT
A) savings accounts.
B) small-denomination time deposits.
C) checkable deposits.
D) certificates of deposit.. ANSWER - C) checkable deposits.
Large-denomination CDs are ________, so that like a bond they can be resold in a
________ market before they mature.
MANAGEMENT OF FINANCIAL INSTITUTIONS
LATEST UPDATE!
QUESTIONS AND ANSWERS
Which of the following statements are TRUE?
A) A bank's assets are its sources of funds.
B) A bank's liabilities are its uses of funds.
C) A bank's balance sheet shows that total assets equal total liabilities plus equity capital.
D) A bank's balance sheet indicates whether or not the bank is profitable.. ANSWER - C)
A bank's balance sheet shows that total assets equal total liabilities plus equity capital.
Which of the following statements is FALSE?
A) A bank's assets are its uses of funds.
B) A bank issues liabilities to acquire funds.
C) The bank's assets provide the bank with income.
D) Bank capital is recorded as an asset on the bank balance sheet.. ANSWER - D) Bank
capital is recorded as an asset on the bank balance sheet.
Which of the following are reported as liabilities on a bank's balance sheet?
A) reserves
B) checkable deposits
C) consumer loans
D) deposits with other banks. ANSWER - B) checkable deposits
Which of the following are reported as liabilities on a bank's balance sheet?
A) discount loans
,B) reserves
C) U.S. Treasury securities
D) real estate loans. ANSWER - A) discount loans
The share of checkable deposits in total bank liabilities has
A) expanded moderately over time.
B) expanded dramatically over time.
C) shrunk over time.
D) remained virtually unchanged since 1960.. ANSWER - C) shrunk over time.
Which of the following statements is FALSE?
A) Checkable deposits are usually the lowest cost source of bank funds.
B) Checkable deposits are the primary source of bank funds.
C) Checkable deposits are payable on demand.
D) Checkable deposits include NOW accounts.. ANSWER - B) Checkable deposits are the
primary source of bank funds.
In recent years the interest paid on checkable and nontransaction deposits has accounted
for around ________ of total bank operating expenses, while the costs involved in servicing
accounts have been approximately ________ of operating expenses.
A) 45 percent; 55 percent
B) 55 percent; 4 percent
C) 25 percent; 50 percent
D) 50 percent; 30 percent. ANSWER - C) 25 percent; 50 percent
Which of the following statements are TRUE?
, A) Checkable deposits are payable on demand.
B) Checkable deposits do not include NOW accounts.
C) Checkable deposits are the primary source of bank funds.
D) Checkable deposits are assets for the bank.. ANSWER - A) Checkable deposits are
payable on demand.
Because checking accounts are ________ liquid for the depositor than savings accounts,
they earn ________ interest rates.
A) less; higher
B) less; lower
C) more; higher
D) more; lower. ANSWER - D) more; lower
Which of the following are transaction deposits?
A) savings accounts
B) small-denomination time deposits
C) checkable deposits
D) certificates of deposit. ANSWER - C) checkable deposits
All of the following are nontransaction deposits EXCEPT
A) savings accounts.
B) small-denomination time deposits.
C) checkable deposits.
D) certificates of deposit.. ANSWER - C) checkable deposits.
Large-denomination CDs are ________, so that like a bond they can be resold in a
________ market before they mature.
