Test Questions Banking

Which of the following is NOT a source of income for a bank? A. the interest earned by depositors B. investments C. loan income from interest D. fees for services - ANS A The difference between what a bank pays in interest and what it receives in interest is called - ANS Spread True or False: A Financial intermediary will not take a deposit for a consumer. - ANS False Total assets minus total liabilities equals - ANS Equity The loosening of government control is called __________ - ANS Deregulation True or False: Return on equity is the ratio of net income to total assets. - ANS False About 60 percent of the deposit and loan business in the United States is done by - ANS Commercial Banks People who put money into banks are called ________________ - ANS Depositor True or False: State Farm Insurance company is an example of a depository institution. - ANS False True or False: A bank is a not-for-profit organization. - ANS False A bank evaluates the ____________ of all customers who apply for loans. - ANS Creditworthiness Assume that a bank receives a $5,000 deposit from a customer and lends it to another to start a small business. The bank pays a straight 5% per year interest to the customer and charges 10% per year for the loan. Calculate the spread for one year. - ANS $250 Banks move money between Answers: A. other banks B.banks and individual customers C. governments D. all of the above - ANS D True or False: General speaking, banks offer customers fewer services today than they did 20 years ago. - ANS False