Fin480 Final Exam Questions and
Answers Graded A+
in general, the ____ a bond rating, the ____ the risk of default - Correct answer-
Lower; Higher
Higher; Lower
If a bank shifts its assets from 30-year Treasury Bonds to 1-year Treasury Bonds,
its - Correct answer-Credit risk = unaffected
Liquidity risk DOES NOT increase
Interest-rate risk DOES NOT increase
A bank has a lot of bonds held as assets, if those bonds are downgraded, the bank's
____ will ____ - Correct answer-Capital; fall
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, A bank has a lot of long-term bonds held as assets, as interest rates rise, this will
tend to ____ the bank's _____ - Correct answer-Decrease; capital
When the Federal Reserve buys bonds from a bank, the Fed's assets ___ and its
liabilities ____ - Correct answer-increase; increase
Deposit insurance is believed to ____ bank leverage. This is a ______ issue. -
Correct answer-Increased; moral hazard
Reserves are a ___ to a bank and _____ to the Fed - Correct answer-Asset; liability
A bank lends money as mortgages, these mortgages are ___ to the bank. The same
bank has a lot of Certificates of Deposit (CDs), these are ___ to the bank - Correct
answer-NOT:
assets; assets
liabilities; assets
liabilities; liabilities
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
Answers Graded A+
in general, the ____ a bond rating, the ____ the risk of default - Correct answer-
Lower; Higher
Higher; Lower
If a bank shifts its assets from 30-year Treasury Bonds to 1-year Treasury Bonds,
its - Correct answer-Credit risk = unaffected
Liquidity risk DOES NOT increase
Interest-rate risk DOES NOT increase
A bank has a lot of bonds held as assets, if those bonds are downgraded, the bank's
____ will ____ - Correct answer-Capital; fall
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
, A bank has a lot of long-term bonds held as assets, as interest rates rise, this will
tend to ____ the bank's _____ - Correct answer-Decrease; capital
When the Federal Reserve buys bonds from a bank, the Fed's assets ___ and its
liabilities ____ - Correct answer-increase; increase
Deposit insurance is believed to ____ bank leverage. This is a ______ issue. -
Correct answer-Increased; moral hazard
Reserves are a ___ to a bank and _____ to the Fed - Correct answer-Asset; liability
A bank lends money as mortgages, these mortgages are ___ to the bank. The same
bank has a lot of Certificates of Deposit (CDs), these are ___ to the bank - Correct
answer-NOT:
assets; assets
liabilities; assets
liabilities; liabilities
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
