Test Questions Banking (With correct solutions)

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 correct answers A The difference between what a bank pays in interest and what it receives in interest is called correct answers Spread True or False: A Financial intermediary will not take a deposit for a consumer. correct answers False Total assets minus total liabilities equals correct answers Equity The loosening of government control is called __________ correct answers Deregulation True or False: Return on equity is the ratio of net income to total assets. correct answers False About 60 percent of the deposit and loan business in the United States is done by correct answers Commercial Banks People who put money into banks are called ________________ correct answers Depositor True or False: State Farm Insurance company is an example of a depository institution. correct answers False True or False: A bank is a not-for-profit organization. correct answers False A bank evaluates the ____________ of all customers who apply for loans. correct answers 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. correct answers $250 Banks move money between Answers: A. other banks