UARK AGRICULTURAL FINANCE EXAM 1 STUDY GUIDE EXAM
QUESTIONS AND ANSWERS
What are the two functions of financial markets? - CORRECT ANSWER✅✅Transfer and ration funds
What is the length of term in years for an appointment to the Board of Governors - CORRECT
ANSWER✅✅14
Who is the current Chairmen of the Board of Governors of the Federal Reserve System? - CORRECT
ANSWER✅✅Jerome Powell
Arkansas is in which Federal Reserve Bank District? - CORRECT ANSWER✅✅St. Louis
According to the class notes, the four areas in which banks allocate funds are: primary reserves,
secondary reserves, loans, and investments. What primary management goal is met by primary
reserves? - CORRECT ANSWER✅✅Liquidity
According to the class notes, the four areas in which banks allocate funds are: primary reserves,
secondary reserves, loans, and investments. What primary management goal is met by secondary
reserves? - CORRECT ANSWER✅✅Liquidity
According to the class notes, the four areas in which banks allocate funds are: primary reserves,
secondary reserves, loans, and investments. What primary management goal is met by loans? -
CORRECT ANSWER✅✅Profitability
According to the class notes, the four areas in which banks allocate funds are: primary reserves,
secondary reserves, loans, and investments. What primary management goal is met by investments? -
CORRECT ANSWER✅✅Balance of the three (liquidity, profitability, and solvency)
Compute the bank's equity-to-asset ratio
Other Assets: 1,000
Total Assets: 100,000
, Total Trust Assets: 0
Total Equity capital & Reserves: 4,000
Total Liabilities & Capital: 100,000
Number of Shares Outstanding: 10,000 - CORRECT ANSWER✅✅Equity/assets --> 4,000/100,000=
0.04 equity-to-asset ratio
Is this bank's equity-to-asset ratio high or low? - CORRECT ANSWER✅✅Low
Compute the bank's loan-to-deposit ratio
Total Loans: 75,000
Other Assets: 1,000
Total Assets: 100,000
Total Trust Assets: 0
Deposits: 50,000
Total Equity capital & Reserves: 4,000
Total Liabilities & Capital: 100,000
Number of Shares Outstanding: 10,000 - CORRECT ANSWER✅✅Loans/deposits --> 75,000/50,000 =
1.5 loan-to-deposit ratio
Is this bank's loan-to-deposit ratio high or low? - CORRECT ANSWER✅✅High
The Farm Credit System (FCS) is operated as what type of organization? - CORRECT
ANSWER✅✅Cooperative
QUESTIONS AND ANSWERS
What are the two functions of financial markets? - CORRECT ANSWER✅✅Transfer and ration funds
What is the length of term in years for an appointment to the Board of Governors - CORRECT
ANSWER✅✅14
Who is the current Chairmen of the Board of Governors of the Federal Reserve System? - CORRECT
ANSWER✅✅Jerome Powell
Arkansas is in which Federal Reserve Bank District? - CORRECT ANSWER✅✅St. Louis
According to the class notes, the four areas in which banks allocate funds are: primary reserves,
secondary reserves, loans, and investments. What primary management goal is met by primary
reserves? - CORRECT ANSWER✅✅Liquidity
According to the class notes, the four areas in which banks allocate funds are: primary reserves,
secondary reserves, loans, and investments. What primary management goal is met by secondary
reserves? - CORRECT ANSWER✅✅Liquidity
According to the class notes, the four areas in which banks allocate funds are: primary reserves,
secondary reserves, loans, and investments. What primary management goal is met by loans? -
CORRECT ANSWER✅✅Profitability
According to the class notes, the four areas in which banks allocate funds are: primary reserves,
secondary reserves, loans, and investments. What primary management goal is met by investments? -
CORRECT ANSWER✅✅Balance of the three (liquidity, profitability, and solvency)
Compute the bank's equity-to-asset ratio
Other Assets: 1,000
Total Assets: 100,000
, Total Trust Assets: 0
Total Equity capital & Reserves: 4,000
Total Liabilities & Capital: 100,000
Number of Shares Outstanding: 10,000 - CORRECT ANSWER✅✅Equity/assets --> 4,000/100,000=
0.04 equity-to-asset ratio
Is this bank's equity-to-asset ratio high or low? - CORRECT ANSWER✅✅Low
Compute the bank's loan-to-deposit ratio
Total Loans: 75,000
Other Assets: 1,000
Total Assets: 100,000
Total Trust Assets: 0
Deposits: 50,000
Total Equity capital & Reserves: 4,000
Total Liabilities & Capital: 100,000
Number of Shares Outstanding: 10,000 - CORRECT ANSWER✅✅Loans/deposits --> 75,000/50,000 =
1.5 loan-to-deposit ratio
Is this bank's loan-to-deposit ratio high or low? - CORRECT ANSWER✅✅High
The Farm Credit System (FCS) is operated as what type of organization? - CORRECT
ANSWER✅✅Cooperative
