PRO BANKER EXAM QUESTIONS WITH 100%
CORRECT ANSWERS
Why did the bank have a decline in net income from Q0 to Q1? List two specific
decisions. Please provide at least one reasonably sized paragraph. While we
are at it, why did the bank have a decline in net income from Q1 to Q2? List
two specific decisions. Please provide at least one reasonably sized paragraph.
Totaled
The bank had a decline in net income from Q0 to Q1 of roughly $1,157. This
was due to the decisions made. First, the bank increased deposit rates and
lowered loan rates simultaneously. This caused the bank to have smaller
margins; thus, less profit was made from its financial operations. Secondly,
additional Federal Funds were purchased that increased the overall expenses
for the bank, causing a decline in net income. Lastly, operating mortgage fees
increased, and the bank had to pay more for FDIC insurance premiums.
Why did the bank have a decline in net income from Q0 to Q1? List two specific
decisions. Please provide at least one reasonably sized paragraph. While we
are at it, why did the bank have a decline in net income from Q1 to Q2? List
two specific decisions. Please provide at least one reasonably sized paragraph.
Totaled
In Q1 to Q2 the bank’s met income continued to decrease. Net income also
decreased in Q1 from $1,235 to $825.93 in Q2. This was due to the lowering
of interest rates on loans and increasing rates paid on deposits and increased
advertising expenses. The bank is receiving less revenue and increasing
expenses.
With respect to "absolute" dollar volume, what two types of deposits changed
the most from Q0 to Q1? Then, please specify whether the change in each was
positive or negative.
Q0 to Q1 in largest changes in dollar amounts was increased in retail CD’s
and negotiable CDs. This was due to raising rates paid on CDs. This was to be
expected because consumers will chase CD’s with higher yields. This is good
, for the bank if they are trying to stimulate money coming into the bank to
fund loans.
With respect to “absolute” dollar volume, what two types of loans changed the
most from Q0 to Q1? Then, please specify whether the change in each was
positive or negative.
The largest change in dollar amounts from Q0 to Q1 in types of loans were
fixed rate loans and floating rate loans. They increased by X amount. This
increase in demand was from the decision to lower rates. This could be a
positive if the bank wants to make more loans
Why did the bank have an increase in Floating Rate Corporate Loans (volume)
from Q0 - Q1?
The bank had an increase in floating rate corporate loans from Q0 – Q1
because the spread was smaller. We decided to lower rates by 0.3%, so
floating-rate corporate loans had a rate of 3.7%. Declining rates made these
loans more attractive to borrowers because borrowers do not have to pay as
much on top of the base rate when the spread is more minor. The lower rates
reduce the cost of borrowing, and when the cost of borrowing is lower, more
people tend to borrow money, increasing the loan volume.
Why did the bank realize an increase in total assets from Q0 - Q1? Please
provide a paragraph of explanation.
The bank experienced an increase in total assets from Q0 – Q1 for several
vital reasons—first, the decision to lower loan rates. The bank decreased its
loan rates on several types of loans, including fixed-rate corporate, floating-
loan rates, consumer, and mortgage loans. This had a significant impact on
increasing total assets. demand for loans. Customers are more willing to
borrow money at lower rates. This heightened demand led to an expansion
of the bank’s loan portfolio and, in turn, increased the volume of assets on its
balance sheet. In addition, the decision to purchase more Federal Funds
played a role in increasing the total assets. When the bank decided to buy
Federal Funds, it acquired interest-bearing assets. Altogether, the
combination of lower loan rates and increased purchase of Federal Funds
drove the expansion of the bank’s asset portfolio, resulting in the observed
increase in total assets from Q0 to Q1.
CORRECT ANSWERS
Why did the bank have a decline in net income from Q0 to Q1? List two specific
decisions. Please provide at least one reasonably sized paragraph. While we
are at it, why did the bank have a decline in net income from Q1 to Q2? List
two specific decisions. Please provide at least one reasonably sized paragraph.
Totaled
The bank had a decline in net income from Q0 to Q1 of roughly $1,157. This
was due to the decisions made. First, the bank increased deposit rates and
lowered loan rates simultaneously. This caused the bank to have smaller
margins; thus, less profit was made from its financial operations. Secondly,
additional Federal Funds were purchased that increased the overall expenses
for the bank, causing a decline in net income. Lastly, operating mortgage fees
increased, and the bank had to pay more for FDIC insurance premiums.
Why did the bank have a decline in net income from Q0 to Q1? List two specific
decisions. Please provide at least one reasonably sized paragraph. While we
are at it, why did the bank have a decline in net income from Q1 to Q2? List
two specific decisions. Please provide at least one reasonably sized paragraph.
Totaled
In Q1 to Q2 the bank’s met income continued to decrease. Net income also
decreased in Q1 from $1,235 to $825.93 in Q2. This was due to the lowering
of interest rates on loans and increasing rates paid on deposits and increased
advertising expenses. The bank is receiving less revenue and increasing
expenses.
With respect to "absolute" dollar volume, what two types of deposits changed
the most from Q0 to Q1? Then, please specify whether the change in each was
positive or negative.
Q0 to Q1 in largest changes in dollar amounts was increased in retail CD’s
and negotiable CDs. This was due to raising rates paid on CDs. This was to be
expected because consumers will chase CD’s with higher yields. This is good
, for the bank if they are trying to stimulate money coming into the bank to
fund loans.
With respect to “absolute” dollar volume, what two types of loans changed the
most from Q0 to Q1? Then, please specify whether the change in each was
positive or negative.
The largest change in dollar amounts from Q0 to Q1 in types of loans were
fixed rate loans and floating rate loans. They increased by X amount. This
increase in demand was from the decision to lower rates. This could be a
positive if the bank wants to make more loans
Why did the bank have an increase in Floating Rate Corporate Loans (volume)
from Q0 - Q1?
The bank had an increase in floating rate corporate loans from Q0 – Q1
because the spread was smaller. We decided to lower rates by 0.3%, so
floating-rate corporate loans had a rate of 3.7%. Declining rates made these
loans more attractive to borrowers because borrowers do not have to pay as
much on top of the base rate when the spread is more minor. The lower rates
reduce the cost of borrowing, and when the cost of borrowing is lower, more
people tend to borrow money, increasing the loan volume.
Why did the bank realize an increase in total assets from Q0 - Q1? Please
provide a paragraph of explanation.
The bank experienced an increase in total assets from Q0 – Q1 for several
vital reasons—first, the decision to lower loan rates. The bank decreased its
loan rates on several types of loans, including fixed-rate corporate, floating-
loan rates, consumer, and mortgage loans. This had a significant impact on
increasing total assets. demand for loans. Customers are more willing to
borrow money at lower rates. This heightened demand led to an expansion
of the bank’s loan portfolio and, in turn, increased the volume of assets on its
balance sheet. In addition, the decision to purchase more Federal Funds
played a role in increasing the total assets. When the bank decided to buy
Federal Funds, it acquired interest-bearing assets. Altogether, the
combination of lower loan rates and increased purchase of Federal Funds
drove the expansion of the bank’s asset portfolio, resulting in the observed
increase in total assets from Q0 to Q1.
