FIN 350 Quiz 9

Question 1   �   Banks G and H are the same size and have similar operations. Bank G holds the minimum level of capital and Bank H holds a higher level of capital. Bank G’s return on equity is probably ____ volatile than that of Bank H. Bank G’s beta is probably ____ than that of Bank H.   Question 2   �   Banks A and B have the same net income. Bank A has a higher capital ratio and more assets than B. Bank A’s return on assets is ____ than Bank B’s. Bank A’s return on equity is ____ than Bank B’s.   Question 3   �   The risk premium on a commercial bank is ____ related to economic growth and ____ related to management skills.   Question 4   �   Net income measured as a percentage of assets is   Question 5   �   Interest paid on deposits and borrowed funds is called   Question 6   �   ____ results from a bank’s sale of securities.   Question 7   �   If a bank has short-term deposits and provides long-term fixed rate loans, and interest rates decline over time, its net interest margin should be:   Question 8   �   Interest income generated from all assets is called   Question 9   �   Changes in ____ are a factor affecting the value of a commercial bank over which the bank has some control.   Question 10   �   During the credit crisis, the level of ____ was much higher than in other periods.   Question 11   �   If a bank is too ____ in attempting to avoid loan losses, its net interest margin will be ____.   Question 12   �   When only equity counts as capital, the leverage measure is   Question 13   �   The sum of net interest income, non-interest income, and securities gains, minus provision for loan losses and non-interest expenses equals   Question 14   �   If a bank increases its provisions for loan losses, its interest income is ____, and its noninterest income is ____.   Question 15   �   Which of the following banks would likely have the highest return on equity?   Question 16   �   Federal credit unions are regulated and supervised by the   Question 17   �   Savings institutions obtain most of their funds from   Question 18   �   ____ are the primary asset of savings institutions.   Question 19   �   To obtain short-term funds, savings institutions commonly borrow funds in the ____ market.   Question 20   �   Savings institutions can obtain capital by:   Question 21   �   The primary use of credit union funds is   Question 22   �   The ____ savings institutions hold the most assets in aggregate.   Question 23   �   The risk that a credit union will experience an unanticipated wave of withdrawals without an offsetting amount of new deposits is ____ risk.   Question 24   �   Credit unions obtain most of their funds from   Question 25   �   Which of the following is not an asset of savings institutions?   Question 26   �   Today, credit unions are regulated as to the   Question 27   �   ____ are non-profit organizations composed of members with a common bond.   Question 28   �   ____ do not represent an asset of credit unions.   Question 29   �   Savings institutions that reduce their amount of ____ will best reduce their exposure to interest rate risk.   Question 30   �   ____ risk is probably the least concern for savings institutions.

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