Chapter 10

Which of the following statements are true?

• A) A bankʹs assets are its sources of funds.

• B) A bankʹs liabilities are its uses of funds.

• C) A bankʹs balance sheet shows that total assets equal total liabilities plus equity capital.

• D) A bankʹs balance sheet indicates whether or not the bank is profitable.

Which of the following statements is false?

• A) A bankʹs assets are its uses of funds.

• B) A bank issues liabilities to acquire funds.

• C) The bankʹs assets provide the bank with income.

• D) Bank capital is recorded as an asset on the bank balance sheet.

Which of the following are reported as liabilities on a bankʹs balance sheet?

• A) Reserves

• B) Checkable deposits

• C) Loans

• D) Deposits with other banks

Which of the following are reported as liabilities on a bankʹs balance sheet?

• A) Discount loans

• B) Reserves

• C) U.S. Treasury securities

• D) Loans

The share of checkable deposits in total bank liabilities has

• A) expanded moderately over time.

• B) expanded dramatically over time.

• C) shrunk over time.

• D) remained virtually unchanged since 1960.

Which of the following statements is false?

• A) Checkable deposits are usually the lowest cost source of bank funds.

• B) Checkable deposits are the primary source of bank funds.

• C) Checkable deposits are payable on demand.

• D) Checkable deposits include NOW accounts.

In recent years the interest paid on checkable and time deposits has accounted for around ________ of total bank operating expenses, while the costs involved in servicing accounts have been approximately ________ of operating expenses.

• A) 45 percent; 55 percent

• B) 55 percent; 4 percent

• C) 25 percent; 50 percent

• D) 50 percent; 30 percent

Which of the following statements are true?

• A) Checkable deposits are payable on demand.

• B) Checkable deposits do not include NOW accounts.

• C) Checkable deposits are the primary source of bank funds.

• D) Demand deposits are checkable deposits that pay interest.

Because checking accounts are ________ liquid for the depositor than passbook savings, they earn ________ interest rates.

• A) less; higher

• B) less; lower

• C) more; higher

• D) more; lower

Which of the following are transaction deposits?

• A) Savings accounts

• B) Small-denomination time deposits

• C) Negotiable order of withdraw accounts

• D) Certificates of deposit