Investments in securities provide diversification for a bank's assets because most loans come from the local areas served by a bank's offices.

Test bank NHTM - CHAP 10

Quiz
•
Mathematics
•
University
•
Easy
Nguyệt Minh
Used 4+ times
FREE Resource
58 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
True
False
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Bank income from loans is fully taxable
True
False
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Investment securities are expected to "dress up" a bank's balance sheet, according to the textbook.
True
False
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Investment securities are expected to help stabilize a financial institutions's income.
True
False
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
A short-term IOU offered by major corporations that is of short maturity (most of these lOUs mature in 90 days or less) is known as a CMO.
True
False
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Prepayment risk on securitized assets generally increases when interest rates rise
True
False
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Stripping a security eliminates prepayment risk.
True
False
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