Midterm Review Quiz

What was one major factor leading to bank failures in 2008?

• Increased fixed assets

• Lower financial leverage

• Worsening asset quality

• Higher interest income

How many bank failures occurred in 2005 and 2006?

• 0

• 3

• 26

• 72

Which of the following is NOT a common bank asset?

• Real Estate Loans

• Individual Loans

• Commodities

• Agricultural Loans

What does FDIC insurance on bank deposits result in?

• Higher interest rates on deposits

• Increased financial leverage

• Lower market risk

• Reduced bank earnings volatility

Which category of investment securities must be held until maturity?

• Trading Account

• Held-to-Maturity

• Available-for-Sale

• Liquid Securities

What is the main objective of trading account securities?

• Long-term investment

• Generating trading profits

• Minimizing tax liabilities

• Securing fixed returns

Which of the following is considered a non-interest cash asset?

• T-Bills

• Vault Cash

• Municipal Bonds

• Mortgage-Backed Securities

Which type of deposit is NOT available to for-profit corporations?

• NOW Accounts

• Demand Deposits

• MMDAs

• Savings Deposits

What is the primary difference between core and non-core deposits?

• Core deposits are highly interest-rate sensitive

• Non-core deposits provide a stable funding base

• Core deposits are less interest-rate sensitive

• Non-core deposits cannot be withdrawn early

Which of the following is NOT a liability on a bank’s balance sheet?

• Demand Deposits

• NOW Accounts

• Subordinated Notes

• Trading Account Securities