Banking and Financial Institutions Quiz

Which of the following statements are true?

• A bankʹs assets are its sources of funds.

• A bankʹs liabilities are its uses of funds.

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

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

Which of the following statements is false?

• A bankʹs assets are its uses of funds.

• A bank issues liabilities to acquire funds.

• The bankʹs assets provide the bank with income.

• 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?

• Reserves

• Checkable deposits

• Loans

• Deposits with other banks

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

• Discount loans

• Reserves

• U.S. Treasury securities

• Loans

The share of checkable deposits in total bank liabilities has

• expanded moderately over time.

• expanded dramatically over time.

• shrunk over time.

• remained virtually unchanged since 1960.

Which of the following statements is false?

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

• Checkable deposits are the primary source of bank funds.

• Checkable deposits are payable on demand.

• 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.

• 45 percent; 55 percent

• 55 percent; 4 percent

• 25 percent; 50 percent

• 50 percent; 30 percent

Which of the following statements are true?

• Checkable deposits are payable on demand.

• Checkable deposits do not include NOW accounts.

• Checkable deposits are the primary source of bank funds.

• Demand deposits are checkable deposits that pay interest.

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

• less; higher

• less; lower

• more; higher

• more; lower

Which of the following are transaction deposits?

• Savings accounts

• Small-denomination time deposits

• Negotiable order of withdraw accounts

• Certificates of deposit