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WorksheetsQuiz for Seminar Grades
Total questions: 15
Worksheet time: 25mins
1. Core deposits are deposits that are
A) At the bank solely for the interest rate earned
B) Very stable funds sources
C) Typically for larger denominations than hot money sources
D) Very frequently turned over
2. A construction firm cannot obtain the necessary permits to begin building a shopping mall until it can show it either has or will have the necessary funding to complete the project. The firm may ask a bank for which of the following to allow it to obtain thepermits?
I. Commercial letter of credit
II. Loan commitment
III. Credit line
IV. Repurchase agreement
A) I or II
B) II or III
C) II or IV
D) III or IV
E) I or IV
3. Which one of the following is the definition of the 'spread?'
A) (Net Interest Income--Net Noninterest income) / Earning Assets
B) Net Interest Income / Interest Bearing Liabilities
C) (Interest Income--Interest Expense) / Earning Assets
D) (Interest Income--Interest Expense) / Interest Bearing Liabilities
E) (Interest Income / Earning Assets)--(Interest Expense / Interest Bearing Liabilities)
4. Interest bearing retail accounts with limited checking features designed to compete with money market mutual fund investments are called___________.
A) NOWs
B) Retail CDs
C) MMDAs
D) Special savings deposits
E) Negotiable CDs
5. A bank has an interest income to total assets ratio of 5% and has a noninterest income of $30 million and total assets of $750 million. What is the bank's asset utilization ratio?
A) 5.0%
B) 9.0%
C) 7.5%
D) 6.3%
E) 8.2%
6. The largest source of income at a typical bank is
A) Interest income on securities held for sale
B) Interest income on securities held for investment
C) Interest income on loans and leases
D) Non-interest income
E) Dividends or stock
7. The bank's ROA is
A) 1.31%
B) 1.78%
C) 1.65%
D) 0.89%
E) None of the above
8. The bank's profit margin is
A) 30.04%
B) 27.27%
C) 23.08%
D) 21.31%
E) None of the above
9. If the average net interest margin for this type of bank is 4.65%, then, ceteris paribus,this particular bank is performing.
A) The same as average because this bank has a NIM of 4.65%
B) Better than average because this bank has a NIM of 6.55%
C) Better than average because this bank has a NIM of 5.23%
D) Poorer than average because this bank has a NIM of 3.64%
E) One can't determine with the information given
10. The largest market available for purchased funds is the
A) Wholesale CD market
B) Eurodollar deposit market
C) Banker's acceptances market
D) Discount window purchases
E) Fed funds market
11. It is obvious that if the bank has only modest excess reserves, in the case of a large deposit outflow it will need changes in other parts of the balance sheet and will require a co-ordinated ALM approach. In particular, when a bank is forced to obtain liquidity, what options does it have:
I) borrowing from other banks;
II) selling some of its securities;
III) selling some of its loans; or
IV) borrowing from the central bank.
A) I or II
B) II or III
C) II or IV
D) III or IV
E) All of above
12. _______________________ is typically associated with the management of interest rate risk and bank liquidity and its goals include controlling a bank’s value and profits, subject to taking a certain level of risk and maintaining an appropriate level of safety.
A) Asset-Liability Management
B) Asset Management
C) Liability Management
D) Risk-Adjusted Management
E) Liquidity Management
14. _______________is the amount of capital required by governor. Recently the issue of how much capital is adequate has become an area of substantial discussion, due to the interest that domestic and international governors have in ensuring a safe and sound financial sector.
A) Economic capital
B) Standard capital
C) Requited capital
D) Regulatory capital
E) Beginning capital
14. A bank may avail £20 million to GlaxoSmithKline Ltd over a period of two years for building a brand new chemical plant. Over the set period the borrower may decide to use only part (or even none) of the ____________. The terms of the contract will also specify how the interest rate will be computed and whether the rate is fixed or variable. Typically, ______________ involve large amounts and generate relatively low bank margins. Banks are compensated by the fees charged for making such obligation.
A) Financial Guarantees
B) Loan Commitment
C) Loan Transfer
D) Loan Guarantees
E) Securities Underwriting
15. _________________ are standardized contracts to deliver and pay for a real or financial asset on a pre-arranged date in the future for a specified price with high regulation. __________ relate to a broad variety of financial instruments, including bonds, CDs, currencies and indexes.
A) Forward contracts
B) Options
C) Future contracts
D) Swap contracts
E) None of above
