WorksheetsIFE S4 Banking
Total questions: 10
Worksheet time: 5mins
Which of the following banking functions is NOT a Core Banking function?
Making loans
Providing a payment system
Investing in financial instruments
Taking deposits
Which of the following events lowers bank capital?
The value of loans the bank has given to clients falls because of unexpected defaults.
The securities the bank holds double in value.
The clients of a bank withdraw half of their deposits.
The bank uses half of its excess reserves to issue new loans.
Which of the following statements is correct?
Through the function of lending money, banks help distributing funds efficiently.
Through the function of lending money banks always ensure a more equal distribution of wealth.
Lending money is always a gamble for banks and is only viable because in case the loans turn sour the government intervenes.
Banks will mostly look for short-term loans to minimise liquidity risk.
The return on assets (ROA) is calculated as:
total assets / net income
net income / total assets
total equity / net income
net income / total equity
Why can the return on equity be sometimes misleading?
Because one could increase the return on equity by decreasing equity and replacing it with external funds.
Because one cannot trust accountants in general.
Because it can be artificially increased by just borrowing more money and use the extra cash as excess reserves.
Because it can be artificially increased by raising more equity.
How can the net interest margin (NIM) formula be written?
total interest income / total assets
(total interest income - total interest expense) / total assets
total assets / (total interest income - total interest expense)
total interest expense / total assets
In which two categories can investment banking activities be split?
Profitable activities and very profitable activities
Household facing activities and company facing activities
Profit making activities and loss making activities
Corporate activities and market activities
In the context of investment banking, corporate restructuring implies that:
The management is replaced.
The production processes are changed, or new products are introduced to the production line.
The suppliers are replaced, or new prime materials are used in the production process.
Parts of the company are sold, or debt is restructured.
Which of the following activities is one of the major services that investment banks offer to governments?
Mergers, acquisitions, and corporate restructuring
Risk management
Wealth and asset management
Privatisation
Which of the following activities is a market activity that investment banks perform?
Risk management
Brokerage
Advice on financing
Mergers, acquisitions, and corporate restructuring
