Chapter 10 Practice Quiz1. Which of the following are reported as liabilities on a bank’s balance sheet?a. discount loansb. reservesc. U.S. Treasury securitiesd. loans2. Bank capital is equal to ____________ minus ___________.a. total assets; total liabilitiesb. total liabilities; total assetsc. total assets; total reservesd. total liabilities; total borrowings3. The fraction of checkable deposits that banks are required by regulation to hold area. excess reserves.b. required reserves.c. vault cash.d. total reserves.4. Which of the following are reported as assets on a bank’s balance sheet?a. borrowingsb. reservesc. savings depositsd. bank capital5. When a $10 check written on the First National Bank of Chicago is deposited in an account at Citibank, thena. the liabilities of the First National Bank decrease by $10.b. the reserves of the First National Bank increase by $10.c. the liabilities of Citibank decrease by $10.d. the assets of Citibank decrease by $10.6. A $5 million deposit outflow from a bank has the immediate effect ofa. reducing deposits and reserves by $5 million.b. reducing deposits and loans by $5 million.c. reducing deposits and securities by $5 million.d. reducing deposits and capital by $5 million.7. If, after a deposit outflow, a bank needs an additional $3 million to meet its reserve requirements, thebank cana. reduce deposits by $3 million.b. increase loans by $3 million.c. sell $3 million of securities.d. repay its discount loans from the Fed.8. For a given return on assets, the lower is bank capital,a. the lower is the return for the owners of the bank.b. the higher is the return for the owners of the bank.c. the safer the bank.d. the lower the possibility of bank failure.9. Property promised to the lender as compensation if the borrower defaults is called ________.a. collateralb. deductiblesc. restrictive covenantsd. contingencies10. All else the same, if a bank’s liabilities are more sensitive to interest rate fluctuations than are its assets, then ________ in interest rates will _____________ bank profits.a. an increase; increaseb. an increase; reducec. a decline; reduced. a decline; not affectAnswers to practice quiz for chapter 101. A2. A3. B4. B5. A6. A7. C8. B9. A10.
View Full Document
Unlocking...