Question 1

The interest rate margin shows how much a bank makes out of its intermediation activities and therefore the resources it is using up in performing them.

Accepted Answer

A) True 
 B)False

Question 2

Banks always match the maturity of their assets to the maturity of their liabilities.

Accepted Answer

A) True 
 B)False

Question 3

Banks have to meet:

Accepted Answer

A)   VaR requirements.
B)   liquidity requirements.
C)   Basel II requirements.
D)   all of the above.E) All of the above
F) B) and D)

Question 4

Overdraft facilities and standby letters of credit offered by banks are examples of:

Accepted Answer

A)   contingent claims.
B)   on- balance- sheet activities.
C)   underwriting activities.
D)   none of the above.E) All of the above
F) C) and D)

Question 5

Banks perform an intermediation function by providing deposits which are part of the payments system vital to the proper functioning of the economy, and by providing loans as their major assets.

Accepted Answer

A) True 
 B)False

Question 6

Following deregulation, Australian banks pushed into offshore markets.

Accepted Answer

A) True 
 B)False

Question 7

In a bank's balance sheet, the main item on the liabilities side is:

Accepted Answer

A)   loans.
B)   government securities.
C)   deposits.
D)   bill acceptances.E) C) and D)
F) B) and D)

Question 8

If IR = interest received on assets, IP = interest paid on liabilities, and TA = total assets, then the bank's interest rate margin is defined as:

Accepted Answer

A)   IR + IP.
B)   IR - IP.
C)   (IR - IP) / TP.
D)   (IR + IP) / TP.E) A) and B)
F) None of the above

Question 9

Which of the following statements is INCORRECT?

Accepted Answer

A)   A bank seeking economies of scale should try to become a financial 'supermarket'.
B)   Smaller banks' overheads will be higher per unit of output.
C)   Economies of scale mean that it is cheaper to produce a product in conjunction with another product.
D)   Economies of scale mean that larger banks have lower unit costs.E) None of the above
F) All of the above

Question 10

Which of the following statements is true?

Accepted Answer

A)   Home equity loans allow additional drawings for investment purposes.
B)   Home equity loans allow additional drawings for consumption purposes.
C)   Home equity loans allow borrowers to increase the balance outstanding on their mortgages up to an agreed limit.
D)   All of the above.E) None of the above
F) A) and B)

Exam 4: Banks and Other Deposit Taking Institutions

Banks have to meet:

Correct Answer
verified

Banks perform an intermediation function by providing deposits which are part of the payments system vital to the proper functioning of the economy, and by providing loans as their major assets.

Correct Answer
verified

If IR = interest received on assets, IP = interest paid on liabilities, and TA = total assets, then the bank's interest rate margin is defined as:

Correct Answer
verified

Banks always match the maturity of their assets to the maturity of their liabilities.

Correct Answer
verified

Following deregulation, Australian banks pushed into offshore markets.

Correct Answer
verified

In a bank's balance sheet, the main item on the liabilities side is:

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

The interest rate margin shows how much a bank makes out of its intermediation activities and therefore the resources it is using up in performing them.

Correct Answer
verified

Overdraft facilities and standby letters of credit offered by banks are examples of:

Correct Answer
verified

Which of the following statements is INCORRECT?

Correct Answer
verified

Exam 4: Banks and Other Deposit Taking Institutions

Banks have to meet:

Correct AnswerverifiedShow Answer

Banks perform an intermediation function by providing deposits which are part of the payments system vital to the proper functioning of the economy, and by providing loans as their major assets.

Correct AnswerverifiedShow Answer

If IR = interest received on assets, IP = interest paid on liabilities, and TA = total assets, then the bank's interest rate margin is defined as:

Correct AnswerverifiedShow Answer

Banks always match the maturity of their assets to the maturity of their liabilities.

Correct AnswerverifiedShow Answer

Following deregulation, Australian banks pushed into offshore markets.

Correct AnswerverifiedShow Answer

In a bank's balance sheet, the main item on the liabilities side is:

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

The interest rate margin shows how much a bank makes out of its intermediation activities and therefore the resources it is using up in performing them.

Correct AnswerverifiedShow Answer

Overdraft facilities and standby letters of credit offered by banks are examples of:

Correct AnswerverifiedShow Answer

Which of the following statements is INCORRECT?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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