Question
1In a rising rate environment, banks will quickly reprice ___________ and slowly reprice ____________. This gap in timing will help __________ the Bank's spread. Interest
1In a rising rate environment, banks will quickly reprice ___________ and slowly reprice ____________. This gap in timing will help __________ the Bank's spread.
Interest Bearing Deposits ; Earning Assets; Expand
Earning Assets ; Interest Bearing ; ExpandDeposits
2The use of "Fed Funds Purchased" directly creates Interest Income for the Bank.
True
False
3Imagine there are two banks with identical yields and costs. Bank A puts 50% of its money into cash and 50% into the security portfolio. Bank B keeps 100% of its available funds in the Vault (it's a very big vault, clearly).
Which bank will report the higher revenue?
Bank A
Bank B
4One of the main purposes of the security portfolio is to offset (or mitigate) the various risks of the loan portfolio.
True
False
5A Bank's Allowance for Loan and Lease Losses (or its "Total Reserve") is a contra-asset account that ultimately reflects the Bank's expected losses based on its loan portfolio.
True
False
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