9) If the value of a bank loan declines due to default, what is the corresponding reduction in a banks balance sheet? _______

A) Borrowings are reduced by the amount of the decline in the value of the loan. B) Capital is reduced by the amount of the decline in the value of the loan. C) Deposits are reduced by the amount of the decline in the value of the loan. D) Reserves are reduced by the amount of the decline in the value of the loan.

11) The most important derivative instruments are: _____.

A) U.S. Treasury bonds B) convertible stocks C) futures, options, and swaps D) the VIX and other indices

13) The ratio of a bank's profit to its capital is known as: _______.

A) return on assets B) leverage C) return on equity D) net interest margin

14) A bank's revenue includes all of the following EXCEPT: _______.

A) cash held in bank vault B) financial asset trading activities C) debit and credit card service fees D) interest on loans