A bank has $24,000 in deposits and $2,870 in reserves. If the required reserve ratio is 10%, the bank can support a deposit outflow of up to at maximum of _________ without reorganizing its balance sheet. (It could be higher, but you want to find the highest option below.)

Question options:

	$0
	$240
	$470
	$500

If a bank lacks sufficient reserves to fulfill its requirements quickly, it can increase reserves by all of the below EXCEPT:

Question options:

	Borrow from other banks.
	Sell securities.
	Reduce the amount of new loans given.
	Issue new equity

Off-balance-sheet activities where for instance a bank offers guarantees or a line of credit against a fee, can be:

Question options:

	problematic because a bank is taking on risk without anything appearing on the bank balance sheet.
	problematic because banks often are not able to actually provide the credit since it doesn't appear on the balance sheet.
	a good way of avoiding a bloated balance sheet by keeping some activities off the balance sheet.
	a good way of balancing what is on and off the balance sheet.

Of the following, which would be the last choice for a bank facing a reserve deficiency?

Question options:

A)	Borrow from other banks.

B)	Sell securities.

C)	Borrow from the Fed.

D)	Call in or not renew loans.

In one sense ________ appears surprising since it means that the bank is not ________ its portfolio of loans and thus is exposing itself to more risk.

Question options:

A)	screening; rationing

B)	credit rationing; diversifying

C)	specialization in lending; diversifying

D)	specialization in lending; rationing

To reduce moral hazard problems, banks include restrictive covenants in loan contracts. In order for these restrictive covenants to be effective, banks must also

Question options:

A)	trust the borrower to do the right thing.

B)	be prepared to extend the deadline when the borrower needs more time to comply.

C)	be willing to rewrite the contract if the borrower cannot comply with the restrictions.

D)	monitor and enforce them.