QUESTION 1

1. When a bank is expecting to be able to employ the same managers, employees and physical resources to offer multiple products and generate costs savings they are expecting which of the following effects?

		A) Product Line Diversification Effect
		B) Economies of Scope Effect
		C) Economies of Scale Effect
		D) Geographic Diversification Effect

5 points

QUESTION 2

1. Business (commercial) transaction accounts are generally more profitable than personal checking accounts. Which of the following explain the reasons for this statement:

		A) The average size of the business transaction is smaller than the personal transaction
		B) There are no interest expenses are associated with commercial deposit transaction
		C) The bank receives more investable funds in the commercial deposits transaction
		D) The average size of the business transaction is the same as a personal transaction

5 points

QUESTION 3

1. Wells Fargo wants to issue new shares of stock to the public. Which of the following regulatory agencies would have to approve this offering of stock?

		A) The Comptroller of the Currency
		B) The Securities and Exchange Commission
		C) The Federal Reserve
		D) The State Banking Commission

5 points

QUESTION 4

1. Banks depend heavily upon borrowed funds supplied by customers with little owners' capital invested. This means that banks make heavy use of:

		A) Financial leverage
		B) Capital restructuring
		C) Operating Leverage
		D) Margin borrowing

5 points

QUESTION 5

1. A bank determines from an analysis on its deposits that account processing and other operating expenses cost the bank $4.45 per month. The bank has also determined that non-operating expenses on deposits are $1.15 per month. It has also decided that it wants a profit of $.45 on its deposits. What monthly fee should this bank charge on its deposit accounts?

		A) $6.05
		B) $5.60
		C) $5.15
		D) $4.45