QUESTION 12

1. Interest costs do not equal the effective cost of bank liabilities because:

   		reserve requirements increase the effective costs.
   		there be substantial processing costs.
   		service charges may offset a portion of non-interest expense.
   		all of the above.
   		1. and 3.

6 points

QUESTION 13

1. Which financial ratio measures a firm's ability to pay current interest and lease payments with current earnings?

   		Fixed charge coverage ratio.
   		Return on equity.
   		Current ratio.
   		Inventory turnover.
   		Debt to total assets ratio.