Question 20.5: Will upvote for correct response!

Which of the following factors influencing a banks income statements are the bank policy decisions? Check all that apply.

Maturity and rate sensitivity of assets

Service charges

Tax laws

Composition of assets

Composition of liabilities

Complete the following statement about a possible reason for a low return on assets (ROA).

If the bank is conservative in avoiding loan losses, its net interest margin will be (High / Low) . Thus, banks tend to increase their concentration of relatively (Risky / Low Risk) loans during periods of prosperity, and they increase their concentration of relatively (risky / low risk) investments when economic conditions are less favorable.