1. Which actions by banks ensure that reserves are adequate to cover deposit outflows?
2. A.Liquidity management
3. B.Customer relations managment
4. C.Liability management
5. D.Asset management

QUESTION 2

1. Suppose a bank has $500million in deposits and reserves of $80million.If the required reserve ratio is 10percent,what is the excess reserve level for this bank?
2. A.$0
3. B.$30 million
4. C.$50 million
5. D.$80 million

QUESTION 3

1. Which of the following actions cannot be used by banks to increase reserves?
2. A.Call loans
3. B.Sell loans
4. C.Buy Treasury debt
5. D.Sell Treasury debt

QUESTION 4

1. How are checkable deposits counted on a bank's balance sheet?
2. A.Asset
3. B.Liability

QUESTION 5

1. One of our banks has three loan officers --one officer handles home and personal loans,oneofficer handles commercial or business loans, and one officer handles agricultural loans.This practice is a form of credit risk management known as:
2. A.Specialization in lending
3. B.Restrictive covenants
4. C.Screening

QUESTION 6

1. The benefit of establishing a long-term relationship with your banker is to:
2. A.Reduce the likely of moral hazard
3. B.Diminish problems with asymmetric information
4. C.Improve loan terms for the customer
5. D.All of the above

QUESTION 7

1. First National Bank has assets that are more rate-sensitive than its liabilities.As interest rates rise,then we should expect the bank profits to:
2. A.Remain unchanged
3. B.Fall
4. C.Rise

QUESTION 8

1. Which is the riskier action for a bank?
2. A.Making foreign exchange trades on behalf of customers
3. B.Making foreign exchange trades with bank assets

QUESTION 9

1. Governments require some banks to conduct stress tests of their financial situation.What type of financial regulation is this requirement?
2. A.Disclosure requirements
3. B.Assessment of risk management
4. C.Consumer protection
5. D.Restrictions on competition

QUESTION 10

1. Why are some banks considered too big to fail?
2. A.These banks are so large that their failure may initiate a financial crisis in the broader economy
3. B.Very large banks have enough assets to prevent financial distress and cannot fail
4. C.The Glass-SteagalAct prohibits the failure of any bankwihtmore than $5 billion in assets
5. D.Congress has always stepped in to bail out banks owned by politically connected individuals