1. Which of the following is a reason that banks may favor fee compensation over balance compensation?

1. Balance compensation is not as visible as fees for budgeting purposes.
2. The strategy involves attracting deposits to fund their loans.
3. Earning credits used to determine the value of collected balances are taxable.
4. Deposit balances increase liabilities on the balance sheet.

2. If a bank is compiling lists of current stockholders and bondholders for the purpose of remitting dividend and interest payments, in which of the following roles is it acting?

1. Paying agent
2. Transfer agent
3. Corporate trustee
4. Registrar

3. Increasing liquidity to adequate levels tends to have which effect on a company?

1. Increases collection float
2. Removes need to issue securities
3. lower financial leverage
4. Possible excess cash balances