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商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap003.doc

Chapter 3The Organization and Structure of Banking and the Financial-ServicesIndustryFill in the Blank Questions1.A(n) ___________________ is a machine located at the merchant's place of business which allowsdepositors to use their debit card to pay for purchases directly.Answer: POS2.A(n) _____________________ is a bank which offers its full range of services from severallocations.Answer: branch bank3.A(n) _____________________ is a bank which offers its full range of services from only onelocation.Answer: unit bank4.A(n)________________________ is a corporation chartered for the express purpose of holdingthe stock of one or more banks.Answer: Bank Holding Company5.Managers who value fringe benefits, plush offices and ample travel budgets over the pursuitof maximum returns for stockholders are exhibiting signs of __________________________.Answer: Expense Preference Behavior6.A(n) __________________________ can invest in corporate stock as sell as loan money to helpfinance the start of new ventures or support the expansion of existing businesses.Answer: Merchant bank7. A bank which operates exclusively over the internet is known as a ___________ bank.Answer: Virtual8.One new 21stcentury bank organizational structures is _____________________ . This isa special type of holding company that may offer the broadest range of financial services. Answer: Financial Holding Company (FHC)9. The key problem in a large money center bank is . Managers may be knowledgeable aboutbanking practices but may be less informed about products and services of subsidiary companies.Answer: span of controlbanking in10. The Gramm-Leach-Bliley Act moved the U.S. banking industry closer towhich banks may provide securities, insurance, and other financial products.Answer: universalbank.11. A bank that is not associated with a bank holding company is called a(n)Answer: independent12. is a view of how modern corporations operate which analyzes therelationship between a firm ’ s owners and its managers.Answer: Agency theory13. Many experts believe that, the relationships that exist between managers, the board of directors andstockholders, is more complicated in financial institutions. Answer:Because of government regulations.14. is the idea that there will be a lower cost of production per unit as the firm gets larger.Answer: Economies of scale15. is the idea that there will be lower cost of producing multiple services using the sameorganization and resources.Answer: Economies of scope16.Over the years, managers of banks and other financial institutions have evolved differentorganizational forms to address changes in the industry. Indeed, these firms are organized tocarry out various roles in the most efficient way. This is referred to as_________________________. Answer: Organizational form follows functionTrue/False QuestionsT F 17. Bank size is not considered a significant factor in determining how banks are organized.Answer: FalseT F 18. Nearly three quarters of all U.S. banks exceed $100 million in asset size apiece.Answer: FalseT F 19. Nearly all U.S. banks with federal or state charters have their deposits insured by theFederal Deposit Insurance Corporation.Answer: TrueT F 20. State-chartered banks in the United States represent about a quarter of all U.S.-chartered banks, while national banks account for approximately three quarters of all U.S. chartered banks.Answer: FalseT F 21. The majority of all U.S. banks are members of the Federal Reserve System.Answer: FalseT F 22. A banking corporation chartered by either federal or state governments that operates onlyone full-service office is called a unit bank.Answer: TrueT F 23. Over half of all U.S. states today limit branching activity.Answer: FalseT F 24. The average U.S. bank is larger in size (in terms of number of branch offices) than theaverage Canadian bank.Answer: FalseT F 25. Despite the rapid growth of automation in U.S. banking, there are more full-service branch banking offices than automated teller machines across the whole U.S.Answer: FalseT F 26. In the United States there are more one-bank holding companies than multi-bank holdingcompanies.Answer: True’ s assets in the United T F 27.Bank holding companies hold more than 90 percent of the industryStates.Answer: TrueT F 28. Research evidence suggests that banks taken over by interstate banking organizations have generally increased their market shares over their competitors within the same state and generallyare more profitable than their competitors.Answer: FalseT F 29. The concentration of bank deposits at the local level (that is in urban communities and rural counties) has displayed only moderate changes in recent years.Answer: TrueT F 30. There is evidence that branch banks charge higher fees for some banking services than do unit banks.Answer: TrueT F 31. Branch banks tend to offer a wider menu of services than unit banks.Answer: FalseT F 32. Recent research suggests that branch banks tend to be more profitable than either unit or holding company banks, while interstate banks tend to be the most profitable of all.Answer: FalseT F 33. Less than 10 percent of the largest banks in the U.S. control almost 90 percent of theindustry assets.Answer: TrueT F 34. Agency theory suggests that bank management will always pursue the goal of maximizing the return of the bank's shareholders.Answer: FalseT F 35. Recent research suggests that the relationship between bank size and the cost of production per unit is roughly U shaped.Answer: TrueT F 36. Bank holding companies that want to achieve the goal of risk reduction in earnings risk through interstate banking can achieve the same level of risk reduction by entering any of the fiftystates.Answer: FalseT F 37. Bank holding companies are allowed to own nonbank businesses as long as those businesses offer services closely related to banking.Answer: TrueT F 38. Banks tend to have a higher proportion of outside directors than a typical manufacturing firm.Answer: TrueT F 39. Banks which operate entirely on the web are known as invisible banks.Answer: FalseT F 40.Banks acquired by holding companies are referred to as affiliated banks .Answer: TrueT F 41. Bank organizational structure has become more complex in recent years.Answer: TrueT F 42. There are only a very small number of unit banks in the U.S. today.Answer: FalseT F 43. Traditional brick-and-mortar bank branch offices are on the decline in the U.S. today.Answer: FalseT F 44. Community banks are usually smaller banks that are devoted principally to the markets for smaller, locally based deposits and loans.Answer: TrueT F 45. The question of whether financial firms operate as efficiently as possible requires researchers to look into the issue of x-efficiency. The concept requires an assessment of thefinancial firm’ s operating costs in relation to -itsefficientcost frontier.Answer: TrueMultiple Choice Questions46.In banking, organizational form follows __________ because banks usually are organized in such away as to carry out the tasks and supply the services demanded of them. The term that correctly fillsin the blank in the sentence above is:A)Bank sizeB)Management's decisionC)FunctionD)RegulationE)LocationAnswer: C47.Which one of the following is charged with setting policy and overseeing a bank's performance?A)StockholdersB)Board of directorsC)RegulatorsD)DepositorsE)None of the above.Answer: B48.The largest banks possess some potential advantages over small and medium-size banks,according to the textbook. What specific advantage of the largest banks over small and medium-sized banks is not mentioned in the text?A)Greater diversification geographically and by product lineB)Availability of financial capital at lower costC)Greater professional expertise to allocate capital to the most promising products and servicesD)Better positioned to take advantage of the opportunities afforded by interstate banking.E)All of the above were mentioned in the text as advantages typically possessed by the largestbanks.Answer: E49.Before any financial services can be offered to anyone a bank in the United States must have a:A)Certificate of deposit insuranceB)Charter of incorporationC)List of established customersD)New building constructed to be the bank's permanent homeE)None of the above.Answer: B50.In the United States there are close to __________ commercial banks in operation. Which numbershown below is closest to the actual total number of U.S. banks operating in the U.S.?A)20,500B)13,500C)11,500D)9,000E)7,500Answer: E51.One of the few states that has opted out of interstate banking is:A)New YorkB)OhioC)TexasD)MontanaE)None of the aboveAnswer: D52.The concentration of U.S. bank deposits in the hands of the largest banks has _________ during themost recent period,A)DeclinedB)IncreasedC)Remained essentially unchangedD)Exhibited large fluctuations in both directionsE)None of above.Answer: B53.Bank holding company organizations have several advantages over other types ofbanking organizations. Among the advantages mentioned in this chapter is:A)Greater ease of access to capital marketsB)Tax advantageC)Product-line diversificationD)All of the above.E)None of the above.Answer: D54.A company which owns the stock of three different banks is known as a(n):A)Unit BankB)Interstate BankC)One Bank Holding CompanyD)Multi Bank Holding CompanyE)None of the aboveAnswer: D55.Which of the following is considered an advantage of branch banking?A)Increased availability and convenience of servicesB)Decreased chance of failureC)Reduced transaction costsD) B and C aboveE)All of the aboveAnswer: E56.The types of nonbank businesses a bank holding company can own include which of the following?A)Retail Computer StoreB)Security Brokerage FirmC)Retail Grocery StoreD)Wholesale Electronic Distribution CompanyE)All of the aboveAnswer: B57.A bank which offers its full range of services from only one office is known as a:A)Unit BankB)Branch BankC)Correspondent BankD)Bank Holding CompanyE)None of the aboveAnswer: A58.Why did so many states and the federal government finally enact interstate banking laws?A)The need for new capital in order to revive struggling economiesB)The expansion of services by nonbank financial institutionsC)Competition from neighboring states that already liberalized their lawsD)Advances in technology which allowed banks to service customers in broader geographic areasE)All of the above are reasons for the passage of interstate banking lawsAnswer: E59.What is a bank holding company?A)It is a bank that offers all of its services out of one officeB)It is a bank that offers all its services out of several officesC)It is a corporation formed to hold the stock of one or more banksD)It is a merchant bankE)None of the aboveAnswer: C60.Which of the following is a type of service a bank holding company is not allowed to own?A)Merchant banking companyB)Savings and loan associationC)Retail electronics equipment sales companyD)Security brokerage firmE)Insurance agencyAnswer: C61.In the last decade, the number of banks has __________ and the number of branches has_________.A)Declined; IncreasedB)Grown; IncreasedC)Grown; DecreasedD)Declined; DecreasedE)Stabilized; StabilizedAnswer: A62. Websites known as electronic branches offer all of the following except:A)Internet banking servicesB)ATMsC)Point of sales terminalsD)Computer and phone services connecting customersE)Traveler's checksAnswer: E63.Relative to manufacturing firms, banks tend to have a (the) ___________ number ofboard members.A)SameB)LargerC)SmallerD)UnknownE)None of the aboveAnswer: B64.The percentage of unit banks in the U.S. today is approximately:A)10%B)30%C)50%D)75%E)100%Answer: B65.The ‘ typical ’ community bank has:A)$300 million in assets and is located in a smaller city in the Midwest.B)$25 billion in assets and is located in a large city in the EastC)$100 million in assets and is located in a large city the SouthD)$10 billion in assets and is located in a small city in the WestE)None of the aboveAnswer: A66.The ‘ typical ’ money center bank has:A)$250 million in assets and is located in a smaller city in the MidwestB)$25 billion in assets and is located in a large city in the EastC)$100 million in assets and is located in a large city in the SouthD)$10 billion in assets and is located in a small city in the WestE)None of the aboveAnswer: B67.The majority of banks today are:A)Federally charteredB)UninsuredC)State CharteredD)National BanksE)All of the aboveAnswer: C68.‘ Member’ banks are:A)Members of the FDICB)National BanksC)Unit BanksD)Members of the Federal ReserveE)All of the aboveAnswer: D69. and banks tend to be larger and hold more of the public ’ deposits.A)National and MemberB)State and NonmemberC)National and UninsuredD)State and InsuredE)None of theabove Answer: A70.Which of the following is a reason for the rapid growth in branch banks?A)Exodus of population from cities to suburban areasB)Bank convergenceC)Business failuresD)Decreased costs of brick and mortarE)All of the aboveAnswer: A71. Under the Bank Holding Company Act control of a bank is assumed to exist only if:A) The bank holding company acquires 100% of the bank’ s stockB) The bank holding company acquires 50% or more of the bank’ s stockC) The bank holding company acquires 25% or more the bank’ s stockD)The bank holding company acquires three banksE)None of the aboveAnswer: C72.When a bank holding company acquires a nonbank business it must be approved by:A)The FDICB)The Comptroller of the CurrencyC)The Federal ReserveD)The President of the U.S.E)All of the aboveAnswer: C73.Many financial experts believe that the customers most likely to be damaged bydecreased competition include:A)Large corporations in large citiesB)Households and business in smaller cities and townsC)Households that earn more than a billion dollars a yearD)Students away at collegeE)None of the aboveAnswer: B74.According to Levonian and Rose in order to achieve some reduction in earnings risk,interstate banks must expand into at least:A) 2 statesB) 4 statesC) 6 statesD)10 statesE)25 statesAnswer: B75.The major competitors of banks have:A)Fewer but much larger service providersB)Fewer but smaller service providersC)More but smaller service providersD)More but larger service providersE)None of the aboveAnswer: A76.Of the following countries in Europe, which has the largest number of banks?A)BelgiumB)FranceC)GermanyD)Great BritainE)None of the aboveAnswer: C77. Which country’ s banks were owned by the state until the 1990’ s?A)BelgiumB)FranceC)GermanyD)ItalyE)None of theabove Answer: D78.When financial service providers offer a range of services including banking,insurance and securities services it is known as:A)ConsolidationB)ConvergenceC)Economies of scaleD)E-EfficienciesE)None of the aboveAnswer: B79.The gradual evolution of markets and institutions such that geographic boundaries donot restrict financial transactions is known as:A)DeregulationB)IntegrationC)Re-regulationD)GlobalizationE)Moral suasionAnswer: D80.Banks with less than _______ in assets are generally called community banks.A)More than $1 billionB)Less than $1 billionC)More than $5 millionD)Less than $1 trillionE)More than $1 trillionAnswer: B81.Nonbank financial firms that supply insurance coverage to customers borrowing moneyto guarantee repayment of a loan are referred to as:A)Merchant BankersB)Factoring CompaniesC)Savings AssociationsD)Investment BankersE)Credit Insurance UnderwritersAnswer: E82.A financial holding companies (FHC), defined as a special type of holding company that mayoffer the broadest range of financial services such as securities and insurance activities, were allowed under which act?A)Riegle-Neal Interstate Banking and Branching Efficiency ActB)The Competitive Equality in Banking ActC)The Basel AgreementD)The FDIC Improvement ActE)The Gramm-Leach-Bliley Financial Services Modernization Act Answer: E。

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap016

Chapter 16Lending Policies and Procedures: Managing Credit RiskFill in the Blank Questions1. The______________ is a uniform rating system developed by regulators where banks are given arating from one to five in each of six categories and an overall rating from one to five.Answer: CAMELS2. One of the 6 C‟s of lending,______________ suggests that the lender must look at the position ofthe business firm in the industry and the outlook of the industry to evaluate a loan.Answer: condition3. One of the 6 C‟s of lending,______________ suggests that the lender must look to see if theborrower is legally entitled to sign a binding loan agreement. For an individual this entails making sure the borrower is of legal age to sign a contract.Answer: capacity4. When a bank purchases a whole loan or a piece of a loan from another bank they are purchasingwhat is known as a____________________________.Answer: participation5. Loans that have minor weaknesses because the bank has not followed its written loan policy orwhich have missing documentation are called______________ by regulators.Answer: criticized6. ____________________________ are loans extended to farmers and ranchers to assist in plantingcrops, harvesting crops and to support the feeding and care of livestock.Answer: Agriculture loans7. ____________________________ devote the bulk of their credit portfolio to large-denominationloans to corporations and other businesses and tend to be large banks.Answer: Wholesale lenders8. ____________________________ are loans which are secured by land buildings and otherstructures. These loans can be short term construction loans or longer term loans to finance thepurchase of homes and apartments among others.Answer: Real estate loans9. A______________ is signed by the borrower and indicates the principal amount of the loan, theinterest rate on the loan and the terms under which repayment must take place.Answer: Promissory note10. ____________________________ are those things a borrower must do. They are actions theborrower must take. Examples include filing periodic financial statements with the bank andpurchasing insurance on any collateral pledged.Answer: Affirmative covenants11. ___________________________ are when lenders extend credit to banks, insurance companies,and finance companies among others.Answer: Financial institution loans12. ______________ are loans that carry a strong probability of loss to the bank.Answer: Doubtful loans13. A(n)______________ is the process of resolving a troubled loan so the bank can recover its funds.Answer: loan workout14. ______________ is one of the key features of any loan. This C of lending examines whether theborrower will have enough sales or income to repay the loan.Answer: cash15. A bank‟s__________________________________________ gives loan officers specificguidelines in making individual loan decisions and in shaping the overall loan portfolio.Answer: written loan policy16. An approach in which the lending officer focuses on changes in borrower cash flows over time isknown as the _____________ cash flow method.Answer: direct17. are loans granted to businesses to cover purchases of inventory,paying taxes and meeting payrolls.Answer: Commercial and industrial loans (C&I Loans)18. include credit to finance the purchase of automobiles, mobile homes,appliances and other retail goods and many other purchases by consumers.Answer: Loans to individuals (consumer loans)19. is where the lender buys equipment or vehicles and rents them to itscustomers.Answer: Lease financing receivables20.Smaller banks tend to emphasize in the form of smaller denomination personalcash loans and home mortgage loans to extended to individuals and families as well as smaller business loans.Answer: retail credit21.The loan mix of any lending institution depends heavily on the that each loan offerscompared to all other assets the lending institution can acquire.Answer: expected yield22.Under the no individual can be denied credit because of race, sex,religious affiliation, age or receipt of public assistance.Answer: Equal Credit Opportunity Act (1974)23.One aspect of the CAMELS rating system is which looks at the quality ofthe bank‟s loans. Examiners look at all loans over a certain size and a random selection of all other loans when looking at this aspect of a bank.Answer: asset quality24.One part of the 6 C‟s of lending is which looks at whether the borrower has awell-defined purpose for the loan and a serious intent to repay the loan.Answer: character25.One of the most widely consulted sources of data on business firms is which wasfounded in Philadelphia in 1914 to exchange credit information among business lendinginstitutions and to organize conferences and publish educational materials to train loan officers and credit analysts.Answer: Risk Management Associates (RMA)26.One problem with the newer lending model called _________________ was found to at leastpartially contribute to the recent crisis in the mortgage market.Answer: “Streamlining”27.In the mortgage environment of the early 2000s, lenders were encouraged to sell individual loansand packages of loans to buy more liquid securities instead, thus shifting much of the risk oflending to capital markets. This process is referred to as __________________.Answer: Securitization28.Factors such as changes in the economy, natural disasters, and regulation are referred to as__________ factors, while management errors, illegal manipulation, and ineffective lendingpolicies are considered ___________ factors.Answer: External; internal29.In the loan workout process, the preferred option is nearly always to seek a _______________,which gives both the lending institution and its customer the chance to restore normal operations.Answer: Revised loan agreementTrue/False QuestionsT F 30. The principal reason banks are chartered by federal and state governments is to make loans to their customers.Answer: TrueT F 31. Risk in banking tends to be concentrated in a bank‟s loan portfolio.Answer: TrueT F 32. The largest banks have, on average, reduced their dependence on real estate loans relative to smaller banks.Answer: TrueT F 33. Real estate lending is popular with bank, in part, due to the growth of the secondary mortgage market.Answer: TrueT F 34. Banks in the United States are, on average, examined at least once every three years.Answer: TrueT F 35. Smaller banks tend to emphasize wholesale banking services.Answer: FalseT F 36. Retail credit in banking refers to such loans as residential mortgages and installment loans to individuals.Answer: TrueT F 37. Loans made by a particular bank secured by the bank‟s own stock are not usually permitted except under special circumstances.Answer: TrueT F 38. Federally-supervis ed banks in the U.S. must make an “affirmative effort” to provide loans and other services to all credit-worthy borrowers in their chosen service area.Answer: TrueT F 39. Loans to minors are not legally enforceable contracts in most states.Answer: TrueT F 40. The letter “C” in the CAMELS rating system for banks in the U.S. refers to the “condition”of a bank.Answer: FalseT F 41. The letter “M” in the CAMELS rating system for banks in the U.S. refers to the “management quality” of a bank.Answer: TrueT F 42. The process of loan review means that a loan committee must generally approve a loan before the borrower is told the loan is approved.Answer: FalseT F 43. Troubled loans normally are subject to more frequent review than are sound loans.Answer: TrueT F 44. Credit card loans are generally more profitable for small and medium-size banks than for the largest banks.Answer: FalseT F 45. Banks should concentrate their lending on those loans in which they have the greatest cost advantage.Answer: TrueT F 46. The type of bank loan experiencing the largest losses per dollar of loan is credit card loans.Answer: TrueT F 47. Construction loans by a bank fit under the loan category known as commercial and industrial loans.Answer: FalseT F 48. If the economy slows down a bank should review its outstanding loans more frequently.Answer: TrueT F 49. Foreclosure on property pledged behind a bank loan does not subject a bank to liability to clean up any environmental damage the borrower may have caused to happen.Answer: FalseT F 50. Loans granted to businesses appear to convey positive information to the market place about a borrower‟s credit quality, enabling a borrower to obtain more and cheaper fundsfrom other sources.Answer: TrueT F 51. Loans to a bank‟s officers can never exceed 2.5 percent of a bank‟s capital and unimpaired surplus or $25,000 whichever is larger and cannot be more than $100,000.Answer: TrueT F 52. Financial institutions that disagree with examiner classifications of their loans can appeal these examiner ratings.Answer: TrueT F 53. A rating of “5”is the highest and best rating that a U.S. bank can receive under the CAMEL rating system.Answer: FalseT F 54. Accounts receivable financing means that a bank actually takes over ownership of receivables, whereas factoring means that a bank merely lends money on a borrowingcustomer‟s receivables and the customer still has own ership of the receivables.Answer: FalseT F 55. A restriction against a borrower taking on new debt is an affirmative covenant in a loan contract.Answer: FalseT F 56. Loan review is considered to be a luxury, not a necessity for most banks, especially those with sound lending policies.Answer: FalseT F 57. Cash is one of the 6 C‟s of lending and refers to the fact that the lender wants to make sure the borrower has the ability to generate enough cash to repay the loan.Answer: TrueT F 58. There are three principal sources of cash to repay a loan. These are cash flows generated from sales or income, funds generated from the liquidation of assets and funds raised byselling debt or equity securities.Answer: TrueT F 59. Negative covenants require the borrower to take certain actions.Answer: FalseT F 60. Affirmative covenants restrict a borrower from doing certain things.Answer: FalseT F 61. For ease and convenience most banks have the loan review conducted by the same person who makes the loan. This is particularly true of large banks.Answer: FalseT F 62. A loan workout is when the bank and the customer initially negotiate the terms of the loan.Answer: FalseT F 63. A written loan poli cy gives loan officers and the bank‟s management specific guidelines in making individual loan decisions and in forming the bank‟s loan portfolio.Answer: TrueT F 64. Commercial and industrial loans are loans to businesses to cover such things as purchasing inventory, paying taxes and meeting payroll expenses.Answer: TrueT F 65. Agriculture loans are loans that are made to individuals to finance vacations, purchase durable goods and other retail goods.Answer: FalseT F 66. The A in the CAMELS rating system stands for asset quality.Answer: TrueT F 67. Net cash flow from operations is the borrower‟s net income expressed in cash rather than on an accrual basis.Answer: TrueT F 68. The “direct cash flow” method and “cash flow by origin” are two very different ways of assessing the cash flows of a potential borrower.Answer: FalseT F 69. Commercial banks are the largest originator of household loans.Answer: TrueT F 70. Following the recent global credit crisis, regulators have begun to emphasize the need for loan originators to know their borrowers better and retain some of the risk on loans thatthey sell.Answer: TrueMultiple Choice Questions71.The principal economic function of banks is to:A) Take depositsB) Make loansC) Sell financial servicesD) Encourage spendingE) None of the aboveAnswer: B72.Loans extended to finance the purchase of automobiles, mobile homes, home appliances, andvacations are classified as:A) Real estate loansB) Financial institutionsC) Agricultural loansD) Commercial and industrial loansE) None of the aboveAnswer: E73.According to the textbook the largest category (by dollar volume) of loans extended by U.S. banksis:A) Real estate loansB) Financial institutionsC) Agricultural loansD) Commercial and industrial loansE) None of the aboveAnswer: A74.Banks that emphasize lending to commercial customers are labeled:A)Wholesale banksB)Retail banksC)Personal banksD)Nonbank banksE)Regional banksAnswer: A75.The vast majority of FDIC-insured institutions are classified as:A)Credit card banksB)Agricultural banksC)Consumer lendersD)Commercial lendersE)Mortgage lendersAnswer: D76.In the United States national banks cannot extend an unsecured loan to a single borrower thatexceeds of a national bank‟s capital and surplus. The correct figure that fills in the blank in the preceding sentence is:A) 25 percentB) 10 percentC) 15 percentD) 20 percentE) None of the aboveAnswer: C77.Real estate loans made by national banks in the U.S. cannot exceed:A) 15 percent of a national bank‟s total assets or 25 percent of its total capital.B) A national bank‟s total capital and surplus or 70 percent of time and savings deposits,whichever is greater.C) 20 percent of a national bank‟s capital and surplus or 80 percent of its savings deposits,whichever is smaller in amount.D) 25 percent of capital or 10 percent of the core deposits of a national bank, whichever gives thelargest amount.E) None of the above.Answer: B78.Loans to finance one-to-four family homes fall under which loan category?A) Commercial and industrial loansB) Real estate loansC) Loans to individualsD) Single-payment loansE) None of the above.Answer: B79.The loan category experiencing the largest losses (loan defaults) is usually:A) Credit card loansB) Real estate loansC) Agricultural loansD) Commercial and industrial loansE) None of the aboveAnswer: A80.The most costly type of loan to make (measured by the cost per dollar of loan) for a bank is usually:A) Real estate loansB) Agricultural loansC) Commercial and industrial loansD) Loans to financial institutionsE) None of the above.Answer: E81.Loans providing credit to finance the purchase of automobiles, mobile homes, appliances, andother retail goods to repair and modernize homes are classified under the category:A) Financial institution loansB) Commercial industrialC) Loans to individualsD) Miscellaneous loansE) None of the aboveAnswer: C82.Loans extended to farm and ranch operations to assist in planting and harvesting crops and tosupport the feeding and care of livestock are known as:A) Real estate loansB) Commercial and industrial loansC) Land loansD) Agricultural loansE) None of the above.Answer: D83.Loans granted to businesses to cover such expenses as purchasing inventories, paying taxes, andmeeting payrolls are known as:A) Commercial and industrial loansB) Agricultural loansC) Real estate loansD) Loans to individualsE) None of the above.Answer: A84.A lender that makes a loan to a minor would be violating which of the 6 C‟s of lending?A) CharacterB) CapacityC) CashD) ControlE) CollateralAnswer: B85.A lender that makes a lo an that violates its written loan policy would be violating which of the 6 C‟sof lending?A) CharacterB) CapacityC) CashD) ControlE) CollateralAnswer: D86.Which of the following is a factor in determining the mix of loans that a bank has?A) The location of the bankB) The size of the bankC) The written loan policy of the bankD) The experience and expertise of the managementE) All of the above are factors in determining the mix of loansAnswer: E87.A loan to a local business to purchase a new machine would be categorized as:A) A consumer loanB) An agriculture loanC) A commercial and industrial loanD) A real estate loanE) None of the aboveAnswer: C88.The lender's secondary source of repayment in case of default is:A)Capacity.B)Collateral.C)Character.D)Capital.E)Credit.Answer: B89.A lender that makes a loan to an individual whose only income is commission based and whohasn‟t made a sale in six weeks may be violating which of the 6 C‟s of lending?A) CharacterB) CapacityC) CashD) ControlE) CollateralAnswer: C90.Sean Carter has an excellent credit rating. Which of the 6 C‟s of lending would this piece ofinformation belong to?A) CharacterB) CapacityC) CashD) CollateralE) ConditionsAnswer: A91.First National Bank of Edmond asks a prospective customer for her driver‟s license. Which of the6 C‟s of lending would this piece of information belong to?A) CharacterB) CapacityC) CashD) CollateralE) ConditionsAnswer: B92.The loan officer of Second National Bank of Laramie decides to review the insurance coverage ofone of its business customers. Which of the 6 C‟s of lending would this piece of information belong to?A) CharacterB) CapacityC) CashD) CollateralE) ConditionsAnswer: D93.The TRC Company is required by its bank to pay no dividend over $3 per share. What is this?A) An affirmative covenantB) A negative covenantC) A Special covenantD) A horizontal covenantE) None of the aboveAnswer: B94.A bank that primarily makes its loans to individuals, families and small businesses is:A) A retail bankB) A wholesale lenderC) A money center bankD) A money market bankE) None of the aboveAnswer: A95.The process of resolving a troubled loan so the lender can recover its funds is called the:A) Loan ReviewB) Written Loan PolicyC) Loan WorkoutD) Loan Commitment AgreementE) None of the aboveAnswer: C96.Which of the following is a sign of a potential loan problem?A) Timely receipt of financial statements from the company with a loanB) Increases in the stock price of the company that has a loanC) Increases in earnings for each of the last three years of a companyD) Changes in the methods used to account for inventory, depreciation and other itemsE) All of the above are signs of problems with the loanAnswer: D97.Which of the following should be part of the written loan policy?A) Lending authority of each loan officer and loan committeeB) Lines of responsibility for finding and reporting information within the loan departmentC) A statement of quality standards for all loansD) A statement for the preferred upper limit for total loans outstandingE) All of the above should be part of the written loan policyAnswer: E98.A lender reviews the partnership agreement of one of its small business customers. Which of the 6C‟s of lending would this piece of information belong to?A) CharacterB) CapacityC) CashD) CollateralE) ConditionsAnswer: B99.Which act requires that bank loans to insiders be priced at market?A) Community Reinvestment Act of 1977B) Equal Credit Opportunity Act of 1974C) Sarbanes-Oxley Act of 2002D) Bank Lending Act of 2003E) U.S. Patriot ActAnswer: C100. A method whereby the loan officer focuses on how the borrower cash flows may change over time is known as:A) Indirect cash flowB) Direct cash flowC) Pervasive cash flowD) Variable cash flowE) Total cash flowAnswer: B101.The South Carolina National Bank makes a loan to the Heritage Credit Union. What type of loan did this bank make?A) Financial institution loanB) Commercial and industrial loanC) Loans to individualsD) Miscellaneous loansE) Lease financing receivablesAnswer: A102.A loan for Colin Beverly to purchase a new Mazda Miata would fit into which of the following categories of bank loans?A) Financial institution loanB) Commercial and industrial loanC) Loan to an IndividualD) Miscellaneous loanE) Lease financing receivablesAnswer: C103.The Price Bank of Edmond makes a loan to Home Depot. What type of loan has this bank made?A) Financial institution loanB) Commercial and industrial loanC) Loan to an individualD) Miscellaneous loanE) Lease financing receivablesAnswer: B104.The First State Bank of Duncan buys railroad cars and rents them to the Santa Fe Railroad Company. What type of loan has this bank made?A) Financial institution loanB) Commercial and industrial loanC) Loan to an individualD) Miscellaneous loanE) Lease financing receivablesAnswer: E105.The Third National Bank of Wichita makes a loan so that Tim Bridges can buy 1000 shares of Coca Cola stock. Which category of loans would this loan fit in best?A) Financial institution loanB) Commercial and industrial loanC) Loan to an individualD) Miscellaneous loanE) Lease financing receivablesAnswer: D106.The First State Bank is located in Guyman, Oklahoma which is in the middle of the wheat country of Oklahoma and as a result many of its loans are agriculture loans. What factor determining the growth and mixture of loans does this fact reflect?A) Characteristics of the market areaB) Lender sizeC) The experience and expertise of managementD) The written loan policy of the bankE) Bank regulationsAnswer: A107.The Second State Bank has less than $100 million in assets and as a result primarily makes real estate loans, other consumer loans and loans to very small businesses. What factor determining the growth and mixture of loans does this fact reflect?A) Characteristics of the market areaB) Lender sizeC) The experience and expertise of managementD) The written loan policy of the bankE) Bank regulationsAnswer: B108.Geoff Willis and Mary Williams the president and CEO of the First National Bank of Edmond bothcome from a background of retail banking. As a result they have decided to focus their lending activities on consumer loans and loans to small business. What factor determining the growth andmixture of loans does this fact reflect?A) Characteristics of the market areaB) Lender sizeC) The experience and expertise of managementD) The written loan policy of the bankE) Bank regulationsAnswer: C109.First State Bank‟s loan policy manual states …that the goal of the bank is to make high quality loansfor home mortgages, the purchase of automobiles and small business accounts receivables‟. Whatfactor determining the growth and mixture of loans does this fact reflect?A) Characteristics of the market areaB) Lender SizeC) The experience and expertise of managementD) The written loan policy of the bankE) Bank regulationsAnswer: D110.The Second National Bank has capital and surplus of $100 million. The bank has decided that themost that it can loan to the Krumlova Manufacturing Company is $15 million. What factordetermining the growth and mixture of loans does this most likely reflect for this bank?A) Characteristics of the market areaB) Lender sizeC) The experience and expertise of managementD) The written loan policy of the bankE) Bank regulationsAnswer: E111.A loan that appears to examiners to contain significant weaknesses or that represent a dangerousconcentration of credit in one borrower or industry are called:A) Criticized loansB) Scheduled loansC) Substandard loansD) Doubtful loansE) Loss loansAnswer: B112.A loan that examiners regard as uncollectible and unsuitable to be called a bank asset is called a:A) Criticized loanB) Scheduled loanC) Substandard loanD) Doubtful loanE) Loss loanAnswer: E113.The law t hat requires banks to make …an affirmative effort‟ to meet the credit needs of individuals and businesses in their trade territories is called:A) The Sarbanes-Oxley ActB) The Community Reinvestment ActC) The Equal Credit Opportunity ActD) The Truth in Lending ActE) None of the aboveAnswer: B114.The law that prevents individuals from being denied credit because of race, sex, religious affiliation, age or receipt of public assistance is called:A) The Sarbanes-Oxley ActB) The Community Reinvestment ActC) The Equal Credit Opportunity ActD) The Truth in Lending ActE) None of the aboveAnswer: C115.Dan Cross is a junior loan officer with First State Bank of Durant. He has been busy visiting local businesses to see of any of them need credit. Which step in the lending process is Dan performing?A) Finding prospective customersB) Evaluating a customer‟s character and sincerityC) Making a site visit and evaluating a customer‟s credit historyD) Evaluating a prospective customer‟s financial conditionE) Assessing possible collateral and signing the loan agreementAnswer: A116.Shelby Mann is a loan officer with the First National Bank. She interviews a potential loan customer to find out exactly why the person needs the loan and whether they would be serious about repaying the loan. Which step in the lending process is Shelby performing?A) Finding prospective customersB) Evaluating a customer‟s character and sincerityC) Making a site visit and evaluating a customer‟s credit historyD) Evaluating a prospective customer‟s financial conditionE) Assessing possible collateral and signing the loan agreementAnswer: B117.Jessica Simpson, a loan officer with First National Bank, visits the Tate Manufacturing Company and talks to other lenders to see their experience with Tate Manufacturing. What step in the lending process is Jessica performing?A) Finding prospective customersB) Evaluating a customer‟s character and sincerityC) Making a site visit and evaluating a customer‟s credit hi storyD) Evaluating a prospective customer‟s financial conditionE) Assessing possible collateral and signing the loan agreementAnswer: C118.Terry May, a loan officer with First National Bank, calculates liquidity and debt ratios for the Lava Lamp Company and also examines their cash flow statement. What step in the lending process is Terry performing?A) Finding prospective customersB) Evaluating a customer‟s character and sincerityC) Making a site visit and evaluating a customer‟s credit historyD) Evaluating a prospective customer‟s financial conditionE) Assessing possible collateral and signing the loan agreementAnswer: D119.Jerry LeGere, a loan officer with First National Bank, checks to see if the house pledged to back upa home mortgage has a clear title and proper insurance. What step in the lending process is Jerryperforming?A) Finding prospective customersB) Evaluating a customer‟s character and sincerityC) Making a site visit and evaluating a customer‟s credit historyD) Evalu ating a prospective customer‟s financial conditionE) Assessing possible collateral and signing the loan agreementAnswer: E120.The Tate Manufacturing Company has $150 million in sales revenue with $90 million in cost of goods sold. It has selling and administrative expenses of $10, pays annual taxes in the amount of $10 and has depreciation and other non cash expenses of $30 million. What are this firm‟s annual projected cash flows?A) $150B) $60C) $70D) $40E) None of the aboveAnswer: C。

商业银行管理组织彼得S.罗斯英文原书第8版英语试题目整合Chap015

Chapter 15The Management of CapitalFill in the Blank Questions1. The risk that has to do with banks trading in foreign currencies is called_________________________.Answer: exchange risk2. The risk that has to do with fraud, embezzlement and bank robberies is called__________________.Answer: crime risk3. _________________________ is measured by the par value of the shares of commonequity outstanding.Answer: Common stock4. __________________ is the amount in excess of par value paid by the bank'sshareholders.Answer: Surplus5. _________________________ are the net earnings of the bank which have been kept bythe bank rather than distributed as dividends to stockholders.Answer: Undivided Profits (or retained earnings)6. Core capital such as common stock, surplus, undivided profits, qualifyingnoncumulative preferred stock, etc. is referred to as __________________ capital as defined by the Basel agreement.Answer: Tier 17. The international treaty involving the U.S. and 11 other leading industrializedcountries to impose common capital requirements on all banks is known as the _________________________.Answer: Basel Agreement8. Supplemental capital such as the allowance for loan losses, subordinated debt,mandatory convertible debt, intermediate-term preferred stock, cumulative preferred perpetual stock and equity notes is more commonly known as_________________________.Answer: Tier 2 capital9. When items on a bank's balance sheet are multiplied by the appropriaterisk-weighting factor they are often called _________________________.Answer: risk-weighted assets10. The fact that a bank may suffer deficiencies in quality control, inefficiencies inproducing and delivering of services, weather damage, aging or faulty computer systems, errors in judgment by management and fluctuations in economy that could adversely affect the bank's performance is known as _________________________ risk.Answer: operational11. One defense against risk for the bank is to spread out a bank's credit accounts anddeposits among a wide variety of customers, including large and small accounts different industries, etc. This defense is known as _________________________.Answer: portfolio diversification12. One defense against risk is for the bank to seek out customers located in differentcommunities or in different countries. This defense is known as_________________________.Answer: geographic diversification13. When all else fails, the ultimate defense against risk in banking is_________________________.Answer: owners' capital (net worth)14. The largest component of capital among thrift institutions is _____________.Answer: retained earnings15. The largest component of capital among banks is ____________.Answer: surplus16. ____________ models attempt to measure price or market risk of a portfolio of assetsand attempt to determine the maximum loss they might sustain over a designated period of time.Answer: Value at risk (VaR)17. The latest revision to the Basel accord is known as __________ and will affect onlyabout 20 of the largest U.S. banks and a handful of leading foreign banks.Answer: Basel II18. ____________ models measure lender exposure to defaults or credit downgrades.Answer: Credit Risk19. Credit risk models will be ________ widely used when Basel II takes effect.Answer: more20.At the center of the debate of the Basel Agreement is the ,headquartered in Basel Switzerland , which assists central banks in theirtransactions with each other and serves as a forum for international financialissues.Answer: Bank for International Settlements (BIS)21. represents funds set aside for contingencies such as legalaction against the institution as well as providing a reserve for dividends expected to be paid but not yet declared and a sinking fund to retire stock or debt in thefuture.Answer: Equity reserves22. are debt securities repayable from the saleof stock.Answer: Equity commitment notes23. is a hybrid form of equity capital issued toinvestors through a trust company, The funds raise are loaned to the financial firm.Dividends paid to stockholders on this time of capital are tax deductible.Answer: Trust preferred stock24. is long-term debt capital whose claims legallyfollow claims of depositors.Answer: Subordinated notes and debentures25. for banks include mortgage servicingrights and purchased credit card relationships and can be counted as part of bank capital.Answer: Identifiable intangible assetsTrue/False QuestionsT F 26. In the field of banking, capital refers principally to those funds contributed by a bank's owners.Answer: TrueT F 27. According to the textbook capital and risk are intimately related to each other.Answer: TrueT F 28. One fundamental purpose for regulating capital is to limit losses to the federal government arising from deposit insurance claims.Answer: TrueT F 29. Deposit insurance subsidized by government encourages banks to increase their ratios of capital to deposits.Answer: FalseT F 30. Tier 2 includes undivided profits.Answer: FalseT F 31. Core capital includes the surplus account for stock.Answer: TrueT F 32. Under the international capital (Basel) agreement Tier 2 capital must be raised to a minimum of 4 percent of risk-weighted assets.Answer: FalseT F 33. Off-balance-sheet commitments of banks carry capital requirements underthe international (Basel) capital requirements.Answer: TrueT F 34. Portfolio diversification refers to seeking out customers located in different communities or countries, which presumably will experience differenteconomic conditions.Answer: FalseT F 35. Geographic diversification refers to the spreading out credit accounts and deposits among a wide variety of customers, including large and smallbusiness accounts, different industries, and households with a variety ofsources of income and collateral.Answer: FalseT F 36. The last line of defense against bank failure is owner's capital, according to the textbook.Answer: TrueT F 37. Under the FDIC Improvement Act of 1991 a U.S. bank possessing a leverage ratio greater than 4 percent would be considered well capitalized.Answer: FalseT F 38. Under the FDIC Improvement Act of 1991 a bank whose leverage ratio drops to 2 percent or less is considered to be critically undercapitalized.Answer: TrueT F 39. Recent research suggests that interest-rate contracts display considerably less risk exposure than do foreign-currency contracts.Answer: TrueT F 40. The Basel Agreement on capital as drafted in the 1980s failed to deal with market risk.Answer: TrueT F 41. If a bank benefits when the value of a foreign currency rises, the bank is said to be in a short position.Answer: FalseT F 42. If a bank benefits when a foreign currency declines in value, then the bank is in a long position.Answer: FalseT F 43. If the ratio of tangible equity capital to total assets is 2 percent or less it is subject to being placed in conservatorship or receivership if its capital ratiosare not increased within a prescribed period of time even if its net worth isstill positive.Answer: TrueT F 44. According to recent research, bank stock prices usually drop within a week after a dividend cut is announced.Answer: TrueT F 45. Equity notes are considered to be part of Tier 1 capital.Answer: FalseT F 46. The most important source of thrift capital in terms of dollar volume is common stock (par value).Answer: FalseT F 47. The daily rate at which robberies have occurred in the U.S. has continued to climb in the 1990s.Answer: FalseT F 48. One of the reasons to regulate the capital position of banks is to limit the risk of bank failures, especially large bank failures.Answer: TrueT F 49. Deposits with the Federal Reserve banks are considered to have moderate credit risk and are therefore placed in the 50 percent risk weight category.Answer: FalseT F 50. The largest component of capital among banks is retained earnings.Answer: FalseT F 51. VaR models provide a single number which indicates the potential for losses on a portfolio of assets.Answer: TrueT F 52. VaR models are most successful in assessing potential risk when the assets are non-traded.Answer: FalseT F 53. Credit risk models will probably not be needed when Basel II takes effect.Answer: FalseT F 54. One of the key innovations which have been proposed in Basel II is to require banks to hold capital against operational risk.Answer: TrueT F 55. Basel II will require each bank to determine its own capital requirements based on its own calculated risk exposure.Answer: TrueT F 56. It is anticipated that Basel II may lower capital requirements for the largest banks.Answer: TrueT F 57. The global financial crisis of 2007-2009 highlighted the importance of taking into consideration a bank’s exposure to market risk that arise fromchanges in interest rates, security prices, and currency.Answer: TrueT F 58. Smaller banks rely more heavily on internally generated capital than larger banks.Answer: TrueT F 59. A well-capitalized institution has a ratio of capital to risk-weighted assets of at least 10 percent and faces no significant regulatory restrictions on itsexpansion.Answer: TrueT F 60. Regulatory capital focus on the market value of equity.Answer: FalseMultiple Choice Questions61.According to the textbook the role of capital is to:A) Provide a cushion against failure risk.B) Provide funds needed to organize, open, and operate a bank.C) Promote public confidenceD) Support growth and the development of new servicesE) All of the above.Answer: E62.The textbook discusses several alternative defenses banks have against risk. Thesedefenses include:A) Quality managementB) Portfolio diversificationC) Geographic diversificationD) Deposit insuranceE) All of the above.Answer: E63.Measured by dollar volume the largest category of capital at U.S. banks is:A) Par value of common stockB) Subordinated notes and debenturesC) SurplusD) Undivided profits and capital reservesE) None of the above.Answer: C64.The fundamental purposes of regulating bank capital cited in the textbook includewhich of the following?A) To limit the risk of bank failures.B) To preserve public confidence in banks.C) To limit losses to the federal government arising from insurance claims.D) All of the above.E) A and B only.Answer: D65.The Internal Capital Growth Rate for a bank is a function of which of the followingfactors?A) Profit margin.B) Asset utilization.C) Equity multiplier.D) Earnings retention ratio.E) All of the above.Answer: E66.Second National Bank is forecasting a return on equity of 15 percent for this year.The board of directors wants to maintain its current policy of paying the bank's stockholders 40 percent of any net earnings the bank will earn. How fast can the bank's assets grow this year without jeopardizing its ratio of capital to assets?A) 15 percent.B) 9 percent.C) 8 percent.D) 6 percent.E) None of the aboveAnswer: B67.Possible breakdowns in quality control, inefficiencies in producing and deliveringfinancial services, weather damage, aging or faulty computer systems andsimple errors in judgment by bank management illustrate what form of riskfaced by banks?A) Credit riskB) Liquidity riskC) Interest-rate riskD) Operational riskE) None of the aboveAnswer: D68.The ratio of core capital to average assets is called the:A) Supplemental Capital ratioB) Leverage ratioC) Long-term capital ratioD) GAAP capital ratioE) None of the above.Answer: B69.The risk that a customer the bank has entered into a contract with will fail to pay orto perform, forcing the bank to find a replacement contract that may be lesssatisfactory is what form of risk listed below?A) Counterparty riskB) Interest-rate riskC) Operating riskD) Credit riskE) Liquidity riskAnswer: A70.If a bank benefits when a foreign currency declines in value, then the bank must bein a __________ position. The term below that correctly fills in the blank in thepreceding sentence is:A) LongB) ShortC) NegativeD) Credit riskE) None of the aboveAnswer: B71.In the United States a 'well capitalized' bank must have a ratio of capital torisk-weighted assets of at least:A) 6 percentB) 8 percentC) 10 percent.D) 5 percent.E) None of the aboveAnswer: C72.In the United States a bank to be considered 'adequately capitalized' must have aratio of Tier 1 (or core) capital to risk-weighted assets of at least:A) 8 percentB) 6 percentC) 10 percentD) 4 percentE) None of the aboveAnswer: D73. A "well capitalized" bank in the United States must have a leverage ratio of at least:A) 5 percentB) 4 percentC) 6 percentD) 8 percentE) None of the aboveAnswer: B74. A bank has $100 million in assets in the 0 percent risk weight category, $200million in assets in the 20 percent risk weight category, $500 million in assets in the50 percent risk weight category and $750 million in assets in the 100 percent riskweight category. This bank has $57 million in core (Tier 1) capital. What is this bank's ratio of Tier 1 capital to risk-weighted assets?A) 3.68 percentB) 7.6 percentC) 18.25 percentD) 5.48 percentE) None of the aboveAnswer: D75. A bank has a profit margin of 5 percent, an asset utilization ratio of 11 percent , anequity multiplier of 12 and a retention ratio of 60 percent. What is this bank's ICGR?A) 6.6 percentB) 3.96 percentC) 7.2 percentD) .33 percentE) None of the aboveAnswer: B76.Which of the following would be an example of Tier 1 capital?A) Subordinated debt capital instruments with an original maturity of at least 5yearsB) Allowance for loan and lease lossesC) Minority interest in the equity accounts of consolidated subsidiariesD) Intermediate term preferred stockE) All of the aboveAnswer: C77.Which of the following would be an example of Tier 2 capital?A) Subordinated debt capital instruments with an original maturity of at least 5yearsB) Undivided profitsC) Minority interest in the equity accounts of consolidated subsidiariesD) Qualifying noncumulative preferred stockE) All of the aboveAnswer: A78.Which of the following would be an example of crime risk?A) A bank manager that embezzles $1,000,000 from the bankB) A bank that loses $500,000 from trading in foreign currenciesC) A $1,000,000 loan to a business on which no interest and principal has beencollected in 2 yearsD) A bank manager predicts that interest rates will rise. However interest rates fallcausing the bank 's net income to fall by $250,000E) All of the above are examples of crime riskAnswer: A79.Which of the following assets fits into the 0 percent risk weight category?A) CashB) Deposits at the Federal ReserveC) Treasury BillsD) GNMA mortgage-backed securitiesE) All of the above fit into the 0 percent risk weight categoryAnswer: E80. A bank that is 'well-capitalized':A) Faces no significant regulatory restrictionsB) Cannot accept broker placed deposits without regulatory approvalC) Has limits on dividends and management fees it is allowed to pay and limits onthe maximum asset growth rate among other restrictionsD) Will be placed into conservatorship or receivership if it its capital level is notincreased within a certain time limit.E) None of the aboveAnswer: A81. A bank that is 'critically undercapitalized':A) Faces no significant regulatory restrictionsB) Cannot accept broker-placed deposits without regulatory approvalC) Has limits on dividends and management fees it is allowed to pay and limits onthe maximum asset growth rate among other restrictionsD) Will be placed into conservatorship or receivership if it its capital level is notincreased within a certain time limit.E) None of the aboveAnswer: D82. A bank that is adequately capitalized:A) Faces no significant regulatory restrictionsB) Cannot accept broker-placed deposits without regulatory approvalC) Has limits on dividends and management fees it is allowed to pay and limits onthe maximum asset growth rate among other restrictionsD) Will be placed into conservatorship or receivership if it its capital level is notincreased within a certain time limit.E) None of the aboveAnswer: B83.Which of the following is in the 100 percent risk-weight category?A) CashB) General obligation municipal bondsC) Residential mortgage loansD) Credit card loansE) None of the aboveAnswer: D84.Which of the following is in the 50 percent risk-weight (moderate) category?A) CashB) General Obligation Municipal BondsC) Residential Mortgage LoansD) Credit Card LoansE) None of the aboveAnswer: C85.Which of the following is in the 20 percent risk-weight (low) category?A) CashB) General obligation municipal bondsC) Residential mortgage loansD) Credit card loansE) None of the aboveAnswer: B86. A bank has a ROE of 14 percent and a ROA of 2 percent. What is this bank's equitycapital to total assets ratio?A) 7.00 percentB) 14.29 percentC) 28.00 percentD) 16 percentE) None of the aboveAnswer: B87. A bank has $200 million in assets in the 0 percent risk-weight category. It has $400million in assets in the 20 percent risk-weight category. It has $1000 million in assets in the 50 percent risk-weight category and has $1000 million in assets in the 100 percent risk-weight category. This bank has $96 million in Tier 1 capital and $48 million in Tier 2 capital. What is this bank's ratio of Tier 1 capital to risk assets?A) 6.08 percentB) 3.04 percentC) 9.11 percentD) 5.54 percentE) None of the aboveAnswer: A88. A bank has $200 million in assets in the 0 percent risk-weight category. It has $400million in assets in the 20 percent risk-weight category. It has $1000 million in assets in the 50 percent risk-weight category and has $1000 million in assets in the 100 percent risk-weight category. This bank has $96 million in Tier 1 capital and $48 million in Tier 2 capital. What is this bank's ratio of Tier 2 capital to risk assets?A) 6.08 percentB) 3.04 percentC) 9.11 percentD) 5.54 percentE) None of the aboveAnswer: B89. A bank has $200 million in assets in the 0 percent risk-weight category. It has $400million in assets in the 20 percent risk-weight category. It has $1000 million in assets in the 50 percent risk-weight category and has $1000 million in assets in the 100 percent risk-weight category. This bank has $96 million in Tier 1 capital and $48 million in Tier 2 capital. What is this bank's ratio of total capital to risk assets?A) 6.08 percentB) 3.04 percentC) 9.11 percentD) 5.54 percentE) None of the aboveAnswer: C90. A bank has a net profit margin of 5.25 percent. It has an asset utilization ratio of 45percent and has an equity multiplier of 12. It retains 40 percent of its earnings each year. What is this bank's internal capital growth rate?A) 28.35 percentB) 2.36 percentC) 11.34 percentD) 4.8 percentE) None of the aboveAnswer: C91.The revised Basel I rules impose capital requirements for market risk on:A) Only the largest banksB) Only the smallest banksC) Only moderate size banksD) All banksE) No banksAnswer: A92.Bank debt which appears to be highly sensitive to the market perception of thebank's risk is which of the following?A) DepositsB) Fed fundsC) ReposD) Subordinated debt capitalE) Preferred stockAnswer: D93.Bank operational risk includes:A) Employee fraudB) Account errorsC) Computer breakdownsD) Natural disastersE) All of the aboveAnswer: E94.The issue of correctly adding up all of the different types of bank risk exposure isknown as:A) Risk tallyingB) Summing riskC) Risk aggregationD) Risk accumulationE) Risk totalityAnswer: C95.For a bank with deficient capital ratios, which of the following actions could berequired by regulators to increase the capital ratios, all else constant?A)Cut the bank's dividend paymentB)Increase the bank's leverageC)Reduce the bank’s holdings of cashD)Increase the bank's growth rate by making additional commercial loans.E)Reduce the bank's holdings of Treasury securities.Answer: A96.Basel II has a different set of rules for different bank size categories and thenumber of categories is:A) twoB) threeC) fourD) fiveE) tenAnswer: A97.Which of the following would be an example of exchange risk?A) A bank manager embezzles $1,000,000 from the bankB) A bank that loses $500,000 from trading in foreign currenciesC) A $1,000,000 loan to a business on which no interest or principal has beencollected in 2 yearsD) A bank manager predicts interest rates will rise. However interest rates fallcausing the bank’s net income to fall by $250,000E) All of the above are examples of exchange riskAnswer: B98.Which of the following would be an example of credit risk?A) A bank manager embezzles $1,000,000 from the bankB) A bank that loses $500,000 from trading in foreign currenciesC) A $1,000,000 loan to a business on which no interest or principal has beencollected in 2 yearsD) A bank manager predicts interest rates will rise. However interest rates fallcausing the bank’s net income to fall by $250,000E) All of the above are examples of credit riskAnswer: C99.Which of the following would be an example of interest rate risk?A) A bank manager embezzles $1,000,000 from the bankB) A bank that loses $500,000 from trading in foreign currenciesC) A $1,000,000 loan to a business on which no interest or principal has beencollected in 2 yearsD) A bank manager predicts interest rates will rise. However interest rates fallcausing the bank’s net income to fall by $250,000E) All of the above are examples of interest rate risk?Answer: D100.Which of the following would be an example of operational risk?A) A bank teller manages to steal $250,000 over a period of several monthsB) An out of date computer system causes the bank to lose $750,000C) A bank is forced to sell $1,000,000 in loans at a loss in order to meet the needsof depositorsD) A $500,000 loan the bank has made has been deemed uncollectableE) None of the above are examples of operational riskAnswer: B101.Which of the following would be an example of liquidity risk?A) A bank teller manages to steal $250,000 over a period of several monthsB) An out of date computer system causes the bank to lose $750,000C) A bank is forced to sell $1,000,000 in loans at a loss in order to meet the needsof depositorsD) A $500,000 loan the bank has made has been deemed uncollectableE) None of the above are examples of liquidity riskAnswer: C102.Which of the following would not be an example of operational risk?A) A bank on the coast of Louisiana is hit by a hurricane and is flooded for 6 weeksB) A bank employee acting as a derivatives trader is also the one who writes thereports on profits and losses in derivatives trading at the end of each dayC) The banks older computer system breaks down causing a loss of service tocustomers for 2 weeksD) A bank robber robs a teller at gun point and gets away before police can get tothe bankE) All of the above are examples of operational riskAnswer: D103.The Jennings Bank of Texas wants to protect itself from credit risk by making large loans to corporate customers, by making residential mortgages to families, bymaking agriculture loans to farmers and ranchers in the area, by making smallbusiness loans to business along main street and by making automobile loans for the car dealership across the street from the bank. What defense against risk isthis bank making?A) Portfolio diversificationB) Geographic diversificationC) Quality managementD) Increasing owners’ capitalE) All of the aboveAnswer: A104.The Michelson Bank of Stetson wants to protect itself from risk. It decides to make loans in Florida, Georgia, Texas and Oklahoma as well as invest in municipal bonds from California and Oregon. What defense against risk is this bank making?A) Portfolio diversificationB) Geographic diversificationC) Quality managementD) Increasing owners’ capitalE) All of the aboveAnswer: B105.The Perdue Bank of Houston has just hired a new manager who has a reputation of anticipating potential problems and acting quickly to prevent those problems so that the bank stays healthy and profitable. What defense against risk is this bank making?A) Portfolio diversificationB) Geographic diversificationC) Quality managementD) Increasing owners’ capitalE) All of the aboveAnswer: C106.The Norton Bank of Illinois has just issued trust preferred stock. What defense against risk is this bank making?A) Portfolio diversificationB) Geographic diversificationC) Quality managementD) Increasing owners’ capitalE) All of the aboveAnswer: D107.What type of preferred stock has become popular among large banks in recent years, partly because dividends paid are tax deductible for the issuing institution?A) Cumulative preferred stockB) Noncumulative preferred stockC) Convertible preferred stockD) Trust preferred stockE) All of the aboveAnswer: D108.Even if individual banks are good at forecasting risk using VAR models there may still be problems because losses may occur at several banks at the same time due to the interdependency of the financial system, magnifying each bank’s riskexposure and possibly causing a major problem for regulators. The book calls this:A) Systematic riskB) Operational riskC) Credit riskD) Market riskE) Liquidity riskAnswer: A109.There are three pillars of Basel II. One of them wants to make market discipline a powerful force compelling risky banks to lower their risk exposure. What does Basel II want to do to make this happen?A) Require minimum capital requirement based on the bank’s own evaluation ofits riskB) Require greater public disclosure of each bank’s true financial conditionC) Expand the risks to be evaluated to include credit risk, market risk andoperational riskD) Require supervisory review of each bank’s risk evaluation proceduresE) All of the aboveAnswer: B110. A bank has capital to risk weighted assets of 11.5%, Tier 1 capital to risk weighted assets of 7.2% and a leverage ratio of 5.8%. What type of bank is this?。

罗斯商业银行管理[1][1].第一篇

2.3.3 美国主要的银行法(4)
《银行控股公司法》Bank Holding Colding Company Act及其修正案1956 1966 1970年该法案第一次将银行控股公司—购买和控制银行股份的公司置于联邦政府管制之下。主要考虑是控股公司会威胁到商业银行的独立性
《银行业兼并法》Bank Merger Act及其修正案1960-1966
什么是银行；银行向公众提供的服务；影响银行的各种趋势
银行当今面对的重要非银行金融机构竞争者
一：什么是银行
银行（bank）是提供包括信贷、储蓄、支付服务在内的最广泛金融服务和在经济中发挥最广泛金融服务功能的金融机构。非银行的银行（nonbank banks）
银行的界定
1980年代，根据美国法律，银行被定义为任何提供活期存款（比如签发支票或电子取款）以及提供企业贷款的机构。
银行向公众提供的服务（1.1）
历史上银行曾经提供的服务：
货币兑换：将一种货币兑换成另一种货币，银行收取手续费。
商业票据贴现和向企业提供贷款：客户将拥有的应收帐款项买给银行，以快速的获得现金，银行提前收取贴现手续费并提供资金给客户。
储蓄存款服务：存入银行有一定期限，收益高于活期存款的一种投资。贵重物品的保管和价值证明：将客户的贵重物品放入银行保险柜收取手续费银行传统业务。向政府提供信用支持：商业银行为政府购买债券支持政府的业务行为。支票账户：活期存款帐户。信托业务：银行为客户管理财产和金融业务收取手续费银行业最古老的业务。
2.3.3 美国主要的银行法(3)
依据《格拉斯· 期蒂格尔法》设立联邦存款保险公司
这是该法案最重要的成就之一。对稳定银行体系增加公众对银行的依存度做出了重大的贡献。直接的作用是减少了银行的挤兑现象。对FDIC的批评和对新立法的呼吁

商业银行管理组织彼得S.罗斯英文原书第8版英语试题目整合Chap005

Chapter 5The Financial Statements of Banks and Their Principal Competitors Fill in the Blank Questions1. Fed funds purchased is an example of _______________________ along with Eurodollarborrowings.Answer: nondeposit borrowings2. The short term securities of the bank, including T-Bills and commercial paper, areoften called __________________________ because they are the second line of defense to meet demands for cash.Answer: secondary reserves3. __________________________ is a noncash expense on the bank's income statementwhich allows the bank to account for future bad loans.Answer: Provision for loan losses4. __________________________ is the difference between interest income and interestexpenses for a financial institution.Answer: Net interest income5. __________________________ are the primary long term liabilities of the bank. Theseliabilities are paid only after deposits have been paid in the event of bankruptcy.Answer: Subordinated notes and debentures6. A(n)__________________________ is where the financial institution agrees to guaranteerepayment of a customer's loan received from a third party.Answer: standby credit agreement7. A(n)__________________________ is a short term collateralized loan. The collateral thatis used generally consists of T-Bills.Answer: repurchase agreement8. A(n)__________________________ is a deposit account which pays an interest ratecompetitive with money market mutual funds and which generally has limitedcheck writing ability.Answer: money market deposit account9. _____________________ is the sum of all outstanding IOU's owed to the bank in theform of consumer, real estate, commercial and agriculture loans as well as other types of credit extensions.Answer: gross loans10. A financial institution often records the value of its assets and liabilities at_______________ which is the original or historical cost of the asset.Answer: book value11. The principal types of__________________________ include fee income, income fromfiduciary activities and services charges on deposits.Answer: noninterest income12. The__________________________ shows the amount of revenues received and expensesincurred over a specific time period.Answer: Report of Income (income statement)13. The__________________________ lists the assets, liabilities and equity capital held bythe bank on a given date.Answer: Report of Condition (balance sheet)14. ______________ is labeled "Accounting for Derivative Instruments and HedgingActivities."Answer: FASB 13315. ________________ labeled “Accounting for Derivative Instruments and HedgingActivities” and its recent amendments, FASB 138, are designed to makederivatives more publicly visible on corporate financial statements.Answer: FASB 13316. Under _____________ banks must account for the expected loss of interest income onnonperforming loans when calculating their loan-loss provision.Answer: FASB 11417. Temporarily buying and selling securities by a securities firm in a thinly tradedmarket so as to influence the price is known as _________________.Answer: painting the tape18. The activity of manipulating the financial statements to artificially enhance thebanks financial strength is known as ___________________.Answer: window dressing or ‘creative accounting’19. is direct and indirect investment in real estate.These are properties obtained for compensations for nonperforming loans.Answer: Other Real Estate Owned (OREO)20. consists of interest income received on loans fromcustomers that has not yet been earned by the bank under accrual accounting methods.Answer: Unearned discount income21. can be held by individuals and nonprofit institutions,bear interest and permit drafts from being written against the account to pay third parties.Answer: Now accounts22.In the worldwide banking system, represent transferabletime deposits in a variety of currencies and are often the principal source of short term borrows by banks.Answer: Eurocurrency Borrowings23.One part of arises from fees charged for ATM and POStransactions.Answer: Other Noninterest Income24.Fees that arise from a financial firm’s trust activities, fees for managing acorporations’ interest and dividend payments and fees for managing corporateor individual retirement plans are all included in the category of fees arisingfrom .Answer: fiduciary activities25.Checking account maintenance fees and overdraft fees are included in thenoninterest income account under .Answer: service charges on deposit accountsTrue/False QuestionsT F 26. On a bank's income statement (Report of Income) deposit costs are financial inputs.Answer: TrueT F 27. Loans and leases are financial outputs on a financial institution's balance sheet or Report of Condition.Answer: TrueT F 28. Nondeposit borrowings are a financial input on a bank's balance sheet or Report of Condition.Answer: TrueT F 29. The cost of nondeposit borrowings is a financial input on a bank's income statement or Report of Income.Answer: TrueT F 30. Securities income is a financial output listed on a financial institution's Report of Condition.Answer: FalseT F 31. Net loans on a bank's balance sheet are derived by deducting the allowance for loan losses and unearned discounts from gross loans.Answer: TrueT F 32. When a loan is classified as nonperforming any accrued interest recorded on the bank's books, but not actually received, must be deducted from abank's loan revenues.Answer: TrueT F 33. In U.S. banking, securities gains are treated as ordinary income.Answer: TrueT F 34. Most banks report securities gains as a component of their total noninterest income.Answer: FalseT F 35. A bank displaying trading account securities on its balance sheet is serving as a security dealer and plans to sell those securities before they reachmaturity.Answer: TrueT F 36. Bad loans normally do not affect a bank's current income.Answer: TrueT F 37. The expensing of a worthless loan usually must occur in the year that loan become worthless.Answer: TrueT F 38. Recoveries on loans previously charged off are added to the Provision for Loan Losses (PLL) account on a bank's income statement.Answer: FalseT F 39. Loan-loss reserves set aside to cover a particular loan or loans expected to be a problem or present the bank with above-average risk are known asspecific reserves.Answer: TrueT F 40. U.S. banks (especially those with $500 million or more in total assets) are required to file financial statements audited by an independent publicaccountant with their principal federal regulatory agency.Answer: TrueT F 41. Off-balance-sheet items for a bank are fee generating transactions which are not recorded on their balance sheet.Answer: TrueT F 42. The experience method of accounting for future loan loss reserves allows a bank to deduct from their income statement up to .6 percent of theireligible loans.Answer: FalseT F 43. After the Tax Reform Act of 1986, large banks (>$500 million in assets) were required to use the reserve method of accounting for future loan lossreserves.Answer: FalseT F 44. The number one source of revenue for a bank based on dollar volume is loan income.Answer: TrueT F 45. In looking at comparative balance sheets, it can be seen that large banks rely more heavily on nondeposit borrowings while small banks rely moreheavily on deposits.Answer: TrueT F 46. The Pension Fund industry is now larger than the Mutual Fund industry.Answer: FalseT F 47. Off-balance-sheet items for banks have declined in recent years.Answer: FalseT F 48. Except for banks, Savings & Loans and Savings Banks hold the most deposits.Answer: TrueT F 49. "Painting the tape" refers to the practice whereby banks understate their nonperforming loans.Answer: FalseT F 50. Financial statements issued by banks and nonblank financial service firms are looking increasingly similar today.Answer: TrueMultiple Choice Questions51.Bank assets fall into each of the following categories except:A)Loans.B)Investment securities.C)Demand deposits.D)Noninterest cash and due from banks.E)Other assets.Answer: C52.Banks generate their largest portion of income from:A)Loans.B)Short-term investment.C)Demand deposits.D)Long-term investments.E)Certificates of deposit.Answer: A53.Loans typically fall into each of the following categories except:A)Real estate.B)Consumer.C)Commercial and Industrial (business).D)Agricultural.E)Municipal.Answer: E54.Which of the following adjustments are made to gross loans and leases to obtainnet loans and leases?A)The loan and lease loss allowance is subtracted from gross loansB)Unearned income is subtracted from gross interest receivedC)Investment income is added to gross interest receivedD) A and B.E) A. and C.Answer: D55.An example of a contra-asset account is:A)The loan and lease loss allowance.B)Unearned income.C)Buildings and equipment.D)Revenue bonds.E)The provision for loan loss.Answer: A56.T he noncash expense item on a bank's Report of Income designed to shelter abank's current earnings from taxes and to help prepare for bad loans is called:A) Short-term debt interestB) Noninterest expenseC) Provision for taxesD) Provision for possible loan lossesE) None of the above.Answer: D57.A financial institution's bad-debt reserve, as reported on its balance sheet, iscalled:A) Unearned income or discountB) Allowance for possible loan lossesC) Intangible assetsD) Customer liability on acceptancesE) None of the aboveAnswer: B58.W hen a bank serves as a security dealer for certain kinds of securities (mainlyfederal, state, and local government obligations) the value of these securities is usually recorded in what account on a bank's Report of Condition?A) Investment SecuritiesB) Taxable and Tax-Exempt SecuritiesC) Trading Account SecuritiesD) Secondary ReservesE) None of the aboveAnswer: C59.The difference between noninterest income and noninterest expenses on a bank'sReport of Income is called:A) Net Profit MarginB) Net Interest IncomeC) Net Income After Provision for Possible Loan LossesD) Income or Loss Before Income TaxesE) Net Noninterest IncomeAnswer: E60.T he account that is built up by annual noncash expense deductions and issubtracted from Gross Loans on the Report of Condition is:A) Unearned incomeB) Nonperforming loansC) Allocated loan risk deductionsD) Allowance for possible loan lossesE) None of the above.Answer: D61.N onperforming loans are credits on which any scheduled loan repayments andinterest payments are past due for more than:A) 30 daysB) 60 daysC) 90 daysD) 180 daysE) None of the above.Answer: C62.O ne-time only transactions that often involve financial assets or real propertypledged as collateral behind a loan and upon which the bank has foreclosed affecta bank's account known as:A) Allowance for loan lossesB) Nonrecurring sales of assetsC) Asset gains or lossesD) Provision for loan and security lossesE) None of the above.Answer: B63.T he use of fixed assets, rather than financial assets, in order to increase earningsflowing to a bank's stockholders is known as:A) Plant and equipment investmentB) Financial leverageC) Operating leverageD) Nondeposit capitalE) None of the above.Answer: C64.B anks depend heavily upon borrowed funds supplied by customers with littleowners' capital invested. This means that banks make heavy use of:A) Financial leverageB) Capital restructuringC) Operating LeverageD) Margin borrowingE) None of the above.Answer: A65.W hen a loan is considered uncollectible, the bank's accounting department willwrite (charge) it off the books by reducing the ______ and the accounts.Which choice below correctly fills in the blank in the preceding sentence?A) PLL and Gross LoansB) ALL and Net LoansC) ALL and Gross LoansD) PLL and Net LoansE) None of the above.Answer: C66.T he common banking practice of selling those investment securities that haveappreciated in order to reap a capital gain and holding onto those securitieswhose prices have declined is known as:A) Gains tradingB) Performance bankingC) Loss control tradingD) Selective portfolio managementE) None of the above.Answer: A67.N oninterest revenue sources for a bank are called:A) Commitment fees on loansB) Fee incomeC) Supplemental incomeD) Noninterest marginE) None of the above.Answer: B68.L arge U.S. banks must use which of the methods listed below to determine theirprovision for loan loss expense?A) Experience methodB) Reserve methodC) Specific charge-off methodD) Historical cost methodE) None of the above.Answer: C69.A bank's temporary lending of excess reserves to other banks is labeled on thebalance sheet as:A) Fed Funds PurchasedB) Fed Funds SoldC) Money Market DepositsD) Securities Purchased for ResaleE) None of the aboveAnswer: B70.A bank sells shares of its common stock with a par value of $100 for $200 in themarket. Which two accounts on the bank's balance sheet are going to be affected?A) Retained earnings and capital surplus accountsB) Subordinated notes and debentures and commons stock outstanding accountsC) Retained earnings and common stock outstanding accountsD) Common stock outstanding and capital surplus accountsE) Only the common stock outstanding account is affectedAnswer: D71.A type of letter of credit which is widely used in international trade is known as:A) Banker's acceptanceB) Commercial paperC) Repurchase agreementD) Fed funds purchasedE) None of the aboveAnswer: A72.A bank which starts with ALL of $1.48 million at the beginning of the year, chargesoff worthless loans of $.94 million during the year, recovers $.12 million on loans previously charged off and charges current income for a $1.02 million provision for loan losses will have an ALL at the end of the year of:A) $.66 millionB) $3.32 millionC) $1.68 millionD) $1.28 millionE) The same amount as at the beginning of the yearAnswer: C73.A bank that has total interest income of $67 million and total noninterest incomeof $14 million. This bank has total interest expenses of $35 million and totalnoninterest expenses (excluding PLL) of $28 million. Its provision for loan losses is $6 million and its taxes are $5. What is this bank's net interest income?A) $7B) -$14C) $18D) $32E) None of the aboveAnswer: D74.A bank that has total interest income of $67 million and total noninterest incomeof $14 million. This bank has total interest expenses of $35 million and totalnoninterest expenses (excluding PLL) of $28 million. Its provision for loan losses is $6 million and its taxes are $5. What is this bank's net noninterest income?A) $7B) -$14C) $18D) $32E) None of the aboveAnswer: B75.A bank that has total interest income of $67 million and total noninterest incomeof $14 million. This bank has total interest expenses of $35 million and totalnoninterest expenses (excluding PLL) of $28 million. Its provision for loan losses is $6 million and its taxes are $5. What is this bank's net income?A) $7B) -$14C) $18D) $32E) None of the aboveAnswer: A76.W hich of the following financial statements shows the revenues and expense of abank over a set period of time?A) The statement of stockholders equityB) The funds-flow statementC) The report of financial conditionD) The report of incomeE) None of the aboveAnswer: D77.W hich of the following accounts is sometimes called the bank's primary reserves?A) Cash and deposits due from bankB) Investment securitiesC) Trading account securitiesD) Fed funds soldE) None of the aboveAnswer: A78.W hich of the following assets is the largest asset item on the bank's balance sheet?A) SecuritiesB) CashC) LoansD) Bank PremisesE) None of the aboveAnswer: C79.W hat financial service industry category is second to the banking industry in totalassets held:A) Mutual fundsB) ThriftsC) Investment banksD) Insurance companiesE) Pension fundsAnswer: A80.F ASB Rule 115 focuses primarily on bank:A) Deposit sourcesB) Investments in marketable securitiesC) Derivatives tradingD) Loan-loss reservesE) Federal fundsAnswer: B81.W hich of the following most accurately describes the principal type(s) of banknoninterest income:A) Fees from fiduciary transactionsB) Fees from deposit transactionsC) Fees from securities transactionsD) Fees from additional noninterest incomeE) All of the aboveAnswer: E82.F ee income arising from fiduciary transactions include all of the following except:A) Checking account maintenance feesB) Fees for managing and protecting a customer’s propertyC) Fees for recordkeeping for corporate securityD) Fees for dispersing interest and dividend payments for a corporationE) Fees for managing corporate and individual retirement plansAnswer: A83.You know the following information about the Miller State Bank:Gross Loans $300Miscellaneous Assets $50Deposits $390Total Equity $50Common Stock Par $5Non-Deposit Borrowings $60Investment Securities $150Net Premises $40Surplus $5Allowance for Loan Losses $50Deposits $390Total Assets $500Gross Premises $70Given this information, what is this firm’s Net Loans?A) $250B) $350C) $500D) $50E) $150Answer: A84.You know the following information about the Miller State BankGross Loans $300Miscellaneous Assets $50Deposits $390Total Equity $50Common Stock Par $5Non-Deposit Borrowings $60Investment Securities $150Net Premises $40Surplus $5Allowance for Loan Losses $50Deposits $390Total Assets $500Gross Premises $70Given this information, what is this firm’s Depreciation?A) $250B) $30C) $70D) $40E) $110Answer: B85.You know the following information about the Miller State BankGross Loans $300Miscellaneous Assets $50Deposits $390Total Equity $50Common Stock Par $5Non-Deposit Borrowings $60Investment Securities $150Net Premises $40Surplus $5Allowance for Loan Losses $50Deposits $390Total Assets $500Gross Premises $70Given this information, what is this firm’s Total Liabilities?A) $390B) $60C) $450D) $500E) $50Answer: C86.You know the following information about the Miller State BankGross Loans $300Miscellaneous Assets $50Deposits $390Total Equity $50Common Stock Par $5Non-Deposit Borrowings $60Investment Securities $150Net Premises $40Surplus $5Allowance for Loan Losses $50Deposits $390Total Assets $500Gross Premises $70Given this information, what is this firm’s Undivided Profits?A) $50B) $5C) $10D) $40E) $450Answer: D87.You know the following information about the Miller State BankGross Loans $300Miscellaneous Assets $50Deposits $390Total Equity $50Common Stock Par $5Non-Deposit Borrowings $60Investment Securities $150Net Premises $40Surplus $5Allowance for Loan Losses $50Deposits $390Total Assets $500Gross Premises $70Given this information, what is this firm’s Total Liabilities Plus Equity?A) $250B) $450C) $150D) $50E) $500Answer: E88.You know the following information about the Davis National BankTotal Interest Expenses ($500)Total Non Interest Income $100Securities Gains (Losses) $ 50Income Taxes ($ 80)Dividends to Stockholders ($ 40)Total Interest Income $800Total Non Interest Expenses ($150)Provision for Loan Losses ($100)Given this information, what is this firm’s Net Interest Income?A) $300B) $150C) ($50)D) $120E) $80Answer: A89.You know the following information about the Davis National BankTotal Interest Expenses ($500)Total Non Interest Income $100Securities Gains (Losses) $ 50Income Taxes ($ 80)Dividends to Stockholders ($ 40)Total Interest Income $800Total Non Interest Expenses ($150)Provision for Loan Losses ($100)Given this information, what is this firm’s Net Non Interest Income?A) $300B) $150C) ($50)D) $120E) $80Answer: C90.You know the following information about the Davis National BankTotal Interest Expenses ($500)Total Non Interest Income $100Securities Gains (Losses) $ 50Income Taxes ($ 80)Dividends to Stockholders ($ 40)Total Interest Income $800Total Non Interest Expenses ($150)Provision for Loan Losses ($100)Given this information, what is this firm’s Pretax Net Operating Income (or NetIncome before Extraordinary Items)?A) $300B) $150C) ($50)D) $120E) $80Answer: B91.You know the following information about the Davis National BankTotal Interest Expenses ($500)Total Non Interest Income $100Securities Gains (Losses) $ 50Income Taxes ($ 80)Dividends to Stockholders ($ 40)Total Interest Income $800Total Non Interest Expenses ($150)Provision for Loan Losses ($100)Given this information, what is this firm’s Net Income?A) $300B) $150C) ($50)D) $120E) $80Answer: D92.You know the following information about the Davis National BankTotal Interest Expenses ($500)Total Non Interest Income $100Securities Gains (Losses) $ 50Income Taxes ($ 80)Dividends to Stockholders ($ 40)Total Interest Income $800Total Non Interest Expenses ($150)Provision for Loan Losses ($100)Given this information, what is this firm’s Increase in Undivided Profits?A) $300B) $150C) ($50)D) $120E) $80Answer: E93.You know the following information about the Davis National BankTotal Interest Expenses ($500)Total Non Interest Income $100Securities Gains (Losses) $ 50Income Taxes ($ 80)Dividends to Stockholders ($ 40)Total Interest Income $800Total Non Interest Expenses ($150)Provision for Loan Losses ($100)Given this information, what is this firm’s Total Revenues?A) $800B) $850C) $150D) $950Answer: D94.You know the following information about the Webb State BankAccumulated Depreciation $40Net Loans $600Fed Funds Purchased and Repurchase Agreements $200Cash and Due from Banks $50Trading Account Securities $40Miscellaneous Assets $100Deposits $500Undivided Profits $140Gross Premises $90Surplus $40Subordinated Debt $100Investment Securities $160Common Stock Par $20Gross Loans $700Given this information, what is this firm’s Allowance for Loan Losses?A) $1300B) $1000C) $50D) $200E) $100Answer: E95.You know the following information about the Webb State BankAccumulated Depreciation $40Net Loans $600Fed Funds Purchased and Repurchase Agreements $200Cash and Due from Banks $50Trading Account Securities $40Miscellaneous Assets $100Deposits $500Undivided Profits $140Gross Premises $90Surplus $40Subordinated Debt $100Investment Securities $160Common Stock Par $20Gross Loans $700 Given this information, what is this firm’s Net Premises?A) $130B) $1000C) $50D) $200E) $100Answer: C96.You know the following information about the Webb State BankAccumulated Depreciation $40Net Loans $600Fed Funds Purchased and Repurchase Agreements $200Cash and Due from Banks $50Trading Account Securities $40Miscellaneous Assets $100Deposits $500Undivided Profits $140Gross Premises $90Surplus $40Subordinated Debt $100Investment Securities $160Common Stock Par $20Gross Loans $700 Given this information, what is this firm’s Total Non Deposit Borrowings?A) $1000B) $300C) $800D) $200E) $500Answer: B97.You know the following information about the Webb State BankAccumulated Depreciation $40Net Loans $600Fed Funds Purchased and Repurchase Agreements $200Cash and Due from Banks $50Trading Account Securities $40Miscellaneous Assets $100Deposits $500Undivided Profits $140Gross Premises $90Surplus $40Subordinated Debt $100Investment Securities $160Common Stock Par $20Gross Loans $700 Given this information, what is this firm’s Total Liabilities?A) $1000B) $300C) $800D) $200E) $500Answer: C98.You know the following information about the Webb State BankAccumulated Depreciation $40Net Loans $600Fed Funds Purchased and Repurchase Agreements $200Cash and Due from Banks $50Trading Account Securities $40Miscellaneous Assets $100Deposits $500Undivided Profits $140Gross Premises $90Surplus $40Subordinated Debt $100Investment Securities $160Common Stock Par $20Gross Loans $700 Given this information, what is this firm’s Total Equity?A) $1000B) $300C) $800D) $200E) $500Answer: D99.You know the following information about the Webb State BankAccumulated Depreciation $40Net Loans $600Fed Funds Purchased and Repurchase Agreements $200Cash and Due from Banks $50Trading Account Securities $40Miscellaneous Assets $100Deposits $500Undivided Profits $140Gross Premises $90Surplus $40Subordinated Debt $100Investment Securities $160Common Stock Par $20Gross Loans $700 Given this information, what is this firm’s Total Assets?A) $1000B) $300C) $800D) $200E) $500Answer: A100.Y ou know the following information about the Taylor National BankProvision for Loan Losses ($100)Income Taxes ($140)Non Interest Income $500Dividends ($60)Securities Gains (Losses) ($50)Interest Income $1500Non Interest Expense $750Interest Expenses $750Given this information, what is this firm’s Net Interest Income?A) $150B) $210C) $400D) ($250)E) $750Answer: E101.Y ou know the following information about the Taylor National Bank Provision for Loan Losses ($100)Income Taxes ($140)Non Interest Income $500Dividends ($60)Securities Gains (Losses) ($50)Interest Income $1500Non Interest Expense $750Interest Expenses $750Given this information, what is this firm’s Net Non Interest Income?A) $150B) $210C) $400D) ($250)E) $750Answer: D102.Y ou know the following information about the Taylor National BankProvision for Loan Losses ($100)Income Taxes ($140)Non Interest Income $500Dividends ($60)Securities Gains (Losses) ($50)Interest Income $1500Non Interest Expense $750Interest Expenses $750Given this information, what is this firm’s Net Operating Income or Net Income Before Extraordinary Income?A) $150B) $210C) $400D) ($250)E) $750。

商业银行管理彼得S罗斯英文原书第8版英语试题库Chap009

Chapter 9Risk Management: Asset-Backed Securities, Loan Sales, Credit Standbys, andCredit DerivativesFill in the Blank Questions1.When a bank sets aside a group of income-earning assets and then sells securitiesbased upon those assets it is ________ those assets.Answer: securitizing2.Often when loans are securitized they are passed on to a _________________ whopools the loans and sells securities.Answer: special purpose entity3.A(n) ________________________ allows a homeowner to borrow against the residual value oftheir residence.Answer: home equity loan4. _________________________ allow the bank to generate fee income after they have sold a loan.The bank continues to collect interest and principal from the borrowers andpasses these collections to the loan buyers.Answer: Servicing rights5.In a ________________________ an outsider purchases part of a loan from the selling financialinstitution. Generally the purchaser has no influence over the terms of the loan contract.Answer: participation loan6.A(n) ________________________ is a contingent claim of the bank that issues it. The issuingbank, in return for a fee, guarantees the repayment of a loan received by itscustomer or the fulfillment of a contract made by its customer to a third party.Answer: standby credit agreement7.A(n) ________________________ occurs when two banks agree to exchange a portion or all ofthe loan repayments of their customers.Answer: credit swap8.A(n) _________________ g uards against the losses in the value of a credit asset. It would payoff if the asset declines significantly in value or if it completely turns bad.Answer: credit option.9.A(n) _______________________ combines a normal debt instrument with a credit option. Itallows the issuer of the debt instrument to lower its loan repayments if somesignificant factor changes.Answer: credit linked note10.The _________________________ of a standby letter of credit is a bank or other investor who isconcerned about the safety of funds committed to the recipient of the standbyletter of credit. Answer: beneficiary11.A(n) ________________________ guarantees the s a specific rate of return on their credit asset.Bank A may agree to pay the total return on the loan to Bank B plus anyappreciation in the market value of the loan. In return Bank A will often getLIBOR plus a fixed spread plus any depreciation in the value of the loan.Answer: total return swap12.The ________________________ is the party that is requesting a standby letter of credit.Answer: account party13.The __________________ is the bank or financial institution which guarantees the payment ofthe loan in a standby letter of credit.Answer: issuer14.A(n) ________________________ is a loan sale where ownership of the loan is transferred tothe buyer of the loan, who then has a direct claim against the borrower.Answer: assignment15.Another type of loan sale is a(n) __________________ which is a short dated piece of alonger maturity loan, entitling the purchaser to a fraction of the expected loan income.Answer: loan strip16.A relatively new type of credit derivative is a CDO which stands for ______ .Answer: collateralized debt obligation17.Insurance companies are a prime ______ of credit derivatives.Answer: seller18.A(n) is an over-the-counter agreement offering protection againstloss when default occurs on a loan or other debt instrument.Answer: credit derivative19.A(n) is related to the credit option and is usually aimed at lendersable to handle comparatively limited declines in value but wants insurance against serious losses. Answer: credit default swap20.There has been an explosion in in recent years. These instruments reston pools of credit derivatives that mainly insure against defaults on corporatebonds. The creators of these instruments do not have to buy and pool actual bonds but can create these instruments and generate revenues from selling and trading in them.Answer: synthetic CDOs (Collateralized debt obligations)21.A rates the securities to be sold from a pool of securitized loansso that investors have a better idea of what the new securities are likely to be worth.Answer: credit rating agency22.A(n) is an assurance that investors will be repaid inthe event ofthe default of the underlying loans in a securitization. These can be internal or external to the securitization process and lower the risk of the securities.Answer: credit enhancement23.When the FHLMC creates CMOs they often use different which eachpromise a different coupon rate and which have different maturity and risk characteristics.24.Lenders can set aside a group of loans on their balance sheet, issue bonds andpledge the loans as collateral against the bonds in . These usually stay on the bank ’ bsa lance sheet as liabilities.25.FNMA (Fannie Mae) and FHLMC (Freddie Mac) are examples of .They appear to have the unofficial backing of the federal government in the event of default. Answer: government sponsored enterprises (GSEs)True/False QuestionsT F 26. Securitization is designed to turn illiquid loans into liquid assets in the form of securities sold in the open market.Answer: TrueT F 27. Securitization has the added advantage of generating fee income for banks.Answer: TrueT F 28. Securitized assets cannot be removed from a bank's balance sheet until they mature.Answer: FalseT F 29. Securitization raises the level of competition for the best-quality loans among banks. Answer: TrueT F 30. Servicing rights on loans sold consist of the collection of interest and principal payments from borrowers and monitoring borrower compliance withloan terms.Answer: TrueT F 31. A loan sold by a bank to another investor with recourse means the bank has given the investor a call option on the loan.Answer: FalseT F 32. An account party will seek a bank's standby credit guarantee if the bank's fee for issuing the guarantee is less than the value assigned the guarantee byits beneficiary.Answer: TrueT F 33. Securitization tends to lengthen the maturity of a bank's assets. Answer: FalseT F 34. Securitized assets as a source of bank funds are subject to reserve requirements set by the Federal Reserve Board.Answer: FalseT F 35. Securitizations of commercial loans usually carry the same regulatory capital requirements for a bank as the original loans themselves.Answer: TrueT F 36. Most loans that banks sell off their balance sheets have minimum denominations of at least a million dollars.Answer: TrueT F 37. Most loans that banks sell off their balance sheets carry interest rates that usually are connected to long-term interest rates (such as the 30-yearTreasury bond rate).Answer: FalseT F 38. In a participation loan the purchaser is an outsider to the loan contract between the financial institution selling the loan and the borrower.Answer: TrueT F 39. The buyer of a loan participation must watch both the borrower and the seller bank closely.Answer: TrueT F 40. Under an assignment ownership of a loan is transferred to the buyer, though the buyer still holds only an indirect claim against the borrower.Answer: FalseT F 41. Loan sales are generally viewed as risk-reducing for the selling financial institution. Answer: TrueT F 42. In a CMO, the different tiers (or tranches) of security purchasers face the same prepayment risk.Answer: FalseT F 43. A standby letter of credit substantially reduces the issuing bank's interest rate risk and liquidity risk.Answer: FalseT F 44. Securitization of loans can easily be applied to business loans since these loans tend to have similar cash flow schedules and comparable riskstructures.Answer: FalseT F 45. The advantage of a credit s that it allows each bank in the s broaden its market area and spread out its credit risk on its loans.Answer: TrueT F 46. Bank use of credit derivatives is dominated by the largest banks. Answer: True T F 47. The credit derivatives market has grown nine-fold during the recent years.Answer: TrueT F 48. Banks are the principal sellers of credit derivatives.Answer: FalseT F 49. Banks are one of the principal buyers of credit derivatives. Answer: True T F 50. Insurance companies are one of the principal sellers of credit derivatives.Answer: TrueMultiple Choice Questions51.Securitized assets carry a unique form of risk called:A)Default riskB)Inflation riskC)Interest-rate riskD)Prepayment riskE)None of the aboveAnswer: D52.Short-dated pieces of a longer-term loan, usually maturing in a few days or weeks, are called:A)Loan participationsB)Servicing rightsC)Loan stripsD)Shared creditsE)None of the aboveAnswer: C53.The party for whom a standby credit letter is issued by a bank is known as the:A)Account partyB)BeneficiaryC)RepresentativeD)Credit GuarantorE)None of the aboveAnswer: A54.When a bank issues a standby credit guarantee on behalf of one of its customers,the party receiving the guarantee is known as the:A)Account partyB)BeneficiaryC)ObligatorD)Servicing agentE)None of the aboveAnswer: B55.Securitization had its origin in the selling of securities backed byA)Credit card receivablesB)Residential mortgage loansC)Computer leasesD)Automobile loansE)Truck leasesAnswer: B56.Loan-backed securities, which closely resemble traditional bonds, carry variousforms of credit enhancements, which may include all of the following, EXCEPT:A)Credit letter guaranteeing repayment of the securities.B)Set aside of a cash reserve.C)Division into different risk classes.D)Early payment clauses.E)None of the above.Answer: D57.In some instances, a bank will sell loans and agree to give the loan purchaser recourseto the seller for all or a portion of those loans that become delinquent. In this case, the purchaser, in effect, gets a:A)Call option.B)Put option.C)Forward contract.D)Futures contractE)None of the above.Answer: B58.The key advantages of issuing standby letters of credit include which of the following:A)Letters of credit generate fee income for the bank.B)Letters of credit typically reduce the borrower's cost of borrowing.C)Letters of credit can usually be issued for a relatively low cost.D)The probability is low that the issuer of the letter of credit will be called upon to pay.E)All of the above.Answer: E59.Banks that issue standby letters of credit may face which of the following types of risk?A)Prepayment risk.B)Interest-rate risk.C)Liquidity risk.D)All of the above.E) B and C only.Answer: E59.By agreeing to service any assets that are packaged together in the securitizationprocess a bank can:A)Ensure the assets that are packaged and securitized remain in the package and are not sold off.B)Choose the best loans to go through the securitization process.C)Earn added fee income.D)Liquidate any assets it chooses.E)None of the above.Answer: C60.The difference in interest rates between securitized loans themselves and thesecurities issued against the loans is referred to as:A)The funding gapB)Residual income.C)Service returnsD)Security incomeE)None of the aboveAnswer: B61.If a credit letter is issued to backstop payments on loan-backed securities, thecredit letter is a form of:A)Collateralized assetB)Residual incomeC)Direct loan obligationD)Credit enhancementE)None of the aboveAnswer: D62.Loan sales by banks are generally of two types: (a) participation loans; and (b) . Theterm that correctly fills in the blank above is:A)AssignmentsB)Recourse loansC)Direct loansD)Subscription loansE)None of the above.Answer: A63. A standby credit letter is a (or an):A)Securitized stripB)Loan stripC)Contingent obligationD)Indirect loanE)None of the above.Answer: C64. A bank that wants to protect itself from higher credit costs due to a decrease inits credit rating might purchase ______ .A) A credit risk optionB) A standby letter of creditC) A credit linked noteD) A credit swapE)None of the aboveAnswer: A65.When two banks simply agree to exchange a portion of their customers' loanrepayments, they are using:A) A credit optionB) A standby letter of creditC) A credit linked noteD) A credit swapE)None of the aboveAnswer: D66. A debt instrument which allows the issuer to lower its coupon payments if somesignificant factor changes is called:A) A credit optionB) A standby letter of creditC) A credit linked noteD) A credit swapE)None of the aboveAnswer: C67.Which of the following is a risk of using credit derivatives?A)Credit derivatives do not protect against credit risk exposureB)The partner in the s option contract may fail to performC)Regulators may decide to lower the amount of capital needed for banks usingthese derivativesD)Regulators may decide that these derivatives make the bank more stable and efficientE)All of the above are risks of using credit derivativesAnswer: B68. A securitized asset where the asset used to back the securities is a loan based onthe residual value of a homeowner's residence is called:A) A mortgage backed securityB) A credit card backed securityC)An automobile backed securityD) A loan backed bondE) A home equity loan backed securityAnswer: E69. A financial institution plans to issue a group of bonds backed by a pool of automobile loans.However, they fear that the default rate on the automobile loans will rise wellabove 4 percent of the portfolio –the projected default rate. The financialinstitution wants to lower the interest payments if the loan default rate rises too high. Which type of credit derivative contract would you most recommend for this situation?A)Credit linked noteB)Credit optionC)Credit risk optionD)Total return swapE)Credit swapAnswer: A70. A bank is about to make a $50 million project loan to develop a new oil field and isworried that the petroleum engineer's estimates of the yield on the field areincorrect. The bank wants to protect itself in case the developer cannot repay the loan. Which type of credit derivative contract would you most recommend for this situation?A)Credit linked noteB)Credit optionC)Credit risk optionD)Total return swapE)Credit swapAnswer: B71. A bank plans to offer new subordinated notes in the open market next month but knowsthat its credit rating is being reviewed by a credit rating agency. The bank wants to avoid paying sharply higher credit costs. Which type of credit derivativecontract would you most recommend for this situation?A)Credit linked noteB)Credit optionC)Credit risk optionD)Total return swapE)Credit swapAnswer: C72. A bank is concerned about excess volatility in its cash flows from some recentbusiness loans it has made. Many of these loans have a fixed rate of interest and the bank's economics department has forecast a sharp increase in interest rates. The bank wants more stable cash flows. Which type of credit derivative contract would you most recommend for this situation?A)Credit linked noteB)Credit optionC)Credit risk optionD)Total return swapE)Credit swapAnswer: D73. A bank has a limited geographic area It would like to diversify its loan income withloans in other market areas but does not want to actually make loans in those areas because of their limited experience in those areas Which type of credit derivative contract would you most recommend for this situation?A)Credit linked noteB)Credit optionC)Credit risk optionD)Total return swapE)Credit swapAnswer: E74 A bank has a long term relationship with a particular business customer However,recently the bank has become concerned because of a potential deterioration in the customer's income In addition, regulators have expressed concerns about the bank's capital position The business customer has asked for a renewal of its $25 million dollar loan with the bank Which credit derivative can help this situation?A)Credit swapB)Loan saleC)Loan securitizationD)Credit risk optionE)Credit linked notesAnswer: B75 A bank has placed 5000 consumer loans in a package to be securitized These loans havean annual yield of 15 25 percent This bank estimates that the securities on these loans are priced to yield 10 95 percent The bank expects 1 45 percent of the loans will default Underwriting and advisory services will cost 25 percent and a credit guarantee if more loans default than expected will cost 35 percent What is theresidual income from this loan securitization?A) 3 70 percentB) 4 30 percentC) 2 25 percentD) 5 15 percentE)None of the aboveAnswer: C76.Bank use of credit derivatives is dominated byA)Community BanksB)The largest (over $1 billion) banksC)The retail banksD)None of the banksE)Banks do not use credit derivatives yetAnswer: B77.According to the text, in 2005 the securitization of loans reached:A)Million dollar marketB)Billion dollar marketC)Trillion dollar marketD)Market unknown in valueE)Small but growing marketAnswer: C78.The principal sellers of credit derivatives include all of the following except:A)Insurance companiesB)Securities dealersC)Fund management firmsD)BanksE)None of the aboveAnswer: D79.The bank or other lender whose loans are pooled is called:A)The originatorB)The special purpose entityC)The trusteeD)The servicerE)The credit enhancerAnswer: A80.Loans that are to be securitized pass to . This helps ensure that if the lendergoes bankrupt it does not affect the credit status of the pooled loans.A)The originatorB)The special purpose entityC)The trusteeD)The servicerE)The credit enhancerAnswer: B81.Someone appointed to ensure that the issuer fulfills all the requirements of thetransfer of the loans to the pool and provides all of the services promised toinvestors in the securities is called: A) The originatorB)The special purpose entityC)The trusteeD)The servicerE)The credit enhancerAnswer: C82.Someone who collects the payments on the securitized loans and passes those paymentson to the trustee is called:A)The originatorB)The special purpose entityC)The trusteeD)The servicerE)The credit enhancerAnswer: D83.Investors in securitized loans normally receive added assurance that they will berepaid in the form of guarantees against default issued by:A)The originatorB)The special purpose entityC)The trusteeD)The servicerE)The credit enhancerAnswer: E84.When an issuer of securitized loans divides them into different risk classes ortranches, they are providing an:A)Internal credit enhancementB)External credit enhancementC)Internal liquidity enhancementD)External liquidity enhancementE)None of the aboveAnswer: A85.When an issuer of securitized loans includes a standby letter of credit with thesecuritized loans, they are providing an:A)Internal credit enhancementB)External credit enhancementC)Internal liquidity enhancementD)External liquidity enhancementE)None of the aboveAnswer: B86.When an issuer of securitized loans sets aside a cash reserve to cover loandefaults, they are providing an:A)Internal credit enhancementB)External credit enhancementC)Internal liquidity enhancementD)External liquidity enhancementE)None of the aboveAnswer: A87.Which of the following is an advantage of securitizing loans?A) D iversifying a lender ’ s credit risk exposureB)Reducing the need to monitor each individual loan ’ s payment streamC)Transforming illiquid assets into liquid securitiesD)Serving as a new source of funds for lenders and attractive investments for investorsE)All of the above are advantages of securitizing loansAnswer: E88.Why are securitized loans often issued through a special purpose entity?A)Because the securitized loans often add risk to the bank and need to be held separatelyB)Because the securitized loans are not profitable for the bank and need to be held separatelyC)Because the special purpose entity might fail and this prevents the failure of the bankD)Because the bank might fail and this protects the credit status of thesecuritized loansE)All of the aboveAnswer: D89. A group of pooled loans used is expected to yield a return of 23%. The coupon ratepromised to investors on securities issued against the pool of loans is 8%. Thedefault rate on the pooled loans is expected to be 4.5%. The fee to compensate a servicing institution for collecting payments on the loans is 2%. Fees to set up credit and liquidity enhancements are 3%. The fee for providing advising how to set up the pool of securitized loans is 1%. What is the residual income on this pool of loans?A)18.5%B)9%C) 4.5%D)2%E)None of the aboveAnswer: C90.The coupon rate promised investors on securities issued against a pool of loans is6.5%. The default rate on the pool of loans is expected to be 3.5%. The fee tocompensate a servicing institution for collecting payments on the loan is 2%. Fees to set up credit and liquidity enhancements are 5%. The residual income on this pool of loans is 7%. What is the expected yield on this pool of loans?A)24%B)12%C)10%D) 6.5%E)None of the aboveAnswer: A91.In a collateralized mortgage obligation (CMO) a tranche:A) Promises a different return (coupon) to investorsB)A liquidity enhancementC)Carries a different risk exposureD)A and C aboveE)All of the aboveAnswer: D92.What is one of the advantages of using loan-backed bonds?A)Loans used as collateral for the bonds can be sold before the maturity of the bondsB)Loan-backed bonds have longer maturities than depositsC)Banks do not have to meet regulatory capital requirements on loans used as collateralD)Banks can use less loans as collateral than the amount of bonds issuedE)All of the above are advantages of loan-backed bonds Answer: B93.What is one of the disadvantages of using loan backed bonds?A)The cost of funding often risesB)There is greater default risk on the bondsC)Loans used as collateral for the bonds must be held until the bonds reach maturityD)Loan backed bonds have shorter maturities than depositsE)All of the above are disadvantages of loan-backed bonds Answer: C94.According to the textbook, what is the minimum size of the loan-backed securitiesoffering that are likely to be successful?A)$1 millionB)$10 millionC)$25 millionD)$50 millionE)$1 trillionAnswer: D95.Which of the following is a concern regulators have about securitization?A)The risk of being an underwriter for asset-backed securities that cannot be soldB)The risk of acting as a credit enhancer and underestimating the need for loan-loss reservesC)The risk that unqualified trustees will fail to protect investors in asset-backed instrumentsD)The risk that loan servicers will be unable to satisfactorily monitor loan performanceE)All of the above are concerns regulators have about securitization Answer: E96.What prompted a surge in loan sales in the 1980s?A)A wave of corporate buyoutsB)An increase in lesser developed country loansC) A loosening of government regulationsD)An increase in international lendingE)None of the aboveAnswer: A97.Why have the use of standby credit letters grown in recent years?A)The growth of bank loans sought by companies in recent yearsB)The decreased demand for risk reduction devicesC)The high cost of standby credit letters in recent yearsD)The rapid growth of direct financing by companiesE)All of the aboveAnswer: D98.Which of the following is true regarding regulatory rules for standby credit letters issuedby banks?A)They must list the standby credit letter as a liability on their balance sheetB)They must count standbys as loansC)They do not have to apply the same credit standards for approving standbys as direct loansD) They can apply lower capital standards to standbys than loans Answer: B99.Which of the following is true regarding regulatory rules for standby credit letters issuedby banks?A)They must list the standby credit letter as a liability on their balance sheetB)They do not have to list standby credit letters when assessing the risk exposure to asingle credit customerC)They must apply the same credit standards for approving standby credit letters as directloans D) They can apply lower capital standards to standby credit letters than loansE) None of the above is trueAnswer: C100.Regular collateralized debt obligations (CDO) have been surpassed by:A)Credit swapsB)Credit optionsC)Credit default swapsD)Total return swapsE)Synthetic collateralized debt obligationsAnswer: E101.According to research, off-balance-sheet standby credit letters reduce risk by:A)Increasing diversification of assetsB)Reducing the need for documentationC)Reducing probability of lossesD)Avoiding capital requirementsE)Increasing concentration of risk exposureAnswer: A102.What is the advantage of credit swaps for each partner?A)Broaden the number of marketsB)Broaden the variety of markets from which they collect loan revenues and principalC)Spread out the risk in the loan portfolioD)Avoiding capital requirementsE)A, B, and CAnswer: E103.What are the ways to reduce the risk of standby credit letters?A)Avoid renegotiating the terms of loans of SLC customersB)Specialize in SLCs issued by the same region and industryC)Sell participations in standbys in order to share risk with other lending institutionsD)Do not count standbys as loans when assessing the bank ’ s risk exposureE)All of the above are the ways to reduce the riskAnswer: C104.T he lesson(s) of the credit crisis of 2007-2009 is that the “ bankruptcy remote ”arrangement of the special-purpose entity (SPE):A)Reduces the need for securitizationB)Eliminates the probability of bankruptcy of the originator institutionC)May create problems if the underlying loans go bad in great numbersD)Eliminates the need for a trusteeE)All of the above are correctAnswer: C105.The lesson from the credit crisis of 2007-2009 is that securitized assets and credit swaps are:A)Complex financial instrumentsB)Difficult to correctly value and measure in terms of risk exposureC)Affected by cyclically sensitive markets in which financial problems may spread andresult in a financial contagionD)Possible to set in motion a financial contagion that cannot be easily stopped withoutactive government interventionE)All of the above are correctAnswer: E。

《商业银行管理》课后习题答案IMChap10

CHAPTER 10OFF-BALANCE-SHEET FINANCING IN BANKING AND CREDIT DERIVATIVESGoal of This Chapter: To learn about some of the newer financial instruments that banks have used in recent years to help reduce the risk exposure of their bank, and in some cases, to aid in generating new sources of fee income and in raising new funds to make loans and investments.Key Terms Presented in This ChapterSecuritization Contingent obligationCredit Enhancement IssuerLoan Sales Account partyServicing Rights BeneficiaryParticipation Loans Credit derivativesAssignments Credit swapLoan strip Credit optionFinancial guarantees Credit default swapStandby letter of credit (SLC)Chapter OutlineI. Introduction: Sources of Funds Shortages and Credit Risk for BanksII. Securitizing Bank Loans and Other AssetsA. Nature of SecuritizationB. Advantages of SecuritizationC. The Rate Structure of SecuritizationD. Beginnings of Securitization – The Home Mortgage Market1. Collateralized Mortgage Obligations – CMOs2. Securitization of Home Equity LoansE. Examples of Other Assets That Have Been SecuritizedF. Subordinated SecuritizationsG. Trends in Securitizations TodayH. Impact of Securitization on BanksIll. Sales of Loans to Raise FundsA. Nature of Loan SalesB. Loan Participations and Loan StripsC. Reasons Behind Loan SalesD. The Risks in Loan SalesIV. Standby Credit LettersA. The Nature of Standby Credits (Contingent Obligations)B. Types of Standby Credit LettersC. Advantages of StandbysD. The Structure of Standby Letters of CreditE. The Value and Pricing of Standby LettersF. Sources of Risk with Standby CreditsG. Regulatory Concerns about Standby Credit ArrangementsH. Research Studies of Standbys and Other Contingent ObligationsV. Credit DerivativesA. An Alternative to SecuritizationB. Credit SwapsC. Credit OptionsD. Credit Default SwapsE. Credit Linked NotesF. Risks Associated With Credit DerivativesVI. Summary of the ChapterConcept Checks10-1. What does securitization of assets mean?Securitization involves the pooling of groups of earning assets, removing those pooled assets from the bank’s balance sheet, and issuing securities against the pool. As the pooled assets generate interest income and repayments of principal the cash generated by the pooled earning assets flows through to investors who purchased those securities.10-2. What kinds of assets are most amenable to the securitization process?The best types of assets to pool are high quality, fairly uniform loans, such as home mortgages or credit card receivables.10-3. What advantages does securitization offer for banks?Securitization gives banks the opportunity to use their assets as sources of funds and, in particular, to remove lower-yielding assets from the balance sheet to be replaced with higher-yielding assets. 10-4. What risks of securitization should bank managers be aware of?Banks often have to use the highest-quality assets in the securitization process which means the remainder of the portfolio may become more risky, on average, increasing the bank’s capital requirements.10-5. Suppose a bank securitizes a package of its loans that bear an expected gross annual interest yield of 13 percent. The securities issued against the loan package promise interested investors an annualized yield of 8.25 percent. The expected default rate on the packaged loans is 3.5 percent. The bank agrees to pay an annual fee of 0.35percent to a security dealer in order to cover the cost of underwriting and advisory services and a fee of 0.25 percent to Arunson Mortgage Servicing Corporation to process the payments generated by the packaged loans. If the above items represent all the costs associated with this securitization transaction can you calculate the percentage amount of residual income the bank expects to earn from this particular transaction?The bank’s estimated residual income should be about:Gross Loan Security Expected Default On Underwriting Yield - Interest Rate - Packaged Loans - And Advisory Fee13% 8.25% 3.5% .35%Servicing Expected- Fee = Residual Income.25% .65%10-6. What advantages do sales of loans have for banks trying to raise funds?Loan sales permit a bank to get rid of less desirable or lower-yielding loans and allow them to raise additional funds.10-7. Are there any disadvantages to using loan sales as a significant source of bank funding? Loans may have to be sold at deep discounts and result in a higher average level of risk for the loans the bank still retains on its balance sheet.10-8. What is loan servicing?Loan servicing involves monitoring borrower compliance with a loan’s terms, collecting and recording loan payments, and reporting to the current holder of the loan.10-9. How can servicing be used to increase bank income?Many banks have retained servicing rights on the loans they have sold, earning fees from the current owners of those loans.10-10. What are standby credit letters? Why have they grown so rapidly in recent years? Standby credit letters are promises of a bank or other lender to pay off an obligation of one of its customers in case that customer cannot pay. There are several reasons that standby credit agreements have grown. There has been a tremendous growth in direct financing by companies (issuance of commercial paper) and with growing concerns about default risk on these direct obligations banks have been asked to provide a credit guarantee. Another reason for their growth is the ability of the bank to use their skills to add fee income to the bank Another reason is that these have a relatively low cost for the bank. Finally banks and customers perceive that there has been an increase in economic fluctuations and there has been increased demand for risk reducing devices.10-11. Who are the principal parties to a standby credit agreement?The principal parties to a standby credit agreement are the issuing bank or other institution, the account party who requested the letter, and the beneficiary who will receive payment from the issuing institution if the account party cannot meet its obligation.10-12. What risks accompany a standby credit letter for (a) the issuing bank and (b) the beneficiary?Standbys present the issuing bank with the danger that the customer whose credit the bank has backstopped with the letter will need a loan. That is, the bank’s contingent obligation will become an actual liability, due and payable. The beneficiary that has to collect on the letter must be sure it meets all the conditions required for presentation of the letter or it will not be able to recover its funds.10-13 How can a bank mitigate the risks inherent in issuing standby credit letters?Bankers can use various devices to reduce risk exposure from the standby credit letters they have issued, such as:1. Frequently renegotiating the terms of any loans extended to customers who havestandby credit guarantees so that loan terms are continually adjusted to thecustomers’ changing circumstances and there is less need for the beneficiaries ofthose guarantees to press for collection.2. Diversifying standby letters issued by region and by industry to avoidconcentration of risk exposure.3. Selling participations in standbys in order to share risk with a variety of lendinginstitutions.10-14. Why were credit derivatives developed? What advantages do they have over other loan sales and securitizations, if any?Credit derivatives were developed because not all loans can be pooled. In order to be pooled, the group of loans has to have common features such as maturities and cash flow patterns and many business loans do not have those common features. Credit derivatives can offer the beneficiary protection in the case of loan default and may help the bank reduce its credit risk and possibly its interest rate risk as well.10-15. What is a credit swap? For what kinds of situations was it developed?A credit swap is where two lenders agree to swap portions of their customer’s loan repayments. It was developed so that banks do not have to rely on one narrow market area. They can spread out the risk in the portfolio over a larger market area.10-16. What is a total return swap? What advantages does it offer the swap’s beneficiary’s institution?A total return swap is a type of credit swap where the dealer guarantees the swap parties a specific rate of return on their credit assets. A total return swap can allow a bank to earn a more stable rate of return than it could earn on its loans. This type of arrangement can also shift the credit risk and the interest rate risk from one bank to another.10-17. How do credit options work? What circumstances result in the option contract paying off?A credit option helps guard against losses in the value of a credit asset or helps offset higher borrowing costs. A bank which purchases a credit option contract will exercise their option if the asset declines significantly in value or loses its value completely. If the assets are paid off as expected then the option will not be exercised and the bank will lose the premium they paid for the option. A bank can also purchase a credit option which will be exercised if their borrowing costs rise above a specified spread between their cost and a riskless asset.10-18. When is a credit default swap useful? Why?A credit default swap is a credit option written on a portfolio of assets or a credit swap on a particular loan where the other bank in the swap agrees to pay the first bank a certain fee if the loan defaults. This type of arrangement is designed for banks that can handle relatively small losses but want to protect themselves from serious losses.10-19. Of what use are credit-linked notes?A credit-linked note allows the issuer of a note to lower the coupon payments if some significant fact changes. For example, if more loans on which the notes are based default than expected, the coupon payments on the notes can be lowered. The lender has taken on credit-related insurance from the investors who have purchased the note.10-20. What risks do credit derivatives pose for banks using them? What is the attitude of the regulatory community, thus far, toward banks using these credit-related instruments? In your opinion what should regulators do about the recent rapid growth of this market, if anything? There are several risks associated with these instruments. One risk is that the other party in the swap or option may fail to meet their obligation. Courts may rule that these instruments are illegal or improperly drawn. These types of instruments are relatively new and the markets for these instruments are relatively thin. If a bank needs to resell one of these contracts they may have difficulty finding a buyer or they may not be able to sell it at a reasonable price. So far regulators have left this market virtually unregulated, although this could change any time. Regulators need to understand clearly the benefits and risks of these types of credit instruments and act to ensure the safety of the banks.Problems10-1. Deltone National Bank has placed a group of 10,000 consumer loans bearing an average expected gross annual yield of 14.5 percent in the securitization process. The expected costs are:Interest on Securities Issued 10.08%Expected Default Rate 2.67Investment Banking Fees 0.65Liquidity Facility 0.45Credit Guarantee 0.55Sum of Expected Costs 14.40%The estimated residual income for Deltone National Bank is:Gross Annual Sum of Estimated ResidualYield on Loans - Expected Costs of = Income ofof 14.50% 14.40% .10%10-2. Ryfield Corporation is requesting a loan for repair of some assembly-line equipment in the amount of $5 million. The 9-month loan is priced by First National Bank at a 9 ¼ percent rate of interest. However, the bank tells Ryfield that if it obtains a suitable credit guarantee the loan will be priced at 9 percent. Quinmark Bank agrees to sell Ryfield a standby credit guarantee for $10,000. Is Ryfield likely to buy the standby credit agreement. Please explain.The interest savings from having the credit guarantee would be:[$5 mill. * 0.0925 * ¾] - [$5 mill. x 0.0900 * ¾] = $9,375Clearly, the $10,000 guarantee is overpriced and will not be accepted.10-3. First Security National Bank has a $30 million, 5-year term loan request from United Safeco Industries, about half of which will be used to buy new stamping machines used in the manufacture of metal toys and containers. The remainder of the funds are to be used to help fund a leveraged buyout of Calem Corporation which imports video equipment. However, the bank wishes to reduce its aggregate risk exposure from funding leveraged buy-outs. A forecast of higher interest rates argues against locking the bank in to longer-term, less flexible loan agreements currently.Does the bank have any service option in the form of off-balance-sheet instruments that could help this customer meet its credit needs while avoiding committing $30 million in reserves for afive-year loan? What would you recommend that management do to keep United Safeco happy with its current banking relationship? Could the bank earn any fee income if it pursued your idea? In view of these reasonable objectives on the part of First Security National Bank’s management, the bank should consider recommending that the leveraged buy-out portion of the request be handled by an offering of bonds or, perhaps, 5-year notes, with the bank issuing a standby letter of credit for a portion (though probably not all) of the bond or note issue. Armed with First Security’s standby credit agreement, United Safeco should be able to borrow through a security issue at a substantially lower interest rate. First Security could sell participations in the standby credit to share its risk exposure.For the portion of the loan that calls for the purchase of new assembly-line equipment, management might seriously consider proposing a shorter-term loan for about one-third toone-half the total amount requested by Safeco. This loan would be secured by a pledge of the new equipment plus sufficient covenants to insure the maintenance of adequate liquidity and require bank approval before significant amounts of other forms of debt are undertaken.First Security could generate fee income from this relationship by assessing a fee for issuing the standby letter of credit. The fee for a standby letter of credit typically ranges from ½ percent to 1 percent of the amount of the standby guarantee, depending upon the bank’s assessment of the degree of risk exposure in the guarantee.Currently, the interest rate on three-month Eurodollar deposits in London is 8.4 percent. Federal funds and six-month CDs are trading in the United States at 8.55 percent and 8.21 percent, respectively. Term loans to comparable-quality corporate borrowers are trading at 1/8 to ¼ percentage point above the three-month Eurodollar rate and ¼ to ½ point over thesecondary-market CD rate.Is there a way that First Security National could earn at least as much fee income by providing United Safeco with support services as it could from making the loan United Safeco has asked for (after all loan costs are taken into account)? Please explain how the customer could also benefit even if the bank does not make the loan requested.If United Security National issues a standby letter of credit on behalf of United Safeco as described above, both parties should benefit. United Security, by issuing the standby credit agreement, does not have to tie up $30 million in reserves for an extended period of time as it would if it made the requested loan, particularly in a projected rising interest rate environment. The ½ percent to 1 percent fee would compare favorably in amount to the 1/8 to ¼ percent spread over the Eurodollar rate or the ¼ to ½ percent spread over the federal funds or CD rate that currently prevails in the market. Under the risk-based capital standards now in effect, the standby letter of credit will require the bank to hold capital in an amount equal to the capital requirement for the loan. Therefore, United Security National will have the same capital requirement for either transaction, the loan or the standby letter of credit.Also, as stated above, United Safeco should be able to issue bonds or notes at a more favorable rate with United Security National’s standby letter of credit behind them.Alternative Scenario:Given: The market rate on 90-day Eurodollar deposits drops to 7.60 percent and market interest rates on federal funds and six-month CDs fall to 7.45 percent and 7.55 percent, respectively. All other factors remain constant.Would this substantial rate decline change the relative attractiveness of First Security National’s options in this instance? Why or why not?In view of management’s position rega rding the funding of leveraged buy-outs, it is unlikely that the decline in interest rates, although significant, would change the relative attractiveness of First Security National’s options. Since the rate on a loan would be quoted relative to these bas e ratesand the spread will not change, the fee income generated by issuing the standby letter of credit would still be the more attractive option for the bank.10-4 Ellis Money Center Bank has served as the principal banker for Red Hills Corporation (RHC) for 15 years and their relationship has been both rewarding and friendly during all that time. However, Ellis bank’s senior management is somewhat troubled over recent developments at RHC.The management of the company, which manufactures selected electronic components for two computer firms, has recently launched a new on-line affiliate that sells office products via the internet. RHC has asked the bank for a renewal of its existing $15.75 million operating credit at prime (currently 8.75%) plus half. To be sure cash flows from the on-line sales operation have grown at an “adequate” pace (about 12 percent annually) but the new division has not yet become profitable despite a flurry of on-line activity and there are indications that operating costs are now rising more rapidly than before. Moreover, new on-line competition has appeared within the last 4 months.Ellis’ commercial loan committee believes that RHC’s market share in both its traditional product lines and in its new on-line venture have peaked and begun to decline lately. John Thomas, Ellis’ principal loan officer involved in this relationship, has tried to encourage senior management at RHC to seek more outside capital, especially as a support for its internet sales affiliate., but RHC’s management has, so far, declined to comment. Instead RHC contends that the renewal of its bank credit line should be “automatic” at this point in their long relationship.Mr. Thomas has asked your advice on this possibly troublesome problem, noting that with inflation apparently now under control the bank’s economics department is forecasting a lower prime rate in the near future. Moreover, the most recent bank examiners’ report on Ellis’ own financial condition has just lowered the bank’s overall qu ality rating from 1 to2 (on a 1 to 5 scale) due, in part, to a decline in the bank’s capital to risk-assets ratio and its higher loan-loss provision. Based on what you read in this chapter can you suggest a way for the bank to preserve its satisfactory relationship with RHC and still protect its financial position and loan portfolio quality?One possible answer to this problem is to make the loan to RHC and then consider a loan sale after the loan is made. This can help preserve the relationship between RHC and Ellis but at the same time allow a riskier asset to be removed from the balance sheet. This will also help Ellis improve its capital position and reduce both its credit risk and interest rate risk. This should help reduce pressure from regulators at the same time they maintain their relationship with a valuable customer. In addition, if Ellis keeps the servicing rights to the loan they can also generate fee income fro m this loan.Other possibilities for solving this problem include Ellis entering into a total return swap for this loan with another bank. Ellis would agree to give all interest and principal payments to the other bank as well as any increase in the loan’s market value. In return Ellis would get LIBOR plus some spread. In essence, the other bank would bear the credit risk on the loan. One last way to handle this problem is for Ellis to purchase a credit option on this loan after it is made. They couldenter into a contract that would pay off if the loan declines significantly in value or defaults. This would be the same as purchasing insurance against this particular loan. If the loan is good and pays off in full they would lose the premium they paid for the option. However, they would be protected against loss on this loan. These possibilities might not solve their regulatory problems as well but would help protect them from loss.10-5 What type of credit derivatives contract would you recommend for each of the following situations:a. A bank plans to issue a group of bonds backed by a pool of credit card loans but fears that the default rate on these credit card loans will rise above 6 percent of the portfolio – the default rate it has projected. The bank wants to lower the interest costs on the bonds in case the loan default rate is too high.The best solution to this problem is to use credit linked notes. The interest payments on these notes will change if significant factors change.b. A bank is about to make a $50 million project loan to develop a new gas field and is concerned about the risks involved if petroleum geologists’ estimates of the field’s potential yield turn out to be much too high and the borrowing developer cannot repay.One possibility for solving this problem is to use a credit option. If the developer cannot repay the loan then the option would pay off. They would lose their premium if the developer can repay the loan but they are protected against significant loss.c. A bank holding company plans to offer new capital notes in the open market next month, but knows that the company’s credit rating is being reevaluated by two credit-rating agencies. The holding company wants to avoid paying sharply higher credit costs if its rating is lowered by the investigating credit-rating agencies.A credit risk option would be a good solution to this problem because it protects the bank from higher borrowing costs in the future. If the borrowing costs rise above the spread spec ified in the option contract, the contract would pay off.d. A bank is concerned about possible excess volatility in its cash flow off a recently made group of commercial real estate loans supporting the building of several apartment complexes. Moreover, many of these loans were made at fixed interest rates, and the bank’s economics department has forecast a substantial rise in capital market interest rates. The bank’s management would prefer a more stable cash flow emerging from this group of loans if it could find a way to achieve it.One possibility to solve this problem would be to enter into a total return swap with another bank. The other bank would receive total payments of interest and principal on this loan as well as the price appreciation on this loan. The original bank would receive LIBOR plus some spread in return as well as compensation for any depreciation in value of the loan.e. First National Bank of Ashton serves a relatively limited geographic area centered around a moderate-sized metropolitan area. It would like to diversify its loan income based upon loans from other market areas it does not presently serve, but does not wish to make loans itself in these other market areas due to its lack of familiarity with loan markets outside the region it has served for many years. Is there a credit derivative contract that could help the bank achieve the loan portfolio diversification it seeks?This bank could enter into a credit swap with another bank. This swap agreement means that the two banks simply exchange a portion of their customers’ loan repayments. The purpose of this type of swap agreement is to help the two banks diversify their market area with having to make loans in an unfamiliar area.Web Site Problems1. As a stock analyst following the banking industry, you are especially concerned about the growth of off-balance sheet financing relative to the size of several leading banks in the industry. Your argument is that these off-balance sheet financial tools have, in fact, increased rather than reduced bank risk in many cases. What web sites do you think you could use to help you prove your point?One web site that would be somewhat helpful would be the FDIC web site. From this web site you could go to the UBPR and examine the growth of off-balance sheet items relative to the size of the bank over the last several years. You could determine whether these items have, in fact grown over the last several years. However, this does not tell you anything about the risk of these items or any changes in the risk of the bank as a result. There are a couple of ways to examine this issue. One way is to look at the reports by the Federal Reserve and the FDIC on these issues to see what their opinions of the changing risks of banks are. Another way is see what is being discussed is to do a search on risk of off-balance sheet items for banks and see if there have been any prominent discussions of these issues. As of this time, there does not appear to be much discussion ofoff-balance sheet items on the web so it may be that the risk of banks has not increased recently asa result of using off-balance sheet items.2. Is it true that risk is increasing in banking due, in part, to the rise of many off-balance sheet activities? Are there any web sites that appear to discuss this possible trend and could provide you with more information about what may be happening to bank risk?As mentioned in the previous question, two sites that would be good to check for trends in bank risk and the influence of off-balance sheet activities are the FDIC and the Federal Reserve. Both of these agencies are keeping a close eye on off-balance sheet activities of banks and would quickly notice any changes in bank risk. One article that was found at the current time is located at /publ/bcbsc134.pdf. It appears that one of the issues that is gaining attention now is the issue of adequate reporting of major off-balance sheet activities so that regulators and investors can be completely informed about the risks that banks face. As new types of o ff-balance sheet items are developed this will continue to be an important issue.。

商业银行管理ROSEe课后答案chapter

CHAPTER 6MEASURING AND EVALUATING THE PERFORMANCE OF BANKS AND THEIR PRINCIPAL COMPETITORSGoal of This Chapter: The purpose of this chapter is to discover what analytical tools can be applied to a bank’s financial statements so that management and the public can identify the most critical problems inside each bank and develop ways to deal with those problemsKey Topics in This Chapter•Stock Values and Profitability Ratios•Measuring Credit, Liquidity, and Other Risks•Measuring Operating Efficiency•Performance of Competing Financial Firms•Size and Location Effects•The UBPR and Comparing PerformanceChapter OutlineI. Introduction:II. Evaluating a Bank's PerformanceA. Determining Long-Range ObjectivesB. Maximizing The Value of the Firm: A Key Objective for Nearly AllFinancial-Service InstitutionsC. Profitability Ratios: A Surrogate for Stock Values1. Key Profitability Ratios2. Interpreting Profitability RatiosD. Useful Profitability Formulas for Banks and Other Financial Service CompaniesE. Breaking Down Equity Returns for Closer AnalysisF. Break-Down Analysis of the Return on AssetsG. What a Breakdown of Profitability Measures Can Tell UsH. Measuring Risk in Banking and Financial Services1. Credit Risk2. Liquidity Risk3. Market Risk4. Interest-Rate Risk5. Operational Risk6. Legal and Compliance Risk7. Reputation Risk8. Strategic Risk9. Capital RiskI. Other Goals in Banking and Financial Services ManagementIII. Performance Indicators among Banking’s Key CompetitorsIV. The Impact of Size on PerformanceA. Size, Location and Regulatory Bias in Analyzing The Performance of Banks andCompeting Financial InstitutionsB. Using Financial Ratios and Other Analytical Tools to Track BankPerformance--The UBPR.V. Summary of the ChapterAppendix to the Chapter - Improving the Performance of Financial Firms Through Knowledge: Sources of Information on the Financial-Services IndustryConcept Checks6-1. Why should banks and other corporate financial firms be concerned about their level of profitability and exposure to risk?Banks in the U.S. and most other countries are private businesses that must attract capital from the public to fund their operations. If profits are inadequate or if risk is excessive, they will have greater difficulty in obtaining capital and their funding costs will grow, eroding profitability. Bank stockholders, depositors, and bank examiners representing the regulatory community are all interested in the quality of bank performance. The stockholders are primarily concerned with profitability as a key factor in determining their total return from holding bank stock, while depositors (especially large corporate depositors) and examiners typically focus on bank risk exposure.6-2. What individuals or groups are likely to be interested in these dimensions of performance for a bank or other financial institution?The individuals or groups likely to be interested in bank profitability and risk include other banks lending to a particular bank, borrowers, large depositors, holders of long-term debt capital issued by banks, bank stockholders, and the regulatory community.6-3. What factors influence the stock price of a financial-services corporation?A bank's stock price is affected by all those factors affecting its profitability and risk exposure, particularly its rate of return on equity capital and risk to shareholder earnings. A bank can raise its stock price by creating an expectation in the minds of investors of greater earnings in the future, by lowering the bank's perceived risk exposure, or by a combination of increases in expected earnings and reduced risk.6-4. Suppose that a bank is expected to pay an annual dividend of $4 per share on its stock in the current period and dividends are expected to grow 5 percent a year every year, and the minimum required return to equity capital based on the bank's perceived level of risk is 10 percent. Can you estimate the current value of the bank's stock?In this constant dividend growth rate problem the current value of the bank's stock would be: P o = D1 / (k – g) = $4 / (0.10 – 0.05) = $80.6-5. What is return on equity capital and what aspect of performance is it supposed to measure? Can you see how this performance measure might be useful to the managers of financial firms? Return on equity capital is the ratio of Net Income/Total Equity Capital. It represents the rate of return earned on the funds invested in the bank by its stockholders. Financial firms have stockholders, too who are interested in the return on the funds that they invested.6-6 Suppose a bank reports that its net income for the current year is $51 million, its assets totally $1,144 million, and its liabilities amount to $926 million. What is its return on equity capital? Is the ROE you have calculated good or bad? What information do you need to answer this last question?The bank's return on equity capital should be:ROE = Net Income = $51 million = .098 or 9.8 percentEquity Capital $1,444 mill.-$926 mill.In order to evaluate the performance of the bank, you have to compare the ROE to the ROE of some major competitors or some industry average.6-7 What is the return on assets (ROA), and why is it important? Might the ROA measure be important to banking’s key competitors?Return on assets is the ratio of Net Income/Total Assets. The rate of return secured on a bank's total assets indicates the efficiency of its management in generating net income from all of the resources (assets) committed to the institution. This would be important to banks and their major competitors.6-8. A bank estimates that its total revenues will amount to $155 million and its total expenses (including taxes) will equal $107 million this year. Its liabilities total $4,960 million while its equity capital amounts to $52 million. What is the bank's return on assets? Is this ROA high or low? How could you find out?The bank's return on assets would be:ROA = Net Income = $155 mill. - $107 mill. = 0.0096 or 0.96 percent Total Assets $4,960 mill. + $52 mill.The size of this bank's ROA should be compared with the ROA's of other banks similar in size and location to determine if this bank's ROA is high or low relative to the average forcomparable banks.6-9. Why do the managers of financial firms often pay close attention today to the net interest margin and noninterest margin? To the earnings spread?The net interest margin (NIM) indicates how successful the bank has been in borrowing funds from the cheapest sources and in maintaining an adequate spread between its returns on loans and security investments and the cost of its borrowed funds. If the NIM rises, loan and security income must be rising or the average cost of funds must be falling or both. A declining NIM is undesirable because the bank's interest spread is being squeezed, usually because of rising interest costs on deposits and other borrowings and because of increased competition today.In contrast, the noninterest margin reflects the banks spread between its noninterest income (such as service fees on deposits) and its noninterest expenses (especially salaries and wages and overhead expenses). For most banks the noninterest margin is negative. Management will usually attempt to expand fee income, while controlling closely the growth of noninterest expenses in order to make a negative noninterest margin less negative.The earnings spread measures the effectiveness of the bank's intermediation function of borrowing and lending money, which, of course, is the bank's primary way of generating earnings. As competition increases, the spread between the average yields on assets and the average cost of liabilities will be squeezed, forcing the bank's management to search for alternative sources of income, such as fees from various services the bank offers.6-10. Suppose a banker tells you that his bank in the year just completed had total interest expenses on all borrowings of $12 million and noninterest expense of $5 million, while interest income from earning assets totaled $16 million and noninterest revenues added to a total of $2 million. Suppose further that assets amounted to $480 million of which earning assets represented 85 percent of total assets, while total interest-bearing liabilities amounted to 75 percent of total assets. See if you can determine this bank's net interest and noninterest margins and its earnings base and earnings spread for the most recent year.The bank's net interest and noninterest margins must be:Net Interest = $16 mill. - $12 mill. Noninterest = $2 mill. - $5 mill.Margin $480 mill. Margin $480 mill.=.00833 = -.00625The bank's earnings spread and earnings base are:Earnings = $16 mill. - $12 mill.Spread $480 mill * 0.85 $480 mill. * 0.75= .0392 =.0333Earnings Base = $480 mill. - $480 mill. * 0.15 = 0.85 or 85 percent$480 mill.6-11. What are the principal components of ROE and what do each of these components measure?The principal components of ROE are:a. The net profit margin or net after-tax income to operating revenues which reflects the effectiveness of a bank's expense control program;b. The degree of asset utilization or ratio of operating revenues to total assets which measures the effectiveness of managing the bank's assets, especially the loan portfolio; and,c. The equity multiplier or ratio of total assets to total equity capital which measures a bank's use of leverage in funding its operations.6-12. Suppose a bank has an ROA of 0.80 percent and an equity multiplier of 12x. What is its ROE? Suppose this bank's ROA falls to 0.60 percent. What size equity multiplier must it have to hold its ROE unchanged?The bank's ROE is:ROE = 0.80 percent *12 = 9.60 percent.If ROA falls to 0.60 percent, the bank's ROE and equity multiplier can be determined from: ROE = 9.60% = 0.60 percent * Equity MultiplierEquity Multiplier = 9.60 percent = 16x.0.60 percent6-13. Suppose a bank reports net income of $12, before-tax net income of $15, operating revenues of $100, assets of $600, and $50 in equity capital. What is the bank's ROE?Tax-management efficiency indicator? Expense control efficiency indicator? Asset management efficiency indicator? Funds management efficiency indicator?The bank's ROE must be: ROE = 50$12$ = 0.24 or 24 percent Its tax-management, expense control, asset management, and funds management efficiency indicators are:Tax Management = $12 Expense Control = $15Efficiency indicator $15 Efficiency Indicator $100= .8 or 80 percent =.15 or 15 percentAsset Management = $100 Funds Management = $600Efficiency Indicator $600 Efficiency Indicator $50= 0.1666 or 16.67 percent = 12 x6-14. What are the most important components of ROA and what aspects of a financial institution’s performance do they reflect?The principal components of ROA are:a. Total Interest Income Less Total Interest Expense divided by Total Assets, measuring a bank's success at intermediating funds between borrowers and lenders;b. Provision for Loan Losses divided by Total Assets which measures management's ability to control loan losses and manage a bank's tax exposure;c. Noninterest Income less Noninterest Expenses divided by Total Assets, which indicates the ability of management to control salaries and wages and other noninterest costs and generate tee income;d. Net Income Before Taxes divided by Total Assets, which measures operating efficiency and expense control; ande. Applicable Taxes divided by Total Assets, which is an index of tax management effectiveness. 6-15. If a bank has a net interest margin of 2.50%, a noninterest margin of -1.85%, and a ratio of provision for loan losses, taxes, security gains, and extraordinary items of -0.47%, what is its ROA?The bank's ROA must be:ROA = 2.50 percent - 1.85 percent - 0.47 percent = 0.18 percent6-16. To what different kinds of risk are banks and their financial-service competitors subjected today?a. Credit Risk -- the probability that loans and securities the bank holds will not pay out as promised.b. Liquidity Risk -- the probability the bank will not have sufficient cash on hand in the volume needed precisely when cash demands arise.c. Market Risk -- the probability that the value of assets held by the bank will decline due to falling market prices.d. Interest-Rate Risk - the possibility or probability interest rates will change, subjecting the bank to lower profits or a lower value for the firm’s capital.e. Operational Risk –the uncertainly regarding a financial firm’s earnings due to failures in computer systems, employee misconduct, floods, lightening strikes and other similar events.f. Legal and Compliance Risk –the uncertainty regarding a financial firm’s earnings due to actions taken by our legal system or due to a violation of rules and regulationsg. Reputation Risk – the uncertainty due to public opinion or the variability in earnings due to positive or negative publicity about the financial firmh. Strategic Risk – the uncertainty in earnings due to adverse business decisions, lack or responsiveness to changes and other poor decisions by managementi. Capital Risk – the risk that the value of the assets will decline below the value of the liabilities. All of the other risks listed above can affect earnings and the value of the assets and liabilities and therefore can have an effect on the capital position of the firm.6-17. What items on a bank's balance sheet and income statement can be used to measure its risk exposure? To what other financial institutions do these risk measures apply?There are several alternative measures of risk in banking and financial service firms. Capital risk is often measured by bank capital ratios, such as the ratio of total capital to total assets or total capital to risk assets. Credit risk can be tracked by such ratios as net loan losses to total loans or relative to total capital. Liquidity risk can be followed by using such ratios as cash assets to total assets or by total loans to total assets. Interest-rate risk may be indicated by such ratios as interest-sensitive liabilities to interest-sensitive assets or the ratio of money-market borrowings to money-market assets.6-18. A bank reports that the total amount of its net loans and leases outstanding is $936 million,its assets total $1,324 million, its equity capital amounts to $110 million, and it holds $1,150 million in deposits, all expressed in book value. The estimated market values of the bank's total assets and equity capital are $1,443 million and $130 million, respectively. The bank's stock is currently valued at $60 per share with annual per-share earnings of $2.50. Uninsured deposits amount to $243 million and money market borrowings total $132 million, while nonperforming loans currently amount to $43 million and the bank just charged off $21 million in loans. Calculateas many of the bank's risk measures as you can from the foregoing data.Net Loans and Leases = $936 mill. Uninsured Deposits $243 mill.Total Assets $1,324 mill. Total Deposits $1,150 mill.0.7069 or 70.69 percent 0.2113 or 21.13 percentEquity Capital = $130 mill. Stock Price $60Total Assets $1,443 mill. Earnings Per Share $2.50 = 0.0901 or 9.01 percent = 24 XNonperforming Assets = $43 mill. =0.0459 or 4.59 percentNet Loans and Leases $936 mill.Charge-offs of loans = $21 Purchased Funds = $243 mill. + $132 mill. Total Loans and Leases $936 Total Liabilities $1,324 mill. - $110 mill.=.0224 or 2.24 percent .3089 or 30.89 percentBook Value of Assets = $1324 =0.9175 or 91.75 percentMarket Value of Assets $1443Problems6-1. An investor holds the stock of First National Bank of Imoh and expects to receive a dividend of $12 per share at the end of the year. Stock analysts have recently predicted that the bank’s dividends will grow at approximately 3 percent a yea r indefinitely into the future. If this is true, and if the appropriate risk-adjusted cost of capital (discount rate) for the bank is 15 percent, what should be the current stock price per share of Imoh’s stock?6-2. Suppose that stockbrokers have projected that Poquoson Bank and Trust Company will pay a dividend of $3 per share on its common stock at the end of the year; a dividend of $4.50 per share is expected for the next year and $6 per share in the following year. The risk-adjusted cost of capital for banks in Poquoson’s risk class is 17 percent. If an investor holding Poquoson’s stock plans to hold that stock for only three years and hopes to sell it at a price of $55 per share, what should the value of the bank’s stock be in today’s market?P0 = $43.94 per share.6-3 Depositors Savings Association has a ratio of equity capital to total assets of 7.5 percent. In contrast, Newton Savings reports an equity capital to asset ratio of 6 percent. What is the value of the equity multiplier for each of these institutions? Suppose that both institutions have an ROA of 0.85 percent. What must each institution’s return on equity capital be? What do your calculations tell you about the benefits of having as little equity capital as regulations or the marketplace will allow?Depositors Savings Association has an equity-to-asset ratio of 7.5 percent which means its equity multiplier must be:= 1 / 0.075 = 13.33x1/ (Equity Capital / Assets) = AssetsEquityCapitalIn contrast, Newton Savings has an equity multiplier of:= 16.67x1/ (Equity Capital / Assets) = 10.06With an ROA of 0.85 percent Depositors Savings Association would have an ROE of: ROE = 0.85 x 13.33x = 11.33 percent.With an ROA of .85 percent Newton Savings would have an ROE of:ROE = 0.85 x 16.67x = 14.17 percentIn this case Newton Savings is making greater use of financial leverage and is generating a higher return on equity capital.6-4. The latest report of condition and income and expense statement for Galloping Merchants National Bank are as shown in the following tables:Galloping Merchants National BankInterest Fees on Loans $65Interest Dividends on Securities 12Total Interest Income 77Interest Paid on Deposits 49Interest on Nondeposit Borrowings 6Total Interest Expense 55Net Interest Income 22Provision for Loan Losses 2Noninterest Income and Fees 7Noninterest Expenses:Salaries and Employee Benefits 12Overhead Expenses 5Other Noninterest Expenses 3Total Noninterest Expenses 20Net Noninterest Income -13Pre Tax Operating Income 7Securities Gains (or Losses) 1Pre Tax Net Operating Income 8Taxes 1Net Operating Income 7Net Extraordinary Income -1Net Income $6FTE 40Galloping Merchants National BankReport of ConditionCash and Due From Banks $100 Demand Deposits $190Investment Securities $150 Savings Deposts $180Federal Funds Sold $10 Time Deposits $470Net Loans $670 Federal Funds Purch $69(ALL 25) Total Liabilities $900(Unearned Income 5) Common Stock $20Plant and Equipment $50 Surplus $25Retained Earnings $35Total Assets $980 Total Ca $80Total Earnings Assets $830 Interest BearingDeposits $650Fill in the missing items on the income and expense statement. Using these statements, calculate the following performance measures:6-5. The following information is for Shallow National BankInterest Income $2,100Interest Expense $1,400Total Assets $30,000Securities Gains (losses) $21Earning Assets $25,000Total Liabilities $27,000Taxes Paid $16Shares of Common Stock 5,000Noninterest income $700Noninterest Expense $900Provision for LoanLosses $100ROE = $405 ROA = $405$30,000 -$27,000$30,0000.135 or 13.5 percent 0.0135 or 1.35percentEarnings = $405 = $.081 per sharePer Share 5000Net Interest = $2100 -$1400 = $700 = 0.028 or 2.8percentMargin $25,000 $25,000Net Noninterest = $700 -$900= -$200 = 0.008or .8 percent Margin $25,000 $25,000Net Operating = ($2100 + $700) – ($1,400 + $900+ $100) = $400 =0.0133or 1.33percentMargin $30,000 $30,000Suppose interest income, interest expenses, noninterest income, and noninterest expenses each increase by 5 percent, with all other items remaining unchanged.Interest Income $2,205Interest Expense $1,470Total Assets $30,000Securities Gains (losses) $21Earning Assets $25,000Total Liabilities $27,000Taxes Paid $16Shares of Common Stock 5,000Noninterest income $735Noninterest Expense $945Provision for LoanLosses $100ROE = $430 ROA = $430$30,000 -$27,000$30,0000.1433 or 14.33 percent 0.0143 or 1.43percentEarnings = $430 = $.086 per sharePer Share 5000Net Interest = $2205 -$1470 = $735 = 0.0294 or 2.94percentMargin $25,000 $25,000Net Noninterest = $735 -$945 = -$210 = 0.0084 or .84percentMargin $25,000 $25,000Net Operating = ($2205 + $735) – ($1,470 + $945+ $100) = $425 =0.0142or 1.42percentMargin $30,000 $30,000On the other hand, suppose Shallow’s interest income, interest expenses, noninterest income, and noninterest expenses decline by 5 percent, again with all other factors held equal. How would the bank’s ROE, ROA and per share earnings change?Interest Income $1995Interest Expense $1,330Total Assets $30,000Securities Gains (losses) $21Earning Assets $25,000Total Liabnilities $27,000Taxes Paid $16Shares of Common Stock 5,000Noninterest income $665Noninterest Expense $855Provision for LoanLosses $100ROE = $380 ROA = $380$30,000 -$27,000$30,0000.1267 or 12.67 percent 0.0127 or 1.27percentEarnings = $380 = $.076 per sharePer Share 5000Net Interest = $1995 -$1330 = $665 = 0.0266 or 2.66percentMargin $25,000 $25,000Net Noninterest = $665 -$855 = -$190 = 0.0076 or .76percentMargin $25,000 $25,000Net Operating = ($1995 + $665) – ($1,330 + $855+ $100) = $375 =0.0125or 1.25percentMargin $30,000 $30,0006-6. Blue and White National Bank holds total assets of $1.69 billion and equity capital of $139 million and has just posted an ROA of 1.1 percent. What is this bank’s ROE?:ROE = ROA * Total AssetsEquity Capital = 0.011 * $1,690$139= 0.1337 or 13.37%R0A increases by 50%, with no change in assets or equity capital.Therefore, the new ROA = 0.011 * 1.5 = 0.0165 or 1.65%.New ROE = 1.65% * 12.16 = 20.06%This represents a 50% increase in ROE. With no changes in assets or equity, the investors' funds are more effectively utilized, generating additional income and making the bank more profitable. Alternative Scenario 2:ROA decreases by 50%, with no change in equity or assets.Therefore, the new ROA = 0.011 * 0.5 = 0.0055 or 0.55%.New ROE = 0.55% * 12.16 = 6.69%This represents a 50% decrease in ROE. The bank's management has been less efficient, in this case, in managing their lending and/or investing functions or their operating costs.Alternative Scenario 3:ROA = 0.011 or 1.1% (as in the original problem)Total assets double in size to $3.38 billion and equity capital doubles in size to $278 million. Therefore, the equity multiplier (i.e. total assets/equity capital) remains the same (E.M. =$3,380/$278 = 12.16). As a result, there is no change in ROE from the original situation (i.e.), 1.1% * 12.16 = 13.38%).Alternative Scenario 4:This, of course, is just the reverse of scenario 3. Since the changes in both assets and equity capital are the same, the ratio of the two (i.e., the equity multiplier) remains constant. As a result, there is again no change in ROE.E.M. = Total Assets/Equity Capital = $845/$69.5 = 12.16.Therefore, ROE = 1.1% * 12.16 = 13.38%.6-7. Monarch State Bank reports total operating revenues of $135 million, with total operating expenses of $121 million, and owes taxes of $2 million. It has total assets of $1.00 billion and total liabilities of $900 million and has just posed an ROA of 1.1o percent. What is the bank’s ROE? Net Income after Taxes = $135 million -$121 million -$2 million = $12 millionEquity Capital = $1.00 billion - $900 million = $100 million= $12 million / $100 million = 0.12 or 12%.ROE = Net Income after TaxesEquity CapitalAlternative Scenario 1: How will the ROE for Monarch State Bank change if total operating expenses, taxes and total operating revenues each grow by 10 percent while assets and liabilities stay fixed.Total revenues = $135 million * 1.10 = $148.5 millionTotal expenses = $121 million * 1.10 = $133.1 millionTax liability = $2 million * 1.10 = $2.2 millionNet Income after Taxes = $148.5 - $133.1 - $2.2 = $13.2 millionROE = $13.2 million/$100 million = 0.132 or 13.2%Change in ROE = (13.2%-12%)/12% = 10%Alternative Scenario 2: Suppose Monarch State’s total assets and total liabilities increase by 10 percent, but its revenues and expenses (including taxes) are unchanged. How will the bank’s ROE change?Total assets increase by 10% (Total assets = $ 1.0 * 1.10 = $1.1 billion)Total liabilities increase by 10% (Total liabilities = $900 million * 1.10 = $990Revenues and expenses (including taxes) remain unchanged.Solution: Equity Capital = $1.1 billion - $990 million = $110 millionROE = $12 = .1091$110 10.91 percent= 10.91% - 12% = -1.09% = -.0908% Therefore change inROE12% 12% (ROE decreases by9.08%)Alternative Scenario 3: Can you determine what will happen to ROE if both operating revenues and expenses (including taxes) decline by 10 percent, with the bank’s total assets and liabilities held constant?Total revenues decline by 10% (Total revenues = $135 million * 0.90 = $121.5 million)Total expenses decline by 10% (Total expenses = $121 million * 0.9 = $108.9 million)Tax liability declines by 10% (Tax liability = $2 * 0.9 = $1.8 million)Assets and liabilities remain unchanged (Therefore, equity remains unchanged)Solution: Net Income after Tax = $121.5 million - 108.9 million - $1.8 million = $10.8 ROE = $10.8 million = 0.108 = 10.8%$100 millionTherefore change in ROE = 10.8% - 12% = -1.2% = -.1012% 12% (ROE decreases by 10%) Alternative Scenario 4: What does ROE become if Monarch State’s assets and liabilities decreaseby 10 percent, while its operating revenues, taxes and operating expenses do not change?Total assets = $1.0 billion * 0.9 = $900 millionTotal liabilities = $900 million * 0.9 =$810 millionEquity capital = $900 million - $810 million = $90 millionROE = $12 = .1333$90 13.33 percent6-8. Suppose a stockholder owned thrift institution is projected to achieve a 1.25 percent ROA during the coming year. What must its ratio of total assets to total equity capital be if it is to achieveits target ROE of 12 percent? If ROA unexpectedly falls to .75 percent, what assets-to-capital ratio must it then have to reach a 12 percent ROE?ROE = ROA * (Total Assets/Equity Capital)Total Assets = ROE = 12% = 9.6 xEquity Capital ROA 1.25%If ROA unexpectedly falls to 0.75% and target ROE remains 12%:12% = .75% * Total AssetsEquity CapitalTotal Assets = 12% =16 xEquity Capital .75%。

(完整版)商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap002

Chapter 2The Impact of Government Policy and Regulation on the Financial-Services IndustryFill in the Blank Questions1. The _____________________ was created as part of the Glass Steagall Act. In the beginning itinsured deposits up to $2,500.Answer: FDIC2. The________________________ is the law that states that a bank must get approved from theirregulatory body in order to combine with another bank.Answer: Bank Merger Act3. One tool that the Federal Reserve uses to control the money supply is _________________ . TheFederal Reserve will buy and sell T-bills when they are using this tool of monetary policy.Answer: open market operations4. The__________________________ was created in 1913 in response to a series of economicdepressions and failures. Its principal role is to serve as the lender of last resort and to stabilize the financial markets.Answer: Federal Reserve5. The __________________________ prevented banks from crossing state lines and made nationalbanks subject to the branching laws of their state. This act was later repealed by the Riegle Neal Interstate Banking law.Answer: McFadden-Pepper Act6. Because the FDIC levies fixed insurance premiums regardless of risk, this leads to a problem calledthe ____________________ among banks. The fixed premiums encourage all banks to accept greater risk.Answer: moral hazard7. In 1980, __________________________ was passed and lifted government ceilings on depositinterest rates in favor of free market interest rates.Answer: DIDMCA158. One tool that the Federal Reserve uses to control the money supply is _________________. TheFederal Reserve will change the interest rate they charge for short term loans when they are using this tool of monetary policy.Answer: changing the discount rate9. The first major federal banking law in the U.S. was the __________________________. This lawwas passed during the Civil War and set up a system for chartering national banks and created the OCC.Answer: National Banking Act10. The_________________________ was passed during the Great Depression. It separatedinvestment and commercial banks and created the FDIC.Answer: Glass-Steagall Act11. The__________________________ brought bank holding companies under the jurisdiction of theFederal Reserve.Answer: Bank Holding Company Act12. The__________________________ allows bank holding companies to acquire banks anywhere inthe United States. However, no one bank can control more than 30 percent of the deposits in any one state or more than 10 percent of the deposits across the country.Answer: Riegle-Neal Interstate Banking Act13. The allows banks to affiliate with insurance companies and securitiesfirms either through a holding company or as a subsidiary.Answer: Gramm-Leach-Bliley Act (Financial Services Modernization Act)14. Customers of financial-service companies may _____________________ of having their privateinformation shared with a third party such as a telemarketer. However, in order to do this they must tell the financial-services company in writing that they do not want their personal information shared with outside parties.Answer: opt out15. The federal bank regulatory agency which examines the most banks is the ______________.Answer: FDIC16. The _________________ requires financial service companies to report suspicious activity incustomer accounts to the Treasury Department.Answer: U.S. Patriot Act17. The central bank of the new European Union is known as the _______________________.Answer: European Central Bank or ECB18. The _____________________ Act prohibits banks and other publicly owned firms frompublishing false or misleading financial performance information.Answer: Sarbanes-Oxley19.One of the main roles of the Federal Reserve today is . They have three tools thatthey use today to carry out this role; open market operations, the discount rate and legal reserverequirements.Answer: monetary policy20.The is the center of authority and decision making within the FederalReserve. It consists of seven members appointed by the president for terms not exceeding 14 years.Answer: Board of Governors21.The main regulators of insurance companies are .Answer: state insurance commissions22.Federal Credit Unions are regulated and examined by .Answer: the National Credit Union Administration.23.The makes it easier for victims of identity theft to file fraud alertsand allows the public to apply for a free credit report once a year.Answer: Fair and Accurate Credit Transactions Act (FACT Act)24.The makes it faster and less costly for banks to clear checks. Itallows for banks to electronically send check images instead of shipping paper checks across the country.Answer: Check 21 Act25.The was created by the National Banking Act and is part of theTreasury Department. It is the primary regulator of National Banks.Answer: Office of the Comptroller of the Currency (OCC)26.The _________________________ proposes various regulations applying to the financial marketsto combat the recent credit crisis. T his “bail-out” bill granted the US Treasury the means topurchase troubled loans, allowed the FDIC to temporarily increase deposit insurance, andpermitted the government to inject additional capital into the banking system.Answer: The Emergency Economic Stabilization Act of 2008True/False Questions17T F 27. Federal Reserve Act authorized the creation of the Federal Deposit Insurance Corporation.Answer: FalseT F 28. In the United States, fixed fees charged for deposit insurance, regardless of how risky a bank is, led to a problem known as moral hazard.Answer: TrueT F 28. Government-sponsored deposit insurance typically encourages individual depositors to monitor their banks' behavior in accepting risk.Answer: FalseT F 29. The Federal Reserve changes reserve requirements frequently because the affect of these changes is so small.Answer: FalseT F 30. The Bank Merger Act and its amendments requires that Bank Holding Companies be under the jurisdiction of the Federal Reserve.Answer: FalseT F 31. National banks cannot merge without the prior approval of the Comptroller of the Currency.Answer: TrueT F 32. The Truth in Lending (or Consumer Credit Protection) Act was passed by the U.S.Congress to outlaw discrimination in providing bank services to the public.Answer: FalseT F 33. The federal law that states individuals and families cannot be denied a loan merely because of their age, sex, race, national origin or religious affiliation is known as the CompetitiveEquality in Banking Act.Answer: FalseT F 34. Under the terms of the 1994 Riegle-Neal Interstate Banking law bank holding companies can acquire a bank anywhere inside the United States, subject to Federal Reserve Boardapproval.Answer: TrueT F 35. The 1994 federal interstate banking bill does not limit the percentage of statewide or nationwide deposits that an interstate banking firm is allowed to control.Answer: FalseT F 36. The term "regulatory dialectic" refers to the dual system of banking regulation in the United States and selected other countries where both the federal or central governmentand local governments regulate banks.Answer: FalseT F 37. The moral hazard problem of banks is caused by the fixed insurance premiums paid by banks and causes banks to accept greater risk.Answer: TrueT F 38. When the Federal Reserve buys T-bills through its open market operations, it causes the growth of bank deposits and loans to decrease.Answer: FalseT F 39. When the Federal Reserve increases the discount rate it generally causes other interest rates to decrease.Answer: FalseT F 40. The National Bank Act (1863) created the Federal Reserve which acts as the lender of last resort.Answer: FalseT F 41. FIRREA (1989) allowed bank holding companies to acquire nonblank depository institutions and, if desired, convert them into branch offices.Answer: TrueT F 42. The Sarbanes-Oxley Act allows banks, insurance companies, and securities firms to form Financial Holding Companies (FHCs).Answer: FalseT F 43. The Gramm-Leach-Bliley Act of 1999 essentially repeals the Glass-Steagall Act passed in the 1930s.Answer: TrueT F 44. Passed in 1977, the Equal Credit Opportunity Act prohibits banks from discriminating against customers merely on the basis of the neighborhood in which they live.Answer: FalseT F 45. The tool used by the Federal Reserve System to influence the economy and behavior of19banks is known as moral hazard.Answer: FalseT F 46. One of the principal reasons for government regulation of financial firms is to protect the safety and soundness of the financial system.Answer: TrueMultiple Choice Questions47.Banks are regulated for which of the reasons listed below?A) Banks are leading repositories of the public's savings.B) Banks have the power to create money.C) Banks provide businesses and individuals with loans that support consumption and investmentspending.D) Banks assist governments in conducting economic policy, collecting taxes and dispensinggovernment payments.E) All of the above.Answer: E48.An institutional arrangement in which federal and state authorities both have significant bankregulatory powers is referred to as:A) Balance of PowerB) FederalismC) Dual Banking SystemD) Cooperative RegulationE) Coordinated ControlAnswer: C49.The law that set up the federal banking system and provided for the chartering of national bankswas the:A) National Bank ActB) McFadden-Pepper ActC) Glass-Steagall ActD) Bank Merger ActE) Federal Reserve ActAnswer: A50.The federal law that prohibited federally supervised commercial banks from offering investmentbanking services on privately issued securities is known as:A) The Glass-Steagall ActB) The Bank Merger ActC) The Depository Institutions Deregulation and Monetary Control ActD) The Federal Reserve ActE) None of the AboveAnswer: A51.The Gramm-Leach-Bliley Act (Financial Services Modernization Act) calls for linkinggovernment supervision of the financial-services firm to the types of activities that the firmundertakes. For example the insurance portion of the firm would be regulated by state insurance commissions and the banking portion of the firm would be regulated by banking regulators. This approach to government supervision of financial services is known as:A) Consolidated regulation and supervision.B) Functional regulation.C) Services oversight.D) Umbrella supervision and regulation.E) None of the above.Answer: B52.The Federal Reserve policy tool under which the Fed attempts to bring psychological pressure tobear on individuals and institutions to conform to the Fed's policies, using letters, phone calls, and speeches, is known as:A) Margin requirementsB) Moral suasionC) Discount window supervisionD) Conference and compromiseE) None of the above.Answer: B53.The 1994 law that allowed bank holding companies to acquire banks anywhere in the U.S. is:A) The Glass-Steagall ActB) The Federal Deposit Insurance Corporation Improvement ActC) The National Bank ActD) The Riegle-Neal Interstate Banking and Branching Efficiency Act.E) None of the above.Answer: D54.The federal law that allowed the Federal Reserve to set margin requirements is:A) The National Banking Act.B) The McFadden-Pepper Act.C) The Glass Steagall Act.D) The Federal Reserve Act.E) None of the above.Answer: C55.Of the principal reasons for regulating banks, what was the primary purpose of the NationalBanking Act (1863)?A) Protection of the public's savingsB) Control of the money supplyC) Providing support for government activitiesD) Maintaining confidence in the banking systemE) Preventing banks from realizing monopoly powers21Answer: C56.Of the principal reasons for regulating banks, what was the primary purpose of the Federal ReserveAct of 1913?A) Protection of the public's savingsB) Control of the money supplyC) Preventing banks from realizing monopoly powersD) Ensuring an adequate and fair supply of loansE) None of the above.Answer: B57.The law that allows lifted government deposit interest ceilings and allowed them to pay acompetitive interest rate is:A) The National Banking Act.B) The Glass Steagall Act.C) The Bank Merger Act.D) DIDMCAE) None of the above.Answer: D58.The law that allows banks to affiliate with insurance companies and security brokerage firms toform financial services conglomerates isA) The National Banking ActB) The Glass Steagall ActC) The Garn St. Germain ActD) The Riegle Neal Interstate Banking ActE) The Gramm-Leach-Bliley Act (Financial Services Modernization Act)Answer: E59.Of the principal reasons for regulating banks, what was the primary purpose of the Truth inLending Law?A) Protection of the public's savingsB) Control of the money supplyC) Preventing banks from realizing monopoly powersD) Ensuring an adequate and fair supply of loansE) None of the above.Answer: D60.Which of the following is an unresolved issue in the new century?A) What should be done about the regulatory safety net set up to protect small depositors?B) If financial institutions are allowed to take on more risk, how can taxpayers be protected frompaying the bill when more institutions fail?C) Does functional regulation actually work?D) Should regulators allow the mixing of banking and commerce?E) All of the above are unresolved issuesAnswer: E61.The law that made bank and nonbank depository institutions more alike in the services they couldoffer and allowed banks and thrifts to more fully compete with other financial institutions is:A) The National Banking ActB) The Federal Reserve ActC) The Garn-St. Germain ActD) The Riegle-Neal Interstate Banking and Branching Efficiency ActE) The Gramm-Leach-Bliley Act (Financial Services Modernization Act)Answer: C62.The law that allowed bank holding companies to acquire nonbank depository institutions andconvert them to branches is:A) The National Banking ActB) The Garn-St. Germain ActC) FIRREAD) The Riegle-Neal Interstate Banking and Branching Efficiency ActE) None of the AboveAnswer: C63.The equivalent of the Federal Reserve System in Europe is known as the:A) European UnionB) Bank of LondonC) Basle GroupD) European Central BankE) Swiss Bank CorporationAnswer: D64.The new financial organization created by Gramm-Leach-Bliley is theA) Financial Holding CompanyB) Bank Holding CompanyC) European Central BankD) Financial Service CorporationE) Financial Modernization OrganizationAnswer: A65.The act which requires financial institutions to share information about customer identities withgovernment agencies is:A) The Sarbanes-Oxley ActB) The U.S. Treasury Department ActC) The 9/11 ActD) The USA Patriot ActE) The Gramm-Leach-Bliley ActAnswer: D2366.The 1977 law that prevents banks from “redlining” ce rtain neighborhoods, refusing to serve thoseareas is:A) The National Banking ActB) The Garn-St. Germain ActC) FIRREAD) The Riegle-Neal Interstate Banking and Branching Efficiency ActE) Community Reinvestment Act (CRA)Answer: Emon minimum capital requirements on banks in leading industrialized nations that are basedon the riskiness of their assets is imposed by:A) The National Banking ActB) FIRREAC) The International Banking ActD) The Basel AgreementE) None of the AboveAnswer: D68.The fastest growing crime in the U.S. is:A) Financial statement misrepresentationB) Bank robberiesC) Individual privacy violationsD) Credit card fraudE) Identity theftAnswer: E69.The oldest federal bank agency is the:A) OCCB) FDICC) FRSD) FHCE) BHCAnswer: A70.The federal agency that regulates the most banks is the:A) OCCB) FDICC) FRSD) FHCE) BHCAnswer: B71.Which federal banking act requires that financial service providers establish the identity of anycustomers opening new accounts?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: B72.Which federal banking act prohibits publishing false or misleading information about the financialperformance of a public company and requires top corporate officers to vouch for the accuracy of their company’s financial statements?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: A73.Which federal banking act reduces the need for banks to transport paper checks across the country?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: C74.Which federal banking act forces more individuals to repay at least part of what they owe and willpush higher-income borrowers into more costly forms of bankruptcy?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: E75.Which federal banking act requires the Federal Trade Commission to make it easier for victims ofidentity theft to make theft reports and requires credit bureaus to help victims resolve theproblem?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: D76.The _________ allows adequately capitalized bank holding companies to acquire banks in anystate.A)Riegle-Neal Interstate Banking and Branching Efficiency ActB)Competitive Equality Banking Act25C)Financial Institutions Reform, Recovery and Enforcement ActD)Federal Deposit Insurance Corporation Improvement ActE)Depository Institutions Deregulation and Monetary Control ActAnswer: A77.One of the earliest theories regarding the impact of regulation on banks was developed by GeorgeStigler. He contends that:A) Firms in regulated industries actually seek out regulations because they bring monopolisticrents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulatedfirms.D) Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E) None of the aboveAnswer: A78.Samual Peltzman had an opposing view to George Stigler on the impact of regulation on banks. Hecontends that:A) Firms in regulated industries actually seek out regulations because they bring monopolisticrents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulatedfirms.D) Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E) None of the aboveAnswer: B79.There is an important debate raging today regarding whether banks should be regulated at all.George Benston contends that:A) Firms in regulated industries actually seek out regulations because they bring monopolisticrents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulatedfirms.D) Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E) None of the aboveAnswer: D80.The European Central Bank has the main goal of:A) Ensuring the economy grows at an adequate rate.B) Keeping unemployment low.C) Ensuring price stability.D) Ensuring an adequate and fair supply of loans.E) All of the aboveAnswer: C26Test Bank, Chapter 281.Which of the following has become the principal tool of central bank monetary policy today?A) Open market operationsB) Changing the discount rateC) Changing reserve requirementsD) Using moral suasionE) None of the aboveAnswer: A82.The Federal Reserve buys Treasury Bills in the open market. This will tend to:A) Cause interest rates in the market to riseB) Cause interest rates in the market to fallC) Cause reserves held at the Federal Reserve to decreaseD) Cause a decrease in the growth of deposits and loansE) All of the aboveAnswer: B83.Which federal banking act extends deposit insurance coverage on qualified retirement accountsfrom $100,000 to $250,000 and authorizes the FDIC to periodically increase deposit insurance coverage to keep up with inflation?A) Sarbanes-Oxley ActB) The Gramm-Leach-Bliley ActC) Check 21 ActD) The FACT ActE) Federal Deposit Insurance Reform ActAnswer: E84.The Financial Services Regulatory Relief Act of 2006 does the following:A) Adds selected new service powers to depository institutionsB) Loosens regulations on depository institutionsC) Grants the Federal Reserve authority to pay interest on depository institutions’ legal reservesD) All of the aboveE) None of the aboveAnswer: D85.The Emergency Economic Stabilization Act passed in 2008 during the global credit crisis allowedthe following:A) An emergency sale of “bad assets”B) Temporary increase of FDIC deposit insurance to $250,000 for all depositsC) Injections of capital by the government into banks and other qualified lendersD) Closer surveillance of the mortgage market participants, such as brokers and lendersE) All of the aboveAnswer: E27。

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap012

Chapter 12Managing and Pricing Deposit ServicesFill in the Blank Questions1. A(n) _________________________ requires the bank to honor withdrawals immediately uponrequest.Answer: demand deposit2. A(n) _________________________ is an interest bearing checking account and gives the bank theright to insist on prior notice before customer withdrawals can be honored.Answer: Negotiable order of withdrawal (NOW)3. A(n) _________________________ is a short-maturity deposit which pays a competitive interestrate. Only 6 preauthorized drafts per month are allowed and only 3 of these can be by check.Answer: money market deposit account4. _________________________ are designed to attract funds from customers who wish to set asidemoney in anticipation of future expenditures or financial emergencies.Answer: Thrift deposits5. _________________________ are the stable base of deposited funds that are not highly sensitiveto movements in market interest rates and tend to remain with a depository institution.Answer: Core deposits6. Some people feel that everyone is entitled access to a minimum level of financial service no mattertheir income level. This issue is called the issue of _________________________.Answer: basic (lifeline) banking7. _________________________ is a way of pricing deposit services in which the rate or return orfees charged on the deposit account are based on the cost of offering the service plus a profitmargin.Answer: Cost plus pricing8. When financial institutions tempt customers by paying postage both ways in bank-by-mail servicesor by offering free gifts such as teddy bears, they are practicing ___________.Answer: nonprice competition9. The _________________________is the added cost of bringing in new funds.Answer: marginal cost10. _________________________ pricing is where the financial institution sets up a schedule of feesin which the customer pays a low or no fee if the deposit balance stays above some minimum level and pays a higher fee if the balance declines below that minimum level.Answer: Conditional11. When a customer is charged a fixed charge per check this is called __________________ pricing.Answer: flat rate12. When a customer is charged based on the number and kinds of services used, with the customersthat use a number of services being charged less or having some fees waived, this is called__________________ pricing.Answer: relationship13. _________________________ is part of the new technology for processing checks where the banktakes a picture of the back and the front of the original check and which can now be processed as if they were the original.Answer: Check imaging14. A(n) _________________________ is a thrift account which carries a fixed maturity date andgenerally carries a fixed interest rate for that time period.Answer: time deposit15. A(n) _________________________ is a conditional method of pricing deposit services in whichthe fees paid by the customer depend mainly on the account balance and volume of activity.Answer: deposit fee schedule16. The _________________________ was passed in 1991 and specifies the information thatinstitutions must disclose to their customers about deposit accounts.Answer: Truth in Savings Act17. The _________________________ must be disclosed to customers based on the formula of oneplus the interest earned divided by the average account balance adjusted for an annual 365 day year.It is the interest rate the customer has actually earned on the account.Answer: annual percentage yield (APY)18. A(n) _________________________ is a retirement plan that institutions can sell which is designedfor self-employed individuals.Answer: Keogh plan19. Deposit institution location is most important to ______-income consumers.Answer: low20. _____-income consumers appear to be more influenced by the size of the financial institution.Answer: high21.For decades depository institutions offered one type of savings plan. could be opened withas little as $5 and withdrawal privileges were unlimited.Answer: Passbook savings deposits22.CD’s allow depositors to switch to a higher interest rate if market ratesrise.Answer: Bump-up23.CD’s permit periodic adjustm ents in promised interest rates.Answer: Step-up24.CD’s allow the depositor t o withdraw some of his or her funds without awithdrawal penalty.Answer: Liquid25.A(n) , which was authorized by Congress in 1997, allows individuals to makenon-tax-deductible contributions to a retirement fund that can grow tax free and also pay no taxes on their investment earnings when withdrawn.Answer: Roth IRA26.Due to the fact that they may be perceived as more risky, banks generally offer higherdeposit rates than traditional banks.Answer: virtual27. are accounts in domestic banking institutions where the U.S.Treasury keeps most of their operating funds.Answer: Treasury Tax and Loan Accounts (TT&L accounts)28. is a process where merchants and utility companies take theinformation from a check an individual has just written and electronically debits the individual’s account instead of sending the check through the regular check clearing process.Answer: electronic check conversion29.On October 28, 2004, became the law, permitting depository institutions toelectronically transfer check images instead of the checks themselves.Answer: Check 2130.The to the cost plus pricing derives the weighted average cost of all fundsraised and is based on the assumption that it is not the cost of each type of deposit that matters but rather the weighted average cost of all funds that matters.Answer: pooled-funds cost approachTrue/False QuestionsT F 31. The volume of core deposits at U.S. banks has been growing in recent years relative to other categories of deposits.Answer: FalseT F 32. The U.S. Treasury keeps most of its operating funds in TT&L deposits, according to the textbook.Answer: TrueT F 33. Deposits owned by commercial banks and held with other banks are called correspondent deposits.Answer: TrueT F 34. The implicit interest rate on checkable deposits equals the difference between the cost of supplying deposit services to a customer and the amount of the service charge actuallyassessed that customer.Answer: TrueT F 35. Legally imposed interest-rate ceilings on deposits were first set in place in the United States after passage of the Bank Holding Company Act.Answer: FalseT F 36. Gradual phase-out of legal interest-rate ceilings on deposits offered by U.S. banks was first authorized by the Glass-Steagall Act.Answer: FalseT F 37. The contention that there are certain banking services (such as small loans or savings and checking accounts) that every citizen should have access to is usually called socializedbanking.Answer: FalseT F 38. Domestic deposits generate legal reserves.Answer: TrueT F 39. Excess legal reserves are the source out of which new bank loans are created.Answer: TrueT F 40. Demand deposits are among the most volatile and least predictable of a bank's sources of funds with the shortest potential maturity.Answer: TrueT F 41. IRA and Keogh deposits have great appeal for bankers principally because they can be sold bearing relatively low (often below-market) interest rates.Answer: FalseT F 42. In general, the longer the maturity of a deposit, the lower the yield a financial institution must offer to its depositors because of the greater interest-rate risk the bank faces withlonger-term deposits.Answer: FalseT F 43. The availability of a large block of core deposits decreases the duration of a bank's liabilities.Answer: FalseT F 44. Interest-bearing checking accounts, on average, tend to generate lower net returns than regular (noninterest-bearing) checking accounts.Answer: FalseT F 45. Personal checking accounts tend to be more profitable than commercial checking accounts.Answer: FalseT F 46. NOW accouts can be held by businesses and individuals and are interest bearing checking accounts.Answer: FalseT F 47. A MMDA is a short term deposit where the bank can offer a competitive interest rate and which allows up to 6 preauthorized drafts per month.Answer: TrueT F 48. A Roth IRA allows an individual to accumulate investment earnings tax free and also pay no tax on their investment earnings when withdrawn provided the taxpayer follows therules on this new account.Answer: TrueT F 49. Competition tends to raise deposit interest costs.Answer: TrueT F 50. Competition lowers the expected return to a bank from putting its deposits to work.Answer: TrueT F 51. A bank has full control of its deposit prices in the long run.Answer: FalseT F 52. Nonprice competition for deposits has tended to distort the allocation of scarce resources in the banking sector.Answer: TrueT F 53. Deposits are usually priced separately from loans and other bank services.Answer: TrueT F 54. According to recent Federal Reserve data no-fee savings accounts are on the decline.Answer: TrueT F 55. According to recent survey information provided by the staff of the Federal Reserve Board the average level of fees on most types of checking and NOW accounts appear to haverisen.Answer: TrueT F 56. The Truth in Savings Act requires a bank to disclose to its deposit customer the frequency with which interest is compounded on all interest-bearing accounts.Answer: TrueT F 57. Under the Truth in Savings Act customers must be informed of the impact of any early deposit withdrawals on the annual percentage yield they expect to receive from aninterest-bearing deposit.Answer: TrueT F 58. The number one factor households consider in selecting a bank to hold their checkingaccount is, according to recent studies cited in this chapter, low fees and low minimumbalance.Answer: FalseT F 59. The number one factor households consider in choosing a bank to hold their savings deposits, according to recent studies cited in this chapter, is location.Answer: FalseT F 60. Conditionally free deposits for customers mean that as long as the customers do not go above a certain level of deposits there are no monthly fees or per transaction charges.Answer: FalseT F 61. When a bank temporarily offers higher than average interest rates or lower than average customer fees in order to attract new business they are practicing conditional pricing.Answer: FalseT F 62. Web-centered banks with little or no physical facilities are known as ________ banks Answer: TrueT F 63. The total dollar value of checks paid in the United States has grown modestly in recent years.Answer: FalseT F 64. There are still a number of existing problems with online bill-paying services which has limited the growth.Answer: TrueT F 65. The depository institutions which tend to have the highest deposit yields are credit unions.Answer: FalseT F 66. Urban markets are more responsive to deposit interest rates and fees than rural markets.Answer: FalseT F 67. Research indicates that at least half of all households and small businesses hold their primary checking account at a depository institution situated within 3 miles of theirlocation.Answer: TrueMultiple Choice Questions68. Deposit accounts whose principal function is to make payments for purchases of goods andservices are called:A) DraftsB) Second-party payments accountsC) Thrift depositsD) Transaction accountsE) None of the aboveAnswer: D69. Interest payments on regular checking accounts were prohibited in the United States under terms ofthe:A) Glass-Steagall ActB) McFadden-Pepper ActC) National Bank ActD) Garn-St. Germain Depository Institutions ActE) None of the aboveAnswer: A70. Money-market deposit accounts (MMDAs), offering flexible interest rates, accessible forpayments purposes, and designed to compete with share accounts offered by money market mutual funds, were authorized by the:A) Glass-Steagall ActB) Depository Institutions Deregulation and Monetary Control Act (DIDMCA)C) Bank Holding Company ActD) Garn-St.Germain Depository Institutions ActE) None of the aboveAnswer: D71. The stable and predictable base of deposited funds that are not highly sensitive to movements inmarket interest rates but tend to remain with the bank are called:A) Time depositsB) Core depositsC) Consumer CDsD) Nontransaction depositsE) None of the aboveAnswer: B72. Noegotiable Orders of Withdrawal (NOW) accounts, interest-bearing savings accounts that can beused essentially the same as checking accounts, were authorized by:A) Glass-Steagall ActB) Depository Institutions Deregulation and Monetary Control Act (DIDMCA)C) Bank Holding Company ActD) Garn-St. Germain Depository Institutions ActE) None of the aboveAnswer: B74. A deposit which offers flexible money market interest rates but is accessible for spending bywriting a limited number of checks or executing preauthorized drafts is known as a:A) Demand depositB) NOW accountC) MMDAsD) Time depositE) None of the aboveAnswer: C75. The types of deposits that will be created by the banking system depend predominantly upon:A) The level of interest ratesB) The state of the economyC) The monetary policies of the central bankD) Public preferenceE) None of the above.Answer: D76. The most profitable deposit for a bank is a:A) Time depositB) Commercial checking accountC) Personal checking accountD) Passbook savings depositE) Special checking accountAnswer: B77. Some people feel that individuals are entitled to some minimum level of financial services nomatter what their income level. This issue is often called:A) Lifeline bankingB) Preference bankingC) Nondiscriminatory bankingD) Lifeboat bankingE) None of the aboveAnswer: A78. The formula Operating Expense per unit of deposit service + Estimated overhead expense +Planned profit from each deposit service unit sold reflects what deposit pricing method listedbelow?A) Marginal cost pricingB) Cost plus pricingC) Conditional pricingD) Upscale target pricingE) None of the above.Answer: B79. Using deposit fee schedules that vary deposit prices according to the number of transactions, theaverage balance in the deposit account, and the maturity of the deposit represents what deposit pricing method listed below?A) Marginal cost pricingB) Cost plus pricingC) Conditional pricingD) Upscale target pricingE) None of the above.Answer: C80. The deposit pricing method that favors large-denomination deposits because services are free if thedeposit account balance stays above some minimum figure is called:A) Free pricingB) Conditionally free pricingC) Flat-rate pricingD) Upscale target pricingE) Marginal cost pricingAnswer: B81. The federal law that requires U.S. depository institutions to make greater disclosure of the fees,interest rates, and other terms attached to the deposits they sell to the public is called the:A) Consumer Credit Protection ActB) Fair Pricing ActC) Consumer Full Disclosure ActD) Truth in Savings ActE) None of the above.Answer: D82. Depository institutions selling deposits to the public in the United States must quote the rate ofreturn pledged to the owner of the deposit which reflects the customer's average daily balance kept in the deposit. This quoted rate of return is known as the:A) Annual percentage rate (APR)B) Annual percentage yield (APY)C) Daily deposit yield (DDY)D) Daily average return (DAR)E) None of the above.Answer: B83. According to recent studies cited in this book, in selecting a bank to hold their checking accountshousehold customers rank first which of the following factors?A) SafetyB) High deposit interest ratesC) Convenient locationD) Availability of other servicesE) Low fees and low minimum balance.Answer: C84. According to recent studies cited in this chapter, in choosing a bank to hold their savings depositshousehold customers rank first which of the following factors?A) FamiliarityB) Interest rate paidC) Transactional convenienceD) LocationE) Fees charged.Answer: A85. According to recent studies cited in this chapter, in choosing a bank to supply their deposits andother services business firms rank first which of the following factors?A) Quality of financial advice givenB) Financial health of lending institutionC) Whether loans are competitively pricedD) Whether cash management and operations services are provided.E) Quality of bank officers.Answer: B86. A financial institution that charges customers based on the number of services they use and giveslower deposit fees or waives some fees for a customer that purchases two or more services ispracticing:A) Marginal cost pricingB) Conditional pricingC) Relationship pricingD) Upscale target pricingE) None of the aboveAnswer: C87. A bank determines from an analysis on its deposits that account processing and other operatingexpenses cost the bank $3.95 per month. It has also determined that its non operating expenses on its deposits are $1.35 per month. The bank wants to have a profit margin which is 10 percent of monthly costs. What monthly fee should this bank charge on its deposit accounts?A) $5.30 per monthB) $3.95 per monthC) $5.83 per monthD) $5.70 per monthE) None of the aboveAnswer: C88. A bank determines from an analysis on its deposits that account processing and other operatingexpenses cost the bank $4.45 per month. The bank has also determined that nonoperating 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) $6.05B) $5.60C) $5.15D) $4.45E) None of the aboveAnswer: A89. A customer has a savings deposit for 45 days. During that time they earn $5 in interest and have anaverage daily balance of $1000. What is the annual percentage yield on this savings account?A) 0.5%B) 4.13%C) 4.07%D) 4.5%E) None of the aboveAnswer: B90. A customer has a savings account for one year. During that year they earn $65.50 in interest. For180 days they have $2000 in the account for the other 180 days they have $1000 in the account.What is the annual percentage yield on this savings account.A) 6.55%B) 3.28%C) 4.37%D) 8.73%E) None of the aboveAnswer: C91.If you deposit $1,000 into a certificate of deposit that quotes you a 5.5% APY, how much will youhave at the end of 1 year?A)$1,050.00B)$1,055.00C)$1,550.00D)$1,005.50E)None of the above.Answer: B92. A bank quotes an APY of 8%. A small business that has an account with this bank had $2,500 intheir account for half the year and $5,000 in their account for the other half of the year. How much in total interest earnings did this bank make during the year?A) $300B) $200C) $400D) $150E) None of the aboveAnswer: A93. Conditional deposit pricing may involve all of the following factors except:A) The level of interest ratesB) The number of transactions passing through the accountC) The average balance in the accountD) The maturity of the accountE) All of the above are usedAnswer: A94.Customers who wish to set aside money in anticipation of future expenditures or financialemergencies put their money inA) DraftsB) Second-party payment accountsC) Thrift DepositsD) Transaction accountsE) None of the aboveAnswer: C95. A savings account evidenced only by computer entry for which the customer gets a monthlyprintout is called:A) Passbook savings accountB) Statement savings planC) Negotiable order of withdrawalD) Money market mutual fundE) None of the aboveAnswer: B96. A traditional savings account where evidenced by the entries recorded in a booklet kept by thecustomer is called:A) Passbook savings accountB) Statement savings planC) Negotiable order of withdrawalD) Money market mutual fundE) None of the aboveAnswer: A97.An account at a bank that carries a fixed maturity date with a fixed interest rate and which oftencarries a penalty for early withdrawal of money is called:A) Demand depositB) Transaction depositC) Time depositD) Money market mutual depositE) None of the aboveAnswer: C98. A time deposit that has a denominations greater than $100,000 and are generally for wealthyindividuals and corporations is known as a:A) Negotiable CDB) Bump-up CDC) Step-up CDD) Liquid CDE) None of the aboveAnswer: A99. A time deposit that is non-negotiable but where the promised interest rate can rise with marketinterest rates is called a:A) Negotiable CDB) Bump-up CDC) Step-up CDD) Liquid CDE) None of the aboveAnswer: B100.A time deposit that allows for a periodic upward adjustment to the promised rate is called a:A) Negotiable CDB) Bump-up CDC) Step-up CDD) Liquid CDE) None of the aboveAnswer: C101.A time deposit that allows the depositor to withdraw some of his or her funds without a withdrawalpenalty is called a:A) Negotiable CDB) Bump-up CDC) Step-up CDD) Liquid CDE) None of the aboveAnswer: D102.What has made IRA and Keogh accounts more attractive to depositors recently?A) Allowing the bank to have FDIC insurance on these accountsB) Allowing the fund to grow tax free over the life of the fundC) Allowing the depositor to pay no taxes on investment earnings when withdrawnD) Requiring banks to pay at least 6% on these accounts to depositorsE) Increasing FDIC insurance coverage to $250,000 on these accountsAnswer: E103.The dominant holder of bank deposits in the U.S. is:A) The private sectorB) State and local governmentsC) Foreign governmentsD) Deposits of other banksE) None of the aboveAnswer: A104.The deposit pricing method absent of any monthly account maintenance fee or per-transaction fee is called:A) Free pricingB) Conditionally free pricingC) Flat-rate pricingD) Marginal cost pricingE) Nonprice competitionAnswer: A105.The deposit pricing method that charges a fixed charge per check or per period or both is called:A) Free pricingB) Conditionally free pricingC) Flat-rate pricingD) Marginal cost pricingE) Nonprice competitionAnswer: C106.The deposit pricing method that focuses on the added cost of bringing in new funds is called:A) Free pricingB) Conditionally free pricingC) Flat-rate pricingD) Marginal cost pricingE) Nonprice competitionAnswer: D107.Prior to Depository Institution Deregulation and Control Act (DIDMCA), banks used . This tended to distort the allocation of scarce resources.A) Free pricingB) Conditionally free pricingC) Flat-rate pricingD) Marginal cost pricingE) Nonprice competitionAnswer: E108.A customer has a savings deposit for 60 days. During that time they earn $11 and have an average daily balance of $1500. What is the annual percentage yield on this savings account?A) .73%B) 4.3%C) 4.5%D) 4.7%E) None of the aboveAnswer: C109.A customer has a savings deposit for 15 days. During that time they earn $15 and have an average daily balance of $2200. What is the annual percentage yield on this savings account?A) .68%B) 16.36%C) 16.59%D) 17.98%E) None of the aboveAnswer: D110.A bank determines from an analysis on its deposits that account processing and other operating expenses cost the bank $4.15 per month. It has also determined that its none operating expenses on its deposits are $1.65 per month. The bank wants to have a profit margin which is 10 percent of monthly costs. What monthly fee should this bank charge on its deposit accounts?A) $6.38 per monthB) $5.80 per monthC) $4.57 per monthD) $4.15 per monthE) None of the aboveAnswer: A111.A bank has $200 in checking deposits. Interest and noninterest costs on these accounts are 4%.This bank has $400 in savings and time deposits with interest and noninterest costs of 8%. This bank has $200 in equity capital with a cost of 24%. This bank as estimated that reserverequirements, deposit insurance fees and uncollected balances reduce the amount of moneyavailable on checking deposits by 10% and on savings and time deposits by 5%. What is thisbank’s before-tax cost of funds?A) 11.00%B) 11.32%C) 11.50%D) 12.00%E) None of the aboveAnswer: B112.A bank has $100 in checking deposits. Interest and noninterest costs on these accounts are 8%.This bank has $600 in savings and time deposits with interest and noninterest costs of 12%. This bank has $100 in equity capital with a cost of 26%. This bank has estimated that reserverequirements, deposit insurance fees and uncollected balances reduce the amount of moneyavailable on checking deposits by 20% and on savings and time deposits by 5%. What is the bank’s before-tax cost of funds?A) 13.05%B) 13.25%C) 15.33%D) 19.17%E) None of the aboveAnswer: A113.A bank has $500 in checking deposits. Interest and noninterest costs on these accounts are 6%.This bank has $250 in savings and time deposits with interest and noninterest costs of 14%. This bank has $250 in equity capital with a cost of 25%. This bank has estimated that reserverequirements, deposit insurance fees and uncollected balances reduce the amount of moneyavailable on checking deposits by 15% and on savings and time deposits by 4%. What is the bank’s before-tax cost of funds?A) 15.00%B) 12.75%C) 13.42%D) 15.74%E) None of the aboveAnswer: C114.A bank expects to raise $30 million in new money if it pays a deposit rate of 7%. It can raise $60 million in new money if it pays a deposit rate of 7.5%. It can raise $80 million in new money if it pays a deposit rate of 8% and it can raise $100 million in new money if it pays a deposit rate of 8.5%.This bank expects to earn 9% on all money that it receives in new deposits. What deposit rate should the bank offer on its deposits, if they use the marginal cost method of determining deposit rates?A) 7%B) 7.5%C) 8%D) 8.5%E) None of the aboveAnswer: B115.A bank expects to raise $30 million in new money if it pays a deposit rate of 7%. It can raise $60 million in new money if it pays a deposit rate of 7.5%. It can raise $80 million in new money if it pays a deposit rate of 8% and it can raise $100 million in new money if it pays a deposit rate of 8.5%.This bank expects to earn 9% on all money that it receives in new deposits. What is the marginal cost of deposits if the bank raises their deposit rate from 7 to 7.5%?A) .5%B) 7.5%C) 8.0%D) 9.5%E) 10.5%Answer: C116.Under the Truth in Savings Act, a bank must inform its customers of the terms being quoted on their deposits. Which of the following is not one of the terms listed?A) Loan rate informationB) Balance computation methodC) Early withdrawal penaltyD) Transaction limitationsE) Minimum balance requirementsAnswer: A117.Which of these Acts is attempting to address the low savings rate of workers in the U.S. by including an automatic enrollment (“default option”) in employees’ retirement accounts?A)The Economic Recovery Tax Act of 1981B)The Tax Reform Act of 1986C)The Tax Relief Act of 1997D)The Pension Protection Act of 2006E)None of the aboveAnswer: D118.Business (commercial) transaction accounts are generally more profitable than personal checking accounts, according to the textbook. Which of the following explain the reasons for this statement:A)The average size of the business transaction is smaller than the personal transactionB)Lower interest expenses are associated with commercial deposit transactionC)The bank receives more investable funds in the commercial deposits transactionD) A and BE) B and CAnswer: E。

商业银行管理ROSEe课后答案chapter

CHAPTER 4CREATING AND MANAGING SERVICE OUTLETS:NEW CHARTERS, BRANCHES, AND ELECTRONIC FACILITIESGoal of This Chapter: The purpose of this chapter is to learn how new banks are chartered by state and federal authorities in the United States, to determine what makes a good site for a new branch office, to recognize how the role of branch offices is changing, and to explore the advantages and disadvantages of automated banking facilities.Key Topics in This Chapter•Chartering New Financial Service Institutions•Performance of New Banks•Establishing Full Service Branches•In-Store Branching•Establishing Limited Service Facilities•ATMs and Telephone Centers•The Internet and Online BankingChapter OutlineI. IntroductionA. The Importance of Convenience and Timely Access to CustomersB. Service Options Available Today1. Chartering New (De Novo) Financial Institutions2. Establishing New Full-Service Branches3. Setting Up Limited-Service FacilitiesII.Chartering a New Bank or Other Financial Service InstitutionsIII.The Bank Chartering Process in the United StatesA. The Chartering Authorities in the U.S.B. Benefits of Applying for a National CharterC. Benefits of Applying for a State CharterIV. Questions Regulators Usually Ask the Organizers of a New BankV. Factors Weighing on the Decision to Seek a New Bank CharterA. External Factors1. Level of Economic Activity2. Growth of Local Economic Activity3. The Need for a New Bank4. Strength and Character of Local Competition in Supplying FinancialServicesB. Internal Factors1. Qualifications and Contacts of the Organizers2. Management Quality3. Pledging of Capital and Funds to Cover the Cost of Filing a CharterApplication and Getting UnderwayVI. Volume and Characteristics of New Bank ChartersA. Numbers of New ChartersB. Characteristics of New Charter MarketsVII. How Well Do New Banks Perform?A. New Bank Financial PerformanceB. Pro-Competitive Effects on Service Offerings and Service PricingVIII. Establishing Full-Service Branch Offices: Choosing Locations and Designing New BranchesA. Advantages of Full-Service BranchesB. Trends in the Design of New BranchesC. Desirable Sites for New BranchesD. Expected Rate of ReturnE. Geographic DiversificationF. Branch RegulationG. The Changing Role of BranchesH. In-Store BranchingIX. Establishing and Monitoring Automated Limited-Service FacilitiesX. Point-of-Sale TerminalsXI. Automated Tellers (ATMs)A. History of ATMsB. ATM ServicesC. Fee Structures for ATM UsageD. Customer Service Limitations of ATMsE. Example of the ATM Capital-Budgeting DecisionXII. Home and Office Online BankingA. Telephone Banking and Call CentersB. Internet Banking1. Services Provided Through the Internet2. Challenges in Providing Internet Services3. The Net and Customer Privacy and SecurityXIII. Financial Service Facilities of the FutureXIV. Summary of the ChapterConcept Checks4-1. Why is the physical presence of a bank still important to many bank customers despite recent advances in long-distance communications technology?Many customers still prefer the personal attention and personal service that contact with bank employees provides. Moreover, for those services where problems can arise that require detailed information and explanation-for example, when a checking account is overdrawn and checks begin to bounce-the customer needs quick access and, often, the personal attention to his or her problem on the part of one or more employees.4-2. Why is the creation (chartering) of new banks closely regulated? What about nonblank financial firms?The creation of new banks is regulated to insure the safety and soundness of existing banks and to avoid excessive numbers of bank failures. The same arguments are usually made for non-bank financial firms. Financial-Service firms hold the public’s savings, are the heart of the payment system and create money. The failure of these firms could disrupt the economy and too many could mean in excessive growth in the money supply and inflation.4-3. What do you see as the principal benefits and costs of government regulation of the number of financial service charters issued?While control over the entry of new banks may reduce the number of failures, it also limits competition, so that the public may receive a smaller volume or lower quality of services at excessive prices.4-4. Who charters new banks in the United States? New thrift institutions?New banks are chartered by the banking commissions of the individual states or, at the federal level, by the Comptroller of the Currency. Thrift institutions are chartered by the states or at the federal level by the Office of Thrift Supervision.4-5. What key role does the FDIC play in the chartering process?The FDIC exercises some control over state bank charter activity as well as federal charters because most states insist that their new banks qualify for federal deposit insurance before they can open for business.4-6. What are the advantages of having a national bank charter? A state bank charter?The benefits of a national charter are:a.)It brings prestige due to stricter regulations and may help attract more customersb.)In times of trouble the technical assistance given may be better ensuring a betterchance of long run survivalThe benefits of a state charter are:a.)It may be easier and less costly to get a state charterb.)The bank does not have to join the Federal Reserve and therefore avoids buying andholding low yield stock of the Federal Reservec.)Many states let a bank lend more to one borrowerd.)State chartered banks may be able to make types of loans that a nationally charteredbank cannot4-7. What kinds of information must the organizers of new national banks provide the Comptroller of the Currency in order to get a charter? Why might this required information be important?The Comptroller of the Currency asks for information on the number of competing banks and bank-like institutions in the service area of the proposed bank. More competitive market situations limit the profit potential and perhaps the growth potential of a new bank. Also requested is information about shopping centers, retail and wholesale business activity, recent population growth, traffic counts, and personal income levels - all viewed as indicators of potential demand for banking services in the service area of the proposed new bank. Applicants must also provide background information on the organizers and proposed management of a new bank so the Comptroller can decide if these people are qualified, law-abiding, and trustworthy to manage the public's funds as well as their own.4-8. Why do you think the organizers of a new financial firm are usually expected to put together and submit to the chartering authority a detailed business plan, including marketing, management, and financial components?This demonstrates to regulators that the organizers of the bank have the expertise, experience and skills necessary to be successful in managing the new bank. If the organizers of a bank do not know where they are going, they are unlikely to be successful. In addition, it demonstrates whether the organizers of the new bank have a realistic picture of the community they are planning on serving and whether the organizers have a realistic view of the profit potential in the new bank. 4-9. What are the key factors the organizers of a new financial firm should consider before deciding to seek a charter?While a variety of factors are examined by different business people interested in establishing a new bank, most look at some or all of the following factors.1. External Factorsa. The level of local economic activity.b. Growth of local economic activity.c. The need for a new bank.d. The strength and character of local competition in supplying financialservices.2. Internal Factorsa. Qualifications and contacts of the new bank's organizers.b. Management quality.c. Pledging of capital and funds to cover the cost of filing a charter applicationand begin operations.4-10. Where are most new banks chartered in the United States?New charters tend to be concentrated in large urban areas where expected rates of return on the organizers investments are likely to be the highest. As the population increases relative to the number of financial firms, the number of new charters increases. The success of local banksalready in the area suggests that new financial firms would also be successful. Places where the concentration ratio for new banks has increased tend to have fewer new bank charters.4-11. How well do most new banks perform for the public and for their owners?Most new banks succeed, especially those whose organizers can bring in new deposits and loan accounts during the first year of the bank's operation. Most are profitable within two to three years of opening. There is some ev idence that newly charted banks are financially ‘fragile’ and more prone to failure than existing banks. They appear to be more vulnerable to real estate crises than established banks. New banks tend to under perform their competitors until they have been around for a while and new banks are more closely supervised than established banks.4-12. Why is the establishment of new branch offices usually favored over the chartering of new financial firms as a vehicle for delivering financial services?The chartering of a new financing corporation is normally a lengthy and expensive process, requiring the completion of elaborate federal or state application forms, while the branch application process is normally far simpler and less costly. Moreover, with the increase in the number of failures in recent years regulatory-imposed capital requirements for new charters have increased substantially, while new branch offices usually carry significantly lower capital requirements. Moreover, branch offices themselves are often much less elaborate and costly to build and maintain than are the headquarters' facility of a new institution where some duplicate facilities can be eliminated (for example, checking processing, credit analysis, and records departments).4-13. What factors are often considered in evaluating possible sites for new branch offices? Bankers first need to decide the goals and objectives of a new facility. Often this means assessing whether the proposed new branch is aimed at selling one or more particular services, such as deposits or loans, and also deciding how closely correlated cash flows and returns from the new branch office may be with cash flows and returns from the other facilities operated by the bank. If returns or cash flows through the proposed new institution are negatively correlated or display low positive correlation with the institution's other facilities, they may be able to lower the variance of its returns or cash flows by proceeding to establish the new office.Other considerations revolve around the economic strength of the proposed branch officesite-whether there is adequate traffic volume, large numbers of stores and shops, older or younger age populations who often require slightly different menus of services, recent area population growth, density and income, the occupational and residential makeup of the proposed new branch area, a large enough population to generate enough customers to breakeven and the number and size of facilities operated by competitors. Generally, for branches designed to attract and hold deposits key factors to consider usually revolve around individual and family incomes, concentrations of retail stores and shops, older-than-average residents, and homeowners rather than renters. For branch facilities emphasizing credit services residential areas with substantial new construction activity, heavy traffic flow, and high concentrations of stores and shopping centers are typically desirable for consumer and retail loan demand, while central city office locations are often chosen as locations for commercial loan facilities.4-14. What changes are occurring in the design of, and the roles played by, branch offices? Please explain why these changes are occurring.Bank branches are increasingly becoming selling platforms in which more and more fee-based services are attractively and prominently advertised in order to maximize the fee-income generating potential of each branch. Moreover, branches are becoming increasingly automated to reduce personnel and other operating costs and improve speed, efficiency, and accuracy in handling a growing service volume. Branch design has come to reflect these trends with automated facilities placed at easy access points, along with information booths to speedily direct customers to the service areas they need. Human tellers may be placed deeper inside branch facilities so that customers must pass by other service departments and conspicuous advertising in order to encourage customers to become aware of and avail themselves of other bank services.4-15. What laws and regulations affect the creation of new bank and thrift branches and the closing of existing branches? What advantages and what problems can the closing of a branch office create?The opening of new branch off ices must be approved by a bank's or thrift’s principal federal or state supervisor. Closing a branch office has become much more complicated in recent years as the result of several new laws and regulations. For example, the FDIC Improvement Act requires 90 days advance notice of branch closings to both customers and the principal supervisory agency and a posting on the branch site at least 30 days prior to closing. Banks and thrifts must also make an "affirmative effort" to reach all segments of their communities without discrimination under the terms of the Community Reinvestment Act which raises the danger of customer protests against closings if it appears the bank is under-serving certain groups of customers. Finally, the Community Reinvestment Act can be used as a vehicle to prevent U.S. banks and thrifts from branching expansion when they have a poor record of serving all segments of their communities. Closing selected branch offices can reduce operating costs and divert resources from less profitable to more profitable uses. However, they risk alienating good customer relationships unless it can serve those same customers with its remaining facilities.4-16. What new and innovative sites have been selected for new branch offices in recent years? Why have these sites been chosen by financial firms? Do you have any ideas about other sites that you believe should be considered?Rapid increases in new branches located in grocery stores, shopping centers, and inside other businesses and facilities where the public frequently gathers have helped to reduce branch construction costs and promote cross-selling of goods and financial services. Other branches have been opened in apartment complexes, senior citizen centers, and other customer-convenient locations as bankers come to realize they must adjust their service locations and service hours to conform to customer needs in an intensely competitive financial-services environment.4-17. What are POS terminals and where are they usually located?Point-of-sale terminals are set up to accommodate customer purchases of goods and services. These computer terminals normally are located in retail stores, gasoline stations, and similar places with a link to the banks’ own computer records. When a customer of the bank makes a purchase, the amount of the transaction is deducted from the customer's deposit account and added to the store's account. Because the customer immediately loses funds many bank customers have been hesitant to use the service as opposed to paying by check or credit card where payment is delayed for a few days. However, this depends on whether the POS terminal is an offline or online terminal. An offline terminal accumulates all transactions until the end of the day when all transactions are su btracted from a customer’s account. This type of terminal is less costly for the bank to operate. An online terminal subtracts the transactions immediately from the customer’s account and reduces the chance of an overdraft occurring but is more expensive for the bank to operate. Consumer reluctance to use POS terminals appears to be fading and as fees for other services rise this reluctance will continue to disappear.4-18. What services do ATMs provide? What are the principal limitations of ATMs as a service provider? Should ATM carry fees? Why?The earliest ATMs provided a convenient mechanism for cashing checks, making deposits, and verifying checking account balances, often at hours when the full-service branch offices were closed. Today, ATMs frequently provide a wide menu of old and new services, including bill paying, transfer of funds between accounts, and the purchase of tickets for travel and entertainment. Most authorities expect ATM usage to grow rapidly as these machines offer more services and as bankers increasingly move to restrict customer access to more costly human tellers and other bank personnel, often by charging extra fees for personal service.ATMs do have some significant limitations that bankers will have to work to overcome. They break down and need to be replaced, sometimes quite frequently and annoyingly for customers, and as technology changes often become quickly outdated. Customer activity around ATMs, particularly at night, has invited criminals to steal money and injure customers, sometimes creating liability for banks. Moreover, not all customers make use of these facilities due to a preference for personalized service, fear of crime, or unfamiliarity with how the machines work. Customer education and better service pricing are two important tools that could help with these problem areas in the future. In addition, ATMs do not rank high in their ability to sell peripheral services. Some banks have found that there has been a sharp decline in their ability to sell other services. Finally, ATMs are not necessarily profitable for all banks. Because they are available 24 hours, some customers may make more frequent and smaller withdrawals from the machine than they would with a human teller, driving up the costs. In addition, these same customers will often still demand a human teller to deposit their pay check, making the bank keep both tellers and ATM machines.Whether ATM should carry a fee is rather controversial. Recently, two of the largest ATM networks have decided to let owners of ATMs charge non-customers a surcharge. Several regional have begun to charge fees as well. These fees reflect the usage of ATMs. About 85% of all ATM transactions consist of cash withdrawals and only about 10 percent represent incoming deposits. In addition, in many places, ATM usage has declined as customers pass over ATMs in favor of credit and debit cards, onsite terminals and the internet.4-19. What are self-service terminals and what advantages do they have for financial institutions and their customers?Self-service terminals include ATMs and other computer-based limited-service facilities that permit a customer to call up information about his or her account and recent transactions with the institution or information about different services that the customer might be interested in purchasing. Many are accessible 24 hours a day or are easier to get to rather than wait for the help of personnel. They can save on resources by saving on staff time. Many institutions are adding telephones and video screens so that customers with problems can dial up an employee day or night with problems. This is also saving money because they can avoid duplication of staff at each branch.4-20. What financial services are currently available from banks on the internet? What problems have been encountered in trying to offer internet services?Customers can make payments, check on account balances, move funds between accounts and get applications for loans, deposits and other services. In addition banks can advertise on the web. Some of the problems include protecting customers’ privacy and heading off crime. In addition, the web does not make it easy for a bank to get to know their customers personally. The cost may also be prohibitive to some customers.4-21. How can financial firms better promote internet services?They need to emphasize the safety of their internet services. They need to promote their home page at every opportunity and update it frequently to keep customers’ interest. They need to survey customers about their satisfaction with the services and encourage dialogue via e-mail to resolve problems. They can also provide programs to download to act as screen savers (and advertisements) and also information about the institution and the services it provides. Problems4-1. A group of businessmen and women from the town of Mathews are considering filing an application with the state banking commission to charter a new bank. Due to a lack of current banking facilities within a 10-mile radius of the community, the organizing group estimates that the initial banking facility would cost about $3.2 million to build along with another $700,000 in other organizing expenses and would last for about 20 years. Total revenues are projected to be $510,000 the first year, while total operating expenses are projected to reach $180,000 in year 1. Revenues are expected to increase 6 percent annually after the first year, while expenses will grow an estimated 5 percent annually after year 1. If the organizers require a minimum of a 10 percent annual rate of return on their investment of capital in the proposed new bank, are they likely to proceed with their charter application given the above estimates?Year Revenues Op Expense Net Profits1 $510,000 $180,000 $330,0002 $540,600 $189,000 $351,6003 $573,036 $198,450 $374,5864 $607,418 $208,373 $399,0465 $643,863 $218,791 $425,0726 $682,495 $229,731 $452,7647 $723,445 $241,217 $482,2288 $766,851 $253,278 $513,5739 $812,863 $265,942 $546,92110 $861,634 $279,239 $582,39511 $913,332 $293,201 $620,13112 $968,132 $307,861 $660,27113 $1,026,220 $323,254 $702,96614 $1,087,793 $339,417 $748,37715 $1,153,061 $356,388 $796,67316 $1,222,245 $374,207 $848,03817 $1,295,579 $392,917 $902,66218 $1,373,314 $412,563 $960,75119 $1,455,713 $433,191 $1,022,52220 $1,543,056 $454,851 $1,088,205Initial Investment $3,900,000Required Rate of Return 0.10Present Value of Future CashFlows $4,491,642Net Present Value of Investment $591,642Given the above information, the organizers are likely to proceed given that the net present value of this investment is positive. The return they are going to earn is greater than the 10% they need to earn.4-2. Andover Savings Bank is considering the establishment of a new branch office at the corner of Lafayette and Connecticut Avenues. The savings association’s Economics Department projects annual operating revenues of $1.75 million from services sold to generate fee income and annual branching operating expenses of $880,000. The cost of procuring the property is $2.5 million and branch construction will total an estimated $2.32 million; the facility is expected to last 16 years. If the savings bank has a minimum acceptable rate of return on its invested capital of 12 percent, will Andover likely proceed with this branch office project?Year Revenues Op Expenses Net Profits1 $1,750,000 $880,000 $870,0002 $1,750,000 $880,000 $870,0003 $1,750,000 $880,000 $870,0004 $1,750,000 $880,000 $870,0005 $1,750,000 $880,000 $870,0006 $1,750,000 $880,000 $870,0007 $1,750,000 $880,000 $870,0008 $1,750,000 $880,000 $870,0009 $1,750,000 $880,000 $870,00010 $1,750,000 $880,000 $870,00011 $1,750,000 $880,000 $870,00012 $1,750,000 $880,000 $870,00013 $1,750,000 $880,000 $870,00014 $1,750,000 $880,000 $870,00015 $1,750,000 $880,000 $870,00016 $1,750,000 $880,000 $870,000Initial Investment $4,820,000Required Rate of Return 0.12Present Value of Future CashFlows $6,067,368Net Present Value of Investment $1,247,368Andover is likely to proceed with this project because the net present value is positive. This means that the interest rate that Andover will earn on this project is higher than the 12% they need to earn. 4-3. Jackson Bank of Commerce estimates that building a new branch office in the newly developed Guidar residential township will yield an annual expected return of 13 percent with an estimated standard deviation of 5 percent. The bank’s marketing department estimates that cash flows from the proposed Guidar branch will be mildly correlated (with a correlation coefficient of +0.3) with the bank’s other sources of cash flow. The expected annual return from the bank's existing facilities and other assets is 10 percent with a standard deviation of 3 percent. The branch will represent just 10 percent of Jackson’s total assets. Will the proposed branch increase Sullivan's overall rate of return? Its overall risk?The estimated total rate of return would be:E (R) = 0.10 (13%) + 0.90 (10%) = 10.3%The risk attached to this overall return rate would be:Thus ?? 2.89% and the branch will slightly increase the bank's expected return but slightly decrease its overall risk. The bank should proceed with this project.4-4. The following statistics and estimates were compiled by First Savings Bank of Talbot regarding a proposed new branch office and the bank itself:Branch Office Expected Return 16%Standard Deviation of Return = 7%Ban k’s overall expected return= 10%Standard deviation of bank’s return= 3%Branch Asset Value as a Percentof Total Bank Assets = 15%Correlation of Cash Flows = + 0.27What will happen to the Talbot’s total expected return and overall risk if the proposed new branch is adopted?The bank's total expected return is:E (R) = 0.15 (16%) + 0.85 (10%) = 10.9%The bank's risk exposure is:σ=And thus .0301 or 3.01%The proposed project raises the savings banks expected return slightly and does not affect the risk of the bank. This is a good project.4-5. First National Bank of Yukon is considering installing 3 ATMs in its westside branch. The new machines are expected to cost $48,000 apiece. Installation costs will amount to about $16,000 per machine. Each machine has a projected useful life of 10 years. Due to rapid growth in the westside district these three machines are expected to handle 180,000 transactions per year. On average, each cash transaction is expected to save $0.32 per transaction in check processing costs. If First National has a 12% cost of capital, should the bank proceed with this investment project? Year Savings1 $57,600 (.32*180,000)2 $57,6003 $57,6004 $57,6005 $57,6006 $57,6007 $57,6008 $57,6009 $57,60010 $57,600Initial Investment 192000 (48,000*3+16,000*3)Required Rate of Return 0.12Present Value of Future CashFlows $325,452.85Net Present Value $133,452.85The net present value of this project is positive. First National Bank of Yukon should add the ATM machines to the Westside.4-6. First State Security Bank is planning to set up its own web page to advertise its location and services on the Internet and to offer customers selected service options, such as paying recurring household bills, verification of account balances, and dispensing deposit account and loan application forms. What factors should First State take into account as it plans its own web page and Internet service menu? How can the bank effectively differentiate itself from other banks currently present on the Internet? How might the bank be able to involve its own customers in designing its web site and pricing its Internet service package?The bank should remember that while the internet is a relatively low cost way of expanding and allows customers to find the bank rather than the bank having to find customers, there are serious concerns about privacy. In addition, the Internet is not limited by geography and while there are thousands of potential customers, there are also many financial institutions around the world competing for customer deposits and loans. The bank needs to be aware that there are many bank web pages out there and that they will need to invest in employees with the technical expertise to manage the new web site well. One of the first things the bank needs to do is to take steps to protect its customers and let its customers know what its privacy and security policies are. Another step the bank can take is to start with a customer survey to find out what its customers want and need from the bank’s Internet services. They can run this as a contest and give away some small items to the customer with the best ideas for the web page and Internet service. This should help get customers involved in the design and implementation of the web page and may help the bank start building an online customer base.。

商业银行管理彼得S.罗斯英文原书第8版-英语试题库Chap002

Chapter 2The Impact of Government Policy and Regulation on the Financial-Services IndustryFill in the Blank Questions1. The _____________________ was created as part of the Glass Steagall Act. In the beginning itinsured deposits up to $2,500.Answer: FDIC2. The________________________ is the law that states that a bank must get approved from theirregulatory body in order to combine with another bank.Answer: Bank Merger Act3. One tool that the Federal Reserve uses to control the money supply is _________________ . TheFederal Reserve will buy and sell T-bills when they are using this tool of monetary policy.Answer: open market operations4. The__________________________ was created in 1913 in response to a series of economicdepressions and failures. Its principal role is to serve as the lender of last resort and to stabilize the financial markets.Answer: Federal Reserve5. The __________________________ prevented banks from crossing state lines and made nationalbanks subject to the branching laws of their state. This act was later repealed by the Riegle Neal Interstate Banking law.Answer: McFadden-Pepper Act6. Because the FDIC levies fixed insurance premiums regardless of risk, this leads to a problem calledthe ____________________ among banks. The fixed premiums encourage all banks to accept greater risk.Answer: moral hazard7. In 1980, __________________________ was passed and lifted government ceilings on depositinterest rates in favor of free market interest rates.Answer: DIDMCA15 / 138. One tool that the Federal Reserve uses to control the money supply is _________________. TheFederal Reserve will change the interest rate they charge for short term loans when they are using this tool of monetary policy.Answer: changing the discount rate9. The first major federal banking law in the U.S. was the __________________________. This lawwas passed during the Civil War and set up a system for chartering national banks and created the OCC.Answer: National Banking Act10. The_________________________ was passed during the Great Depression. It separatedinvestment and commercial banks and created the FDIC.Answer: Glass-Steagall Act11. The__________________________ brought bank holding companies under the jurisdiction of theFederal Reserve.Answer: Bank Holding Company Act12. The__________________________ allows bank holding companies to acquire banks anywhere inthe United States. However, no one bank can control more than 30 percent of the deposits in any one state or more than 10 percent of the deposits across the country.Answer: Riegle-Neal Interstate Banking Act13. The allows banks to affiliate with insurance companies and securitiesfirms either through a holding company or as a subsidiary.Answer: Gramm-Leach-Bliley Act (Financial Services Modernization Act)14. Customers of financial-service companies may _____________________ of having their privateinformation shared with a third party such as a telemarketer. However, in order to do this they must tell the financial-services company in writing that they do not want their personal information shared with outside parties.Answer: opt out15. The federal bank regulatory agency which examines the most banks is the ______________.Answer: FDIC16. The _________________ requires financial service companies to report suspicious activity incustomer accounts to the Treasury Department.Answer: U.S. Patriot Act17. The central bank of the new European Union is known as the _______________________.Answer: European Central Bank or ECB18. The _____________________ Act prohibits banks and other publicly owned firms frompublishing false or misleading financial performance information.Answer: Sarbanes-Oxley19.One of the main roles of the Federal Reserve today is . They have three tools thatthey use today to carry out this role; open market operations, the discount rate and legal reserverequirements.Answer: monetary policy20.The is the center of authority and decision making within the FederalReserve. It consists of seven members appointed by the president for terms not exceeding 14 years.Answer: Board of Governors21.The main regulators of insurance companies are .Answer: state insurance commissions22.Federal Credit Unions are regulated and examined by .Answer: the National Credit Union Administration.23.The makes it easier for victims of identity theft to alerts and allowsthe public to apply for a free credit report once a year.Answer: Fair and Accurate Credit Transactions Act (FACT Act)24.The makes it faster and less costly for banks to clear checks. Itallows for banks to electronically send check images instead of shipping paper checks across the country.Answer: Check 21 Act25.The was created by the National Banking Act and is part of theTreasury Department. It is the primary regulator of National Banks.Answer: Office of the Comptroller of the Currency (OCC)26.The _________________________ proposes various regulations applying to the financial marketsto combat the recent credit crisis. This “bail-out” bill granted the US Treasury the means topurchase troubled loans, allowed the FDIC to temporarily increase deposit insurance, andpermitted the government to inject additional capital into the banking system.Answer: The Emergency Economic Stabilization Act of 2008True/False Questions17 / 13T F 27. Federal Reserve Act authorized the creation of the Federal Deposit Insurance Corporation.Answer: FalseT F 28. In the United States, fixed fees charged for deposit insurance, regardless of how risky a bank is, led to a problem known as moral hazard.Answer: TrueT F 28. Government-sponsored deposit insurance typically encourages individual depositors to monitor their banks' behavior in accepting risk.Answer: FalseT F 29. The Federal Reserve changes reserve requirements frequently because the affect of these changes is so small.Answer: FalseT F 30. The Bank Merger Act and its amendments requires that Bank Holding Companies be under the jurisdiction of the Federal Reserve.Answer: FalseT F 31. National banks cannot merge without the prior approval of the Comptroller of the Currency.Answer: TrueT F 32. The Truth in Lending (or Consumer Credit Protection) Act was passed by the U.S.Congress to outlaw discrimination in providing bank services to the public.Answer: FalseT F 33. The federal law that states individuals and families cannot be denied a loan merely because of their age, sex, race, national origin or religious affiliation is known as the CompetitiveEquality in Banking Act.Answer: FalseT F 34. Under the terms of the 1994 Riegle-Neal Interstate Banking law bank holding companies can acquire a bank anywhere inside the United States, subject to Federal Reserve Boardapproval.Answer: TrueT F 35. The 1994 federal interstate banking bill does not limit the percentage of statewide or nationwide deposits that an interstate banking firm is allowed to control.Answer: FalseT F 36. The term "regulatory dialectic" refers to the dual system of banking regulation in the United States and selected other countries where both the federal or central governmentand local governments regulate banks.Answer: FalseT F 37. The moral hazard problem of banks is caused by the fixed insurance premiums paid by banks and causes banks to accept greater risk.Answer: TrueT F 38. When the Federal Reserve buys T-bills through its open market operations, it causes the growth of bank deposits and loans to decrease.Answer: FalseT F 39. When the Federal Reserve increases the discount rate it generally causes other interest rates to decrease.Answer: FalseT F 40. The National Bank Act (1863) created the Federal Reserve which acts as the lender of last resort.Answer: FalseT F 41. FIRREA (1989) allowed bank holding companies to acquire nonblank depository institutions and, if desired, convert them into branch offices.Answer: TrueT F 42. The Sarbanes-Oxley Act allows banks, insurance companies, and securities firms to form Financial Holding Companies (FHCs).Answer: FalseT F 43. The Gramm-Leach-Bliley Act of 1999 essentially repeals the Glass-Steagall Act passed in the 1930s.Answer: TrueT F 44. Passed in 1977, the Equal Credit Opportunity Act prohibits banks from discriminating against customers merely on the basis of the neighborhood in which they live.Answer: FalseT F 45. The tool used by the Federal Reserve System to influence the economy and behavior of19 / 13banks is known as moral hazard.Answer: FalseT F 46. One of the principal reasons for government regulation of financial firms is to protect the safety and soundness of the financial system.Answer: TrueMultiple Choice Questions47.Banks are regulated for which of the reasons listed below?A) Banks are leading repositories of the public's savings.B) Banks have the power to create money.C) Banks provide businesses and individuals with loans that support consumption and investmentspending.D) Banks assist governments in conducting economic policy, collecting taxes and dispensinggovernment payments.E) All of the above.Answer: E48.An institutional arrangement in which federal and state authorities both have significant bankregulatory powers is referred to as:A) Balance of PowerB) FederalismC) Dual Banking SystemD) Cooperative RegulationE) Coordinated ControlAnswer: C49.The law that set up the federal banking system and provided for the chartering of national bankswas the:A) National Bank ActB) McFadden-Pepper ActC) Glass-Steagall ActD) Bank Merger ActE) Federal Reserve ActAnswer: A50.The federal law that prohibited federally supervised commercial banks from offering investmentbanking services on privately issued securities is known as:A) The Glass-Steagall ActB) The Bank Merger ActC) The Depository Institutions Deregulation and Monetary Control ActD) The Federal Reserve ActE) None of the AboveAnswer: A51.The Gramm-Leach-Bliley Act (Financial Services Modernization Act) calls for linkinggovernment supervision of the financial-services firm to the types of activities that the firmundertakes. For example the insurance portion of the firm would be regulated by state insurance commissions and the banking portion of the firm would be regulated by banking regulators. This approach to government supervision of financial services is known as:A) Consolidated regulation and supervision.B) Functional regulation.C) Services oversight.D) Umbrella supervision and regulation.E) None of the above.Answer: B52.The Federal Reserve policy tool under which the Fed attempts to bring psychological pressure tobear on individuals and institutions to conform to the Fed's policies, using letters, phone calls, and speeches, is known as:A) Margin requirementsB) Moral suasionC) Discount window supervisionD) Conference and compromiseE) None of the above.Answer: B53.The 1994 law that allowed bank holding companies to acquire banks anywhere in the U.S. is:A) The Glass-Steagall ActB) The Federal Deposit Insurance Corporation Improvement ActC) The National Bank ActD) The Riegle-Neal Interstate Banking and Branching Efficiency Act.E) None of the above.Answer: D54.The federal law that allowed the Federal Reserve to set margin requirements is:A) The National Banking Act.B) The McFadden-Pepper Act.C) The Glass Steagall Act.D) The Federal Reserve Act.E) None of the above.Answer: C55.Of the principal reasons for regulating banks, what was the primary purpose of the NationalBanking Act (1863)?A) Protection of the public's savingsB) Control of the money supplyC) Providing support for government activitiesD) Maintaining confidence in the banking systemE) Preventing banks from realizing monopoly powers21 / 1356.Of the principal reasons for regulating banks, what was the primary purpose of the Federal ReserveAct of 1913?A) Protection of the public's savingsB) Control of the money supplyC) Preventing banks from realizing monopoly powersD) Ensuring an adequate and fair supply of loansE) None of the above.Answer: B57.The law that allows lifted government deposit interest ceilings and allowed them to pay acompetitive interest rate is:A) The National Banking Act.B) The Glass Steagall Act.C) The Bank Merger Act.D) DIDMCAE) None of the above.Answer: D58.The law that allows banks to affiliate with insurance companies and security brokerage firms toform financial services conglomerates isA) The National Banking ActB) The Glass Steagall ActC) The Garn St. Germain ActD) The Riegle Neal Interstate Banking ActE) The Gramm-Leach-Bliley Act (Financial Services Modernization Act)Answer: E59.Of the principal reasons for regulating banks, what was the primary purpose of the Truth inLending Law?A) Protection of the public's savingsB) Control of the money supplyC) Preventing banks from realizing monopoly powersD) Ensuring an adequate and fair supply of loansE) None of the above.Answer: D60.Which of the following is an unresolved issue in the new century?A) What should be done about the regulatory safety net set up to protect small depositors?B) If financial institutions are allowed to take on more risk, how can taxpayers be protected frompaying the bill when more institutions fail?C) Does functional regulation actually work?D) Should regulators allow the mixing of banking and commerce?E) All of the above are unresolved issues61.The law that made bank and nonbank depository institutions more alike in the services they couldoffer and allowed banks and thrifts to more fully compete with other financial institutions is:A) The National Banking ActB) The Federal Reserve ActC) The Garn-St. Germain ActD) The Riegle-Neal Interstate Banking and Branching Efficiency ActE) The Gramm-Leach-Bliley Act (Financial Services Modernization Act)Answer: C62.The law that allowed bank holding companies to acquire nonbank depository institutions andconvert them to branches is:A) The National Banking ActB) The Garn-St. Germain ActC) FIRREAD) The Riegle-Neal Interstate Banking and Branching Efficiency ActE) None of the AboveAnswer: C63.The equivalent of the Federal Reserve System in Europe is known as the:A) European UnionB) Bank of LondonC) Basle GroupD) European Central BankE) Swiss Bank CorporationAnswer: D64.The new financial organization created by Gramm-Leach-Bliley is theA) Financial Holding CompanyB) Bank Holding CompanyC) European Central BankD) Financial Service CorporationE) Financial Modernization OrganizationAnswer: A65.The act which requires financial institutions to share information about customer identities withgovernment agencies is:A) The Sarbanes-Oxley ActB) The U.S. Treasury Department ActC) The 9/11 ActD) The USA Patriot ActE) The Gramm-Leach-Bliley ActAnswer: D23 / 1366.The 1977 law that prevents banks from “redlining” certain neig hborhoods, refusing to serve thoseareas is:A) The National Banking ActB) The Garn-St. Germain ActC) FIRREAD) The Riegle-Neal Interstate Banking and Branching Efficiency ActE) Community Reinvestment Act (CRA)Answer: Emon minimum capital requirements on banks in leading industrialized nations that are basedon the riskiness of their assets is imposed by:A) The National Banking ActB) FIRREAC) The International Banking ActD) The Basel AgreementE) None of the AboveAnswer: D68.The fastest growing crime in the U.S. is:A) Financial statement misrepresentationB) Bank robberiesC) Individual privacy violationsD) Credit card fraudE) Identity theftAnswer: E69.The oldest federal bank agency is the:A) OCCB) FDICC) FRSD) FHCE) BHCAnswer: A70.The federal agency that regulates the most banks is the:A) OCCB) FDICC) FRSD) FHCE) BHCAnswer: B71.Which federal banking act requires that financial service providers establish the identity of anycustomers opening new accounts?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: B72.Which federal banking act prohibits publishing false or misleading information about the financialperformance of a public company and requires top corporate officers to vouch for the accuracy of their company’s financial statements?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: A73.Which federal banking act reduces the need for banks to transport paper checks across the country?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: C74.Which federal banking act forces more individuals to repay at least part of what they owe and willpush higher-income borrowers into more costly forms of bankruptcy?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: E75.Which federal banking act requires the Federal Trade Commission to make it easier for victims ofidentity theft to make theft reports and requires credit bureaus to help victims resolve theproblem?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: D76.The _________ allows adequately capitalized bank holding companies to acquire banks in anystate.A)Riegle-Neal Interstate Banking and Branching Efficiency ActB)Competitive Equality Banking Act25 / 13C)Financial Institutions Reform, Recovery and Enforcement ActD)Federal Deposit Insurance Corporation Improvement ActE)Depository Institutions Deregulation and Monetary Control ActAnswer: A77.One of the earliest theories regarding the impact of regulation on banks was developed by GeorgeStigler. He contends that:A) Firms in regulated industries actually seek out regulations because they bring monopolisticrents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulatedfirms.D) Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E) None of the aboveAnswer: A78.Samual Peltzman had an opposing view to George Stigler on the impact of regulation on banks. Hecontends that:A) Firms in regulated industries actually seek out regulations because they bring monopolisticrents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulatedfirms.D) Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E) None of the aboveAnswer: B79.There is an important debate raging today regarding whether banks should be regulated at all.George Benston contends that:A) Firms in regulated industries actually seek out regulations because they bring monopolisticrents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulatedfirms.D) Depository institutions should be regulated no differently than any other corporation with nosubsidies or special privileges.E) None of the aboveAnswer: D80.The European Central Bank has the main goal of:A) Ensuring the economy grows at an adequate rate.B) Keeping unemployment low.C) Ensuring price stability.D) Ensuring an adequate and fair supply of loans.E) All of the aboveAnswer: C81.Which of the following has become the principal tool of central bank monetary policy today?A) Open market operationsB) Changing the discount rateC) Changing reserve requirementsD) Using moral suasionE) None of the aboveAnswer: A82.The Federal Reserve buys Treasury Bills in the open market. This will tend to:A) Cause interest rates in the market to riseB) Cause interest rates in the market to fallC) Cause reserves held at the Federal Reserve to decreaseD) Cause a decrease in the growth of deposits and loansE) All of the aboveAnswer: B83.Which federal banking act extends deposit insurance coverage on qualified retirement accountsfrom $100,000 to $250,000 and authorizes the FDIC to periodically increase deposit insurance coverage to keep up with inflation?A) Sarbanes-Oxley ActB) The Gramm-Leach-Bliley ActC) Check 21 ActD) The FACT ActE) Federal Deposit Insurance Reform ActAnswer: E84.The Financial Services Regulatory Relief Act of 2006 does the following:A) Adds selected new service powers to depository institutionsB) Loosens regulations on depository institutionsC) Grants the Federal Reserve authority to pay interest on depository institutions’ legal reservesD) All of the aboveE) None of the aboveAnswer: D85.The Emergency Economic Stabilization Act passed in 2008 during the global credit crisis allowedthe following:A) An emergency sale of “bad assets”B) Temporary increase of FDIC deposit insurance to $250,000 for all depositsC) Injections of capital by the government into banks and other qualified lendersD) Closer surveillance of the mortgage market participants, such as brokers and lendersE) All of the aboveAnswer: E27 / 13。

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap003

Chapter 3The Organization and Structure of Banking and the Financial-Services IndustryFill in the Blank Questions1. A(n) ___________________ is a machine located at the merchant's place of business which allowsdepositors to use their debit card to pay for purchases directly.Answer: POS2. A(n) _____________________ is a bank which offers its full range of services from severallocations.Answer: branch bank3. A(n) _____________________ is a bank which offers its full range of services from only onelocation.Answer: unit bank4. A(n)________________________ is a corporation chartered for the express purpose of holdingthe stock of one or more banks.Answer: Bank Holding Company5. Managers who value fringe benefits, plush offices and ample travel budgets over the pursuit ofmaximum returns for stockholders are exhibiting signs of __________________________.Answer: Expense Preference Behavior6.A(n) __________________________ can invest in corporate stock as sell as loan money to helpfinance the start of new ventures or support the expansion of existing businesses.Answer: Merchant bank7. A bank which operates exclusively over the internet is known as a ___________ bank.Answer: Virtual8. One new 21st century bank organizational structures is _____________________ . This is aspecial type of holding company that may offer the broadest range of financial services.Answer: Financial Holding Company (FHC)9.The key problem in a large money center bank is . Managers may beknowledgeable about banking practices but may be less informed about products and services of subsidiary companies.Answer: span of control10.The Gramm-Leach-Bliley Act moved the U.S. banking industry closer to banking inwhich banks may provide securities, insurance, and other financial products.Answer: universal11.A bank that is not associated with a bank holding company is called a(n) bank.Answer: independent12. is a view of how modern corporations operate which analyzes therelationship between a firm’s owners and its managers.Answer: Agency theory13.Many experts believe that , the relationships that exist between managers,the board of directors and stockholders, is more complicated in financial institutions. Answer:Because of government regulations.14. is the idea that there will be a lower cost of production perunit as the firm gets larger.Answer: Economies of scale15. is the idea that there will be lower cost of producing multipleservices using the same organization and resources.Answer: Economies of scope16.Over the years, managers of banks and other financial institutions have evolved differentorganizational forms to address changes in the industry. Indeed, these firms are organized to carry out various roles in the most efficient way. This is referred to as _________________________.Answer: Organizational form follows functionTrue/False QuestionsT F 17. Bank size is not considered a significant factor in determining how banks are organized.Answer: FalseT F 18. Nearly three quarters of all U.S. banks exceed $100 million in asset size apiece.Answer: FalseT F 19. Nearly all U.S. banks with federal or state charters have their deposits insured by the Federal Deposit Insurance Corporation.Answer: TrueT F 20. State-chartered banks in the United States represent about a quarter of all U.S.-chartered banks, while national banks account for approximately three quarters of all U.S. charteredbanks.Answer: FalseT F 21. The majority of all U.S. banks are members of the Federal Reserve System.Answer: FalseT F 22. A banking corporation chartered by either federal or state governments that operates only one full-service office is called a unit bank.Answer: TrueT F 23. Over half of all U.S. states today limit branching activity.Answer: FalseT F 24. The average U.S. bank is larger in size (in terms of number of branch offices) than the average Canadian bank.Answer: FalseT F 25. Despite the rapid growth of automation in U.S. banking, there are more full-service branch banking offices than automated teller machines across the whole U.S.Answer: FalseT F 26. In the United States there are more one-bank holding companies than multi-bank holding companies.Answer: TrueT F 27. Bank holding companies hold more than 90 percent of the industry’s assets in the United States.Answer: TrueT F 28. Research evidence suggests that banks taken over by interstate banking organizations have generally increased their market shares over their competitors within the same state andgenerally are more profitable than their competitors.Answer: FalseT F 29. The concentration of bank deposits at the local level (that is in urban communities and rural counties) has displayed only moderate changes in recent years.Answer: TrueT F 30. There is evidence that branch banks charge higher fees for some banking services than do unit banks.Answer: TrueT F 31. Branch banks tend to offer a wider menu of services than unit banks.Answer: FalseT F 32. Recent research suggests that branch banks tend to be more profitable than either unit or holding company banks, while interstate banks tend to be the most profitable of all.Answer: FalseT F 33. Less than 10 percent of the largest banks in the U.S. control almost 90 percent of the industry assets.Answer: TrueT F 34. Agency theory suggests that bank management will always pursue the goal of maximizing the return of the bank's shareholders.Answer: FalseT F 35. Recent research suggests that the relationship between bank size and the cost of production per unit is roughly U shaped.Answer: TrueT F 36. Bank holding companies that want to achieve the goal of risk reduction in earnings risk through interstate banking can achieve the same level of risk reduction by entering any ofthe fifty states.Answer: FalseT F 37. Bank holding companies are allowed to own nonbank businesses as long as those businesses offer services closely related to banking.Answer: TrueT F 38. Banks tend to have a higher proportion of outside directors than a typical manufacturing firm.Answer: TrueT F 39. Banks which operate entirely on the web are known as invisible banks.Answer: FalseT F 40. Banks acquired by holding companies are referred to as affiliated banks.Answer: TrueT F 41. Bank organizational structure has become more complex in recent years.Answer: TrueT F 42. There are only a very small number of unit banks in the U.S. today.Answer: FalseT F 43. Traditional brick-and-mortar bank branch offices are on the decline in the U.S. today.Answer: FalseT F 44. Community banks are usually smaller banks that are devoted principally to the markets for smaller, locally based deposits and loans.Answer: TrueT F 45. The question of whether financial firms operate as efficiently as possible requires researchers to look into the issue of x-efficiency. The concept requires an assessment of thefinancial firm’s operating costs in relation to its cost-efficient frontier.Answer: TrueMultiple Choice Questions46.In banking, organizational form follows __________ because banks usually are organized in such away as to carry out the tasks and supply the services demanded of them. The term that correctly fills in the blank in the sentence above is:A) Bank sizeB) Management's decisionC) FunctionD) RegulationE) LocationAnswer: C47.Which one of the following is charged with setting policy and overseeing a bank's performance?A) StockholdersB) Board of directorsC) RegulatorsD) DepositorsE) None of the above.Answer: B48.The largest banks possess some potential advantages over small and medium-size banks, accordingto the textbook. What specific advantage of the largest banks over small and medium-sized banks is not mentioned in the text?A) Greater diversification geographically and by product lineB) Availability of financial capital at lower costC) Greater professional expertise to allocate capital to the most promising products and servicesD) Better positioned to take advantage of the opportunities afforded by interstate banking.E) All of the above were mentioned in the text as advantages typically possessed by the largestbanks.Answer: E49.Before any financial services can be offered to anyone a bank in the United States must have a:A) Certificate of deposit insuranceB) Charter of incorporationC) List of established customersD) New building constructed to be the bank's permanent homeE) None of the above.Answer: B50.In the United States there are close to __________ commercial banks in operation. Which numbershown below is closest to the actual total number of U.S. banks operating in the U.S.?A) 20,500B) 13,500C) 11,500D) 9,000E) 7,500Answer: E51.One of the few states that has opted out of interstate banking is:A) New YorkB) OhioC) TexasD) MontanaE) None of the aboveAnswer: D52.The concentration of U.S. bank deposits in the hands of the largest banks has _________ during themost recent period,A) DeclinedB) IncreasedC) Remained essentially unchangedD) Exhibited large fluctuations in both directionsE) None of above.Answer: B53.Bank holding company organizations have several advantages over other types of bankingorganizations. Among the advantages mentioned in this chapter is:A) Greater ease of access to capital marketsB) Tax advantageC) Product-line diversificationD) All of the above.E) None of the above.Answer: D54.A company which owns the stock of three different banks is known as a(n):A) Unit BankB) Interstate BankC) One Bank Holding CompanyD) Multi Bank Holding CompanyE) None of the aboveAnswer: D55.Which of the following is considered an advantage of branch banking?A) Increased availability and convenience of servicesB) Decreased chance of failureC) Reduced transaction costsD) B and C aboveE) All of the aboveAnswer: E56.The types of nonbank businesses a bank holding company can own include which of the following?A) Retail Computer StoreB) Security Brokerage FirmC) Retail Grocery StoreD) Wholesale Electronic Distribution CompanyE) All of the aboveAnswer: B57.A bank which offers its full range of services from only one office is known as a:A) Unit BankB) Branch BankC) Correspondent BankD) Bank Holding CompanyE) None of the aboveAnswer: A58.Why did so many states and the federal government finally enact interstate banking laws?A) The need for new capital in order to revive struggling economiesB) The expansion of services by nonbank financial institutionsC) Competition from neighboring states that already liberalized their lawsD) Advances in technology which allowed banks to service customers in broader geographic areasE) All of the above are reasons for the passage of interstate banking lawsAnswer: E59.What is a bank holding company?A) It is a bank that offers all of its services out of one officeB) It is a bank that offers all its services out of several officesC) It is a corporation formed to hold the stock of one or more banksD) It is a merchant bankE) None of the aboveAnswer: C60.Which of the following is a type of service a bank holding company is not allowed to own?A) Merchant banking companyB) Savings and loan associationC) Retail electronics equipment sales companyD) Security brokerage firmE) Insurance agencyAnswer: C61.In the last decade, the number of banks has __________ and the number of branches has_________.A) Declined; IncreasedB) Grown; IncreasedC) Grown; DecreasedD) Declined; DecreasedE) Stabilized; StabilizedAnswer: A62.Websites known as electronic branches offer all of the following except:A) Internet banking servicesB) ATMsC) Point of sales terminalsD) Computer and phone services connecting customersE) Traveler's checksAnswer: E63.Relative to manufacturing firms, banks tend to have a (the) ___________ number of boardmembers.A) SameB) LargerC) SmallerD) UnknownE) None of the aboveAnswer: B64.The percentage of unit banks in the U.S. today is approximately:A) 10%B) 30%C) 50%D) 75%E) 100%Answer: B65.The ‘typical’ community bank has:A) $300 million in assets and is located in a smaller city in the Midwest.B) $25 billion in assets and is located in a large city in the EastC) $100 million in assets and is located in a large city the SouthD) $10 billion in assets and is located in a small city in the WestE) None of the aboveAnswer: A66.The ‘typical’ money center bank has:A) $250 million in assets and is located in a smaller city in the MidwestB) $25 billion in assets and is located in a large city in the EastC) $100 million in assets and is located in a large city in the SouthD) $10 billion in assets and is located in a small city in the WestE) None of the aboveAnswer: B67.The majority of banks today are:A) Federally charteredB) UninsuredC) State CharteredD) National BanksE) All of the aboveAnswer: C68.‘Member’ banks are:A) Members of the FDICB) National BanksC) Unit BanksD) Members of the Federal ReserveE) All of the aboveAnswer: D69. and banks tend to be larger and hold more of the public’sdeposits.A) National and MemberB) State and NonmemberC) National and UninsuredD) State and InsuredE) None of the aboveAnswer: A70.Which of the following is a reason for the rapid growth in branch banks?A) Exodus of population from cities to suburban areasB) Bank convergenceC) Business failuresD) Decreased costs of brick and mortarE) All of the aboveAnswer: A71.Under the Bank Holding Company Act control of a bank is assumed to exist only if:A) The bank holding company acquires 100% of the bank’s stockB) The bank holding company acquires 50% or m ore of the bank’s stockC) The bank holding company acquires 25% or more the bank’s stockD) The bank holding company acquires three banksE) None of the aboveAnswer: C72.When a bank holding company acquires a nonbank business it must be approved by:A) The FDICB) The Comptroller of the CurrencyC) The Federal ReserveD) The President of the U.S.E) All of the aboveAnswer: C73.Many financial experts believe that the customers most likely to be damaged by decreasedcompetition include:A) Large corporations in large citiesB) Households and business in smaller cities and townsC) Households that earn more than a billion dollars a yearD) Students away at collegeE) None of the aboveAnswer: B74.According to Levonian and Rose in order to achieve some reduction in earnings risk,interstate banks must expand into at least:A) 2 statesB) 4 statesC) 6 statesD) 10 statesE) 25 statesAnswer: B75.The major competitors of banks have:A) Fewer but much larger service providersB) Fewer but smaller service providersC) More but smaller service providersD) More but larger service providersE) None of the aboveAnswer: A76.Of the following countries in Europe, which has the largest number of banks?A) BelgiumB) FranceC) GermanyD) Great BritainE) None of the aboveAnswer: C77.Which country’s banks were owned by the state until the 1990’s?A) BelgiumB) FranceC) GermanyD) ItalyE) None of the aboveAnswer: D78.When financial service providers offer a range of services including banking, insuranceand securities services it is known as:A) ConsolidationB) ConvergenceC) Economies of scaleD) E-EfficienciesE) None of the aboveAnswer: B79.The gradual evolution of markets and institutions such that geographic boundaries do notrestrict financial transactions is known as:A)DeregulationB)IntegrationC)Re-regulationD)GlobalizationE)Moral suasionAnswer: D80.Banks with less than _______ in assets are generally called community banks.A)More than $1 billionB)Less than $1 billionC)More than $5 millionD)Less than $1 trillionE)More than $1 trillionAnswer: B81.Nonbank financial firms that supply insurance coverage to customers borrowing money toguarantee repayment of a loan are referred to as:A) Merchant BankersB) Factoring CompaniesC) Savings AssociationsD) Investment BankersE) Credit Insurance UnderwritersAnswer: E82.A financial holding companies (FHC), defined as a special type of holding company thatmay offer the broadest range of financial services such as securities and insurance activities, were allowed under which act?A) Riegle-Neal Interstate Banking and Branching Efficiency ActB) The Competitive Equality in Banking ActC) The Basel AgreementD) The FDIC Improvement ActE) The Gramm-Leach-Bliley Financial Services Modernization Act Answer: E。

商业银行办理彼得S罗斯英文原书第8版英语试题库Chap016

4. When a bana piece of a loan from another bank they are purchasing what is known as a____________________________. Answer: participation
3. One of the 6 C’s of lending,______________ suggests that the lender must look to see if the borrower is legally entitled to sign a binding loan agreement. For an individual this entails making sure the borrower is of legal age to sign a contract. Answer: capacity
2. One of the 6 C’s of lending,______________ suggests that the lender must look at the position of the business firm in the industry and the outlook of the industry to evaluate a loan. Answer: condition
8. ____________________________ are loans which are secured by land buildings and other structures. These loans can be short term construction loans or longer term loans to finance the purchase of homes and apartments among others. Answer: Real estate loans

商业银行管理(罗斯)

The Roles of Commercial Banks
Intermediation Role Payment Role Guarantor Role Risk Management Role Investment Banking Role Savings/Investment Advisor Role Safekeeping/Certification of Value Role Agency Role Policy Role
Non-Bank Competition
Saving associations Mutual funds /Hedge funds Money market funds Credit unions Security brokers & dealers Investment banks Finance companies Finance holding companies
9th Edition
Peter S. Rose
COURSE DESCRIPTION

In the course of bank management and financial services as the research object, introduces the main business of the commercial bank and the provision of financial services, discusses the main aspects in the management of commercial banks. In this course students can master certain financial knowledge foundation, and understand the modern commercial banking business development trend, the better for the future to engage in financial business and lay a solid foundation. This course is mainly about the modern commercial bank's operation and management theory, focuses on the study of the environment of the commercial bank, business assets ( focus on the study of commercial bank nonperforming loan processing ), and liabilities of the business, intermediate business, online banking, capital management, asset liability management, risk management, marketing, financial management and performance evaluation and commercial bank's legal responsibility.

商业银行管理组织彼得S.罗斯英文原书第8版英语试题目整合Chap007

商业银行管理组织彼得S.罗斯英文原书第8版英语试题目整合Chap007Chapter 7Risk Management for Changing Interest Rates: Asset-Liability Management and Duration TechniquesFill in the Blank Questions1. The ___________________ view of assets and liabilities held that the amount and typesof deposits was primarily determined by customers and hence the key decision a bank needed to make was with the assets.Answer: asset management2. Recent decades have ushered in dramatic changes in banking. The goal of__________________ was simply to gain control of the bank's sources of funds.Answer: liability management3. The__________________________ is the interest rate that equalizes the current marketprice of a bond with the present value of the future cash flows.Answer: yield to maturity (YTM)4. The __________________ risk premium on a bond allows the investor to becompensated for their projected loss in purchasing power from the increase in the prices of goods and services in the future.Answer: inflation5. The __________________ shows the relationship between the time to maturity and theyield to maturity of a bond. It is usually constructed using treasury securities since they are assumed to have no default risk.Answer: yield curve6. The __________________ risk premium on a bond reflects the differences in the easeand ability to sell the bond in the secondary market at a favorable price.Answer: liquidity7. __________________________ are those assets which mature or must be repriced withinthe planning period.Answer: Interest-sensitive assets8. __________________________ is the difference between interest-sensitive assets andinterest-sensitive liabilities.Answer: Dollar interest-sensitive gap9. A(n)__________________________ means that the bank has more interest-sensitiveliabilities than interest-sensitive assets.Answer: negative interest-sensitive gap (liability sensitive)10. The bank's__________________________ takes into account the idea that the speed(sensitivity) of interest rate changes will differ for different types of assets andliabilities.Answer: weighted interest-sensitive gap11. __________________________ is the coordinated management of both the bank's assetsand its liabilities.Answer: Funds management12. __________________________ is the risk due to changes in market interest rates whichcan adversely affect the bank's net interest margin, assets and equity.Answer: Interest rate risk13. The__________________________ is the rate of return on a financial instrument using a360 day year relative to the instrument's face value.Answer: bank discount rate14. The __________________________ component of interest rates is the risk premium dueto the probability that the borrower will miss some payments or will not repay the loan.Answer: default risk premium15. __________________ is the weighted average maturity for a stream of future cashflows. It is a direct measure of price risk.Answer: Duration16. __________________________ is the difference between the dollar-weighted duration ofthe asset portfolio and the dollar-weighted duration of the liability portfolio.Answer: Duration gap17. A(n)__________________________ duration gap means that fora parallel increase in allinterest rates the market value of net worth will tend to decline.Answer: positive18. A(n)__________________________ duration gap means that fora parallel increase in allinterest rates the market value of net worth will tend to increase.Answer: negative19. The __________________ refers to the periodic fluctuations in the scale of economicactivity.Answer: business cycle20. The__________________________ is equal to the duration of each individual type ofasset weighted by the dollar amount of each type of asset out of the total dollar amount of assets.Answer: duration of the asset portfolio21. The__________________________ is equal to the duration of each individual type ofliability weighted by the dollar amount of each type of asset out of the total dollar amount of assets.Answer: duration of the liability portfolio22. A bank is __________________ against changes in its net worth if its duration gap isequal to zero.Answer: immunized (insulated or protected)23. The relationship between a change in an asset's price and an asset’s change inthe yield or interest rate is captured by __________________________.Answer: convexity24. The change in a financial institution's __________________ is equal to difference in theduration of the assets and liabilities times the change in the interest rate divided by the starting interest rate times the dollaramount of the assets and liabilities.Answer: net worth25. When a bank has a positive duration gap a parallel increase in the interest rates onthe assets and liabilities of the bank will lead to a(n) __________________ in the bank's net worth.Answer: decrease26. When a bank has a negative duration gap a parallel decrease in the interest rateson the assets and liabilities of the bank will lead to a(n)_________________________ in the bank's net worth.Answer: decrease27. U.S. banks tend to do better when the yield curve is upward-sloping because theytend to have ____________ maturity gap positions.Answer: positive28.One government-created giant mortgage banking firms which have subsequentlybeen privatized is the .Answer: FNMA or Fannie Mae (or FHLMC or Freddie Mac)29.One part of interest rate risk is . This part of interest raterisk reflects that as interest rates rise, prices of securities tend to fall.Answer: price risk30.One part of interest rate risk is . This part of interestrate risk reflects that as interest rates fall, any cash flows that are received before maturity are invested at a lower interest rate.Answer: reinvestment risk31.When a borrower has the right to pay off a loan early which reduced the lender’sexpected rate of return it is called .Answer: call risk32.In recent decades, banks have aggressively sought to insulate their assets andliability portfolios and profits from the ravages if interest rate changes. Manybanks now conduct their asset-liability management strategy with the help of an which often meets daily.Answer: asset-liability committee33. is interest income from loans and investments lessinterest expenses on deposits and borrowed funds divided by total earning assets.Answer: Net interest margin (NIM)34. are those liabilities that which mature or must berepriced within the planning period.Answer: Interest-sensitive liabilities35.Variable rate loans and securities are included as part offor banks.Answer: repriceable assets36.Money market deposits are included as part of for banks.Answer: repriceable liabilities37.Interest sensitive assets less interest sensitive liabilities divided by total assets ofthe bank is known as .Answer: relative interest sensitive gap38.Interest sensitive assets divided by interest sensitive liabilities is knownas .Answer: Interest sensitivity ratio39. is a measure of interest rate exposure which is the totaldifference in dollars between those assets and liabilities that can be repriced over a designated time period.Answer: Cumulative gap40. is the phenomenon that interest rates attached tovarious assets often change by different amounts and at different speeds thaninterest rates attached to various liabilities,Answer: basis riskTrue/False QuestionsT F 41. Usually the principal goal of asset-liability management is to maximize or at least stabilize a bank's margin or spread.Answer: TrueT F 42. Asset management strategy in banking assumes that the amount and kinds of deposits and other borrowed funds a bank attracts are determinedlargely by its management.Answer: FalseT F 43. The ultimate goal of liability management is to gain control over a financialinstitution's sources of funds.Answer: TrueT F 44. If interest rates fall when a bank is in an asset-sensitive position its net interest margin will rise.Answer: FalseT F 45. A liability-sensitive bank will experience an increase in its net interest margin if interest rates rise.Answer: FalseT F 46. Under the so-called liability management view in banking the key control lever banks possess over the volume andmix of their liabilities is price.Answer: TrueT F 47. Under the so-called funds management view bank management's control over assets must be coordinated with its control over liabilities so that assetand liability management are internally consistent.Answer: TrueT F 48. Bankers cannot determine the level or trend of market interest rates;instead, they can only react to the level and trend of rates.Answer: TrueT F 49. Short-term interest rates tend to rise more slowly than long-term interest rates and to fall more slowly when all interest rates in the market areheaded down.Answer: FalseT F 50. A financial institution is liability sensitive if its interest-sensitive liabilities are less than its interest-sensitive assets.Answer: FalseT F 51. If a bank's interest-sensitive assets and liabilities are equal than its interest revenues from assets and funding costs from liabilities will change at thesame rate.Answer: TrueT F 52. Banks with a positive cumulative interest-sensitive gap will benefit if interest rates rise, but lose income if interest rates decline.Answer: TrueT F 53. Banks with a negative cumulative interest-sensitive gap will benefit if interest rates rise, but lose income if interestrates decline.Answer: FalseT F 54. For most banks interest rates paid on liabilities tend to move more slowly than interest rates earned on assets.Answer: FalseT F 55. Interest-sensitive gap techniques do not consider the impact of changing interest rates on stockholders equity.Answer: TrueT F 56. Interest-sensitive gap, relative interest-sensitive gap and theinterest-sensitivity ratio will often reach different conclusions as to whetherthe bank is asset or liability sensitive.Answer: FalseT F 57. The yield curve is constructed using corporate bonds with different default risks so the bank can determine the risk/return tradeoff for default risk.Answer: FalseT F 58. Financial securities that are the same in all other ways may have differences in interest rates that reflect the differences in the ease of selling the securityin the secondary market at a favorable price.Answer: TrueT F 59. Financial institutions face two major kinds of interest rate risk. These risks include price risk and reinvestment risk.Answer: TrueT F 60. Interest-sensitive gap and weighted interest-sensitive gap will always reach the same conclusion as to whether a bank is asset sensitive or liabilitysensitive.Answer: FalseT F 61. Weighted interest-sensitive gap is less accurate than interest-sensitive gap in determining the affect of changes in interest rates on net interest margin.Answer: FalseT F 62. A bank with a positive duration gap experiencing a rise in interest rates will experience an increase in its net worth.Answer: FalseT F 63. A bank with a negative duration gap experiencing a rise in interest rates will experience an increase in its net worth.Answer: TrueT F 64. Duration is a direct measure of the reinvestment risk of a bond.Answer: FalseT F 65. A bank with a positive duration gap experiencing a decrease in interest rates will experience an increase in its net worth.Answer: TrueT F 66. A bank with a negative duration gap experiencing a decrease in interest rates will experience an increase in its net worth.Answer: FalseT F 67. Duration is the weighted average maturity of a promised stream of future cash flows.Answer: TrueT F 68. Duration is a direct measure of the price risk of a bond.Answer: TrueT F 69. A bond with a greater duration will have a smaller price change in percentage terms when interest rates change.Answer: FalseT F 70. Long-term interest rates tend to change very little with the cycle of economic activity.Answer: TrueT F 71. A bank with a duration gap of zero is immunized against changes in the value of net worth due to changes in interest rates in the market.Answer: TrueT F 72. Convexity is the idea that the rate of change of an asset's price varies with the level of interest rates.Answer: TrueT F 73. The change in the market price of an asset's price from a change in market interest rates is roughly equal to the asset's duration times the change theinterest rate divided by the original interest rate.Answer: TrueT F 74. U.S. banks tend to do better when the yield curve is upward-sloping.Answer: TrueT F 75. Net interest margin tends to rise for U.S. banks when the yield curve is upward-sloping.Answer: TrueT F 76. Financial institutions laden with home mortgages tend be immune to interest-rate risk.Answer: FalseT F 77. If a Financial Institution's net interest margin is immune to interest-rate risk then so is its net worth.Answer: FalseMultiple Choice Questions78.When is interest rate risk for a bank greatest?A)When interest rates are volatile.B)When interest rates are stable.C)When inflation is high.D)When inflation is low.E)When loan defaults are high.Answer: A79.A bank’s IS GAP is defined as:A)The dollar amount of rate-sensitive assets divided by the dollar amount ofrate-sensitive liabilities.B)The dollar amount of earning assets divided by the dollar amount of totalliabilities.C)The dollar amount of rate-sensitive assets minus the dollar amount ofrate-sensitive liabilities.D)The dollar amount of rate-sensitive liabilities minus the dollar amount ofrate-sensitive assets.E)The dollar amount of earning assets times the average liability interest rate.Answer: C80.According to the textbook, the maturing of the liability management techniques,coupled with more volatile interest rates, gave birth to the __________________approach which dominates banking today. The term that correctly fills in the blank in the preceding sentence is:A) Liability managementB) Asset managementC) Risk managementD) Funds managementE) None of the above.Answer: D81.The principal goal of interest-rate hedging strategy is to hold fixed a bank's:A) Net interest marginB) Net income before taxesC) Value of loans and securitiesD) Noninterest spreadE) None of the above.Answer: A82.A bank is asset sensitive if its:A) Loans and securities are affected by changes in interest rates.B) Interest-sensitive assets exceed its interest-sensitive liabilities.C) Interest-sensitive liabilities exceed its interest-sensitive assets.D) Deposits and borrowings are affected by changes in interest rates.E) None of the above.Answer: B83.The change in a bank's net income that occurs due to changes in interest ratesequals the overall change in market interest rates (in percentage points) times _____________. The choice below that correctly fills in the blank in the preceding sentence is:A) Volume of interest-sensitive assetsB) Price risk of the bank's assetsC) Price risk of the bank's liabilitiesD) Size of the bank's cumulative gapE) None of the above.Answer: D84.A bank with a negative interest-sensitive GAP:A) Has a greater dollar volume of interest-sensitive liabilities thaninterest-sensitive assets.B) Will generate a higher interest margin if interest rates rise.C) Will generate a higher interest margin if interest rates fall.D) A and B.E) A and C.Answer: E85.The net interest margin of a bank is influenced by:A) Changes in the level of interest rates.B) Changes in the volume of interest-bearing assets and interest-bearingliabilities.C) Changes in the mix of assets and liabilities in the bank's portfolio.D) All of the above.E) A and B only.Answer: D86.The discount rate that equalizes the current market value of a loan or security withthe expected stream of future income payments from that loan or security isknown as the:A) Bank discount rateB) Yield to maturityC) Annual percentage rate (APR)D) Add-on interest rateE) None of the above.Answer: B87.The interest-rate measure often quoted on short-term loans and money marketsecurities such as U.S. Treasury bills is the:A) Bank discount rateB) Yield to maturityC) Annual percentage rate (APR)D) Add-on interest rateE) None of the aboveAnswer: A88.A bank whose interest-sensitive assets total $350 million and its interest-sensitiveliabilities amount to $175 million has:A) An asset-sensitive gap of 525 millionB) A liability-sensitive gap of $175 millionC) An asset-sensitive gap of $175 millionD) A liability-sensitive gap of $350 millionE) None of the above.Answer: C89.A bank has a 1-year $1,000,000 loan outstanding, payable in four equal quarterlyinstallments. What dollar amount of the loan would be considered rate sensitive in the 0 – 90 day bucket?A)$0B)$250,000C)$500,000D)$750,000E)$1,000,000Answer: B90.A bank has Federal funds totaling $25 million with an interest rate sensitivityweight of 1.0. This bank also has loans of $105 million and investments of $65 million with interest rate sensitivity weights of 1.40 and 1.15 respectively. This bank also has $135 million in interest-bearing deposits with an interest ratesensitivity weight of .90 and other money market borrowings of $75 million with an interest rate sensitivity weight of 1.0. What is the weighted interest-sensitive gap for this bank?A) $50.25B) $-15C) -$50.25D) $34.25E) None of the aboveAnswer: A91.A bond has a face value of $1000 and five years to maturity. This bond has acoupon rate of 13 percent and is selling in the market today for $902. Coupon payments are made annually on this bond. What is the yield to maturity (YTM) for this bond?A) 13%B) 12.75%C) 16%D) 11.45%E) Cannot be calculated from the information givenAnswer: C92.A treasury bill currently sells for $9,845, has a face value of $10,000 and has 46 daysto maturity. What is the bank discount rate on this security?A) 12.49%B) 12.13%C) 12.30%D) 2%E) None of the aboveAnswer: B93.The _______________ is determined by the demand and supply for loanable fundsin the market. The term that correctly fills in the blank in the preceding sentence is:A) The yield to maturityB) The banker's discount rateC) The holding period returnD) The risk-free real rate of interestE) The market rate of interest on a risky loanAnswer: D94. A bank with a positive interest-sensitive gap will have a decrease in net interestincome when interest rates in the market:A) RiseB) Fall。

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap

Chapter 2The Impact of Government Policy and Regulation on the Financial-Services IndustryFill in the Blank Questions1. The _____________________ was created as part of the Glass Steagall Act. In the beginning it insured deposits upto $2,500.Answer: FDIC2. The________________________ is the law that states that a bank must get approved from their regulatory body inorder to combine with another bank.Answer: Bank Merger Act3. One tool that the Federal Reserve uses to control the money supply is _________________ . The Federal Reservewill buy and sell T-bills when they are using this tool of monetary policy.Answer: open market operations4. The__________________________ was created in 1913 in response to a series of economic depressions and failures.Its principal role is to serve as the lender of last resort and to stabilize the financial markets.Answer: Federal Reserve5. The __________________________ prevented banks from crossing state lines and made national banks subject to thebranching laws of their state. This act was later repealed by the Riegle Neal Interstate Banking law.Answer: McFadden-Pepper Act6. Because the FDIC levies fixed insurance premiums regardless of risk, this leads to a problem called the____________________ among banks. The fixed premiums encourage all banks to accept greater risk.Answer: moral hazard7. In 1980, __________________________ was passed and lifted government ceilings on deposit interest rates in favor offree market interest rates.Answer: DIDMCA158. One tool that the Federal Reserve uses to control the money supply is _________________. The Federal Reservewill change the interest rate they charge for short term loans when they are using this tool of monetary policy.Answer: changing the discount rate9. The first major federal banking law in the U.S. was the __________________________. This law was passed duringthe Civil War and set up a system for chartering national banks and created the OCC.Answer: National Banking Act10. The_________________________ was passed during the Great Depression. It separated investment and commercialbanks and created the FDIC.Answer: Glass-Steagall Act11. The__________________________ brought bank holding companies under the jurisdiction of the Federal Reserve.Answer: Bank Holding Company Act12. The__________________________ allows bank holding companies to acquire banks anywhere in the United States.However, no one bank can control more than 30 percent of the deposits in any one state or more than 10 percent of the deposits across the country.Answer: Riegle-Neal Interstate Banking Act13. The allows banks to affiliate with insurance companies and securities firms either througha holding company or as a subsidiary.Answer: Gramm-Leach-Bliley Act (Financial Services Modernization Act)14. Customers of financial-service companies may _____________________ of having their private information sharedwith a third party such as a telemarketer. However, in order to do this they must tell the financial-services company in writing that they do not want their personal information shared with outside parties.Answer: opt out15. The federal bank regulatory agency which examines the most banks is the ______________.Answer: FDIC16. The _________________ requires financial service companies to report suspicious activity in customer accounts to theTreasury Department.Answer: U.S. Patriot Act17. The central bank of the new European Union is known as the _______________________.Answer: European Central Bank or ECB18. The _____________________ Act prohibits banks and other publicly owned firms from publishing false or misleadingfinancial performance information.Answer: Sarbanes-Oxley19.One of the main roles of the Federal Reserve today is . They have three tools that they use today tocarry out this role; open market operations, the discount rate and legal reserve requirements.Answer: monetary policy20.The is the center of authority and decision making within the Federal Reserve. It consistsof seven members appointed by the president for terms not exceeding 14 years.Answer: Board of Governors21.The main regulators of insurance companies are .Answer: state insurance commissions22.Federal Credit Unions are regulated and examined by .Answer: the National Credit Union Administration.23.The makes it easier for victims of identity theft to file fraud alerts and allows the publicto apply for a free credit report once a year.Answer: Fair and Accurate Credit Transactions Act (FACT Act)24.The makes it faster and less costly for banks to clear checks. It allows for banks toelectronically send check images instead of shipping paper checks across the country.Answer: Check 21 Act25.The was created by the National Banking Act and is part of the Treasury Department.It is the primary regulator of National Banks.Answer: Office of the Comptroller of the Currency (OCC)26.The _________________________ proposes various regulations applying to the financial markets to combat the recentcredit crisis. T his “bail-out” bill granted the US Treasury the means to purchase troubled loans, allowed the FDIC to temporarily increase deposit insurance, and permitted the government to inject additional capital into the bankingsystem.Answer: The Emergency Economic Stabilization Act of 2008True/False QuestionsT F 27. Federal Reserve Act authorized the creation of the Federal Deposit Insurance Corporation.Answer: False17T F 28. In the United States, fixed fees charged for deposit insurance, regardless of how risky a bank is, led to a problem known as moral hazard.Answer: TrueT F 28. Government-sponsored deposit insurance typically encourages individual depositors to monitor their banks' behavior in accepting risk.Answer: FalseT F 29. The Federal Reserve changes reserve requirements frequently because the affect of these changes is so small.Answer: FalseT F 30. The Bank Merger Act and its amendments requires that Bank Holding Companies be under the jurisdiction of the Federal Reserve.Answer: FalseT F 31. National banks cannot merge without the prior approval of the Comptroller of the Currency.Answer: TrueT F 32. The Truth in Lending (or Consumer Credit Protection) Act was passed by the U.S. Congress to outlaw discrimination in providing bank services to the public.Answer: FalseT F 33. The federal law that states individuals and families cannot be denied a loan merely because of their age, sex, race, national origin or religious affiliation is known as the Competitive Equality in Banking Act.Answer: FalseT F 34. Under the terms of the 1994 Riegle-Neal Interstate Banking law bank holding companies can acquire a bank anywhere inside the United States, subject to Federal Reserve Board approval.Answer: TrueT F 35. The 1994 federal interstate banking bill does not limit the percentage of statewide or nationwide deposits that an interstate banking firm is allowed to control.Answer: FalseT F 36. The term "regulatory dialectic" refers to the dual system of banking regulation in the United States and selected other countries where both the federal or central government and local governments regulate banks.Answer: FalseT F 37. The moral hazard problem of banks is caused by the fixed insurance premiums paid by banks and causes banks to accept greater risk.Answer: TrueT F 38. When the Federal Reserve buys T-bills through its open market operations, it causes the growth of bank deposits and loans to decrease.Answer: FalseT F 39. When the Federal Reserve increases the discount rate it generally causes other interest rates to decrease.Answer: FalseT F 40. The National Bank Act (1863) created the Federal Reserve which acts as the lender of last resort.Answer: FalseT F 41. FIRREA (1989) allowed bank holding companies to acquire nonblank depository institutions and, if desired, convert them into branch offices.Answer: TrueT F 42. The Sarbanes-Oxley Act allows banks, insurance companies, and securities firms to form Financial Holding Companies (FHCs).Answer: FalseT F 43. The Gramm-Leach-Bliley Act of 1999 essentially repeals the Glass-Steagall Act passed in the 1930s.Answer: TrueT F 44. Passed in 1977, the Equal Credit Opportunity Act prohibits banks from discriminating against customers merely on the basis of the neighborhood in which they live.Answer: FalseT F 45. The tool used by the Federal Reserve System to influence the economy and behavior of banks is known as moral hazard.Answer: FalseT F 46. One of the principal reasons for government regulation of financial firms is to protect the safety and soundness of the financial system.Answer: TrueMultiple Choice Questions47.Banks are regulated for which of the reasons listed below?A) Banks are leading repositories of the public's savings.B) Banks have the power to create money.C) Banks provide businesses and individuals with loans that support consumption and investment spending.D) Banks assist governments in conducting economic policy, collecting taxes and dispensing government payments.E) All of the above.Answer: E1948.An institutional arrangement in which federal and state authorities both have significant bank regulatory powers isreferred to as:A) Balance of PowerB) FederalismC) Dual Banking SystemD) Cooperative RegulationE) Coordinated ControlAnswer: C49.The law that set up the federal banking system and provided for the chartering of national bankswas the:A) National Bank ActB) McFadden-Pepper ActC) Glass-Steagall ActD) Bank Merger ActE) Federal Reserve ActAnswer: A50.The federal law that prohibited federally supervised commercial banks from offering investmentbanking services on privately issued securities is known as:A) The Glass-Steagall ActB) The Bank Merger ActC) The Depository Institutions Deregulation and Monetary Control ActD) The Federal Reserve ActE) None of the AboveAnswer: A51.The Gramm-Leach-Bliley Act (Financial Services Modernization Act) calls for linking government supervision of thefinancial-services firm to the types of activities that the firm undertakes. For example the insurance portion of the firm would be regulated by state insurance commissions and the banking portion of the firm would be regulated by banking regulators. This approach to government supervision of financial services is known as:A) Consolidated regulation and supervision.B) Functional regulation.C) Services oversight.D) Umbrella supervision and regulation.E) None of the above.Answer: B52.The Federal Reserve policy tool under which the Fed attempts to bring psychological pressure to bear on individualsand institutions to conform to the Fed's policies, using letters, phone calls, and speeches, is known as:A) Margin requirementsB) Moral suasionC) Discount window supervisionD) Conference and compromiseE) None of the above.Answer: B53.The 1994 law that allowed bank holding companies to acquire banks anywhere in the U.S. is:A) The Glass-Steagall ActB) The Federal Deposit Insurance Corporation Improvement ActC) The National Bank ActD) The Riegle-Neal Interstate Banking and Branching Efficiency Act.E) None of the above.Answer: D54.The federal law that allowed the Federal Reserve to set margin requirements is:A) The National Banking Act.B) The McFadden-Pepper Act.C) The Glass Steagall Act.D) The Federal Reserve Act.E) None of the above.Answer: C55.Of the principal reasons for regulating banks, what was the primary purpose of the National Banking Act (1863)?A) Protection of the public's savingsB) Control of the money supplyC) Providing support for government activitiesD) Maintaining confidence in the banking systemE) Preventing banks from realizing monopoly powersAnswer: C56.Of the principal reasons for regulating banks, what was the primary purpose of the Federal Reserve Act of 1913?A) Protection of the public's savingsB) Control of the money supplyC) Preventing banks from realizing monopoly powersD) Ensuring an adequate and fair supply of loansE) None of the above.Answer: B57.The law that allows lifted government deposit interest ceilings and allowed them to pay a competitive interest rate is:A) The National Banking Act.B) The Glass Steagall Act.C) The Bank Merger Act.D) DIDMCAE) None of the above.Answer: D58.The law that allows banks to affiliate with insurance companies and security brokerage firms to form financial servicesconglomerates isA) The National Banking ActB) The Glass Steagall ActC) The Garn St. Germain ActD) The Riegle Neal Interstate Banking ActE) The Gramm-Leach-Bliley Act (Financial Services Modernization Act)Answer: E2159.Of the principal reasons for regulating banks, what was the primary purpose of the Truth in Lending Law?A) Protection of the public's savingsB) Control of the money supplyC) Preventing banks from realizing monopoly powersD) Ensuring an adequate and fair supply of loansE) None of the above.Answer: D60.Which of the following is an unresolved issue in the new century?A) What should be done about the regulatory safety net set up to protect small depositors?B) If financial institutions are allowed to take on more risk, how can taxpayers be protected from paying the bill whenmore institutions fail?C) Does functional regulation actually work?D) Should regulators allow the mixing of banking and commerce?E) All of the above are unresolved issuesAnswer: E61.The law that made bank and nonbank depository institutions more alike in the services they could offer and allowedbanks and thrifts to more fully compete with other financial institutions is:A) The National Banking ActB) The Federal Reserve ActC) The Garn-St. Germain ActD) The Riegle-Neal Interstate Banking and Branching Efficiency ActE) The Gramm-Leach-Bliley Act (Financial Services Modernization Act)Answer: C62.The law that allowed bank holding companies to acquire nonbank depository institutions and convert them to branchesis:A) The National Banking ActB) The Garn-St. Germain ActC) FIRREAD) The Riegle-Neal Interstate Banking and Branching Efficiency ActE) None of the AboveAnswer: C63.The equivalent of the Federal Reserve System in Europe is known as the:A) European UnionB) Bank of LondonC) Basle GroupD) European Central BankE) Swiss Bank CorporationAnswer: D64.The new financial organization created by Gramm-Leach-Bliley is theA) Financial Holding CompanyB) Bank Holding CompanyC) European Central BankD) Financial Service CorporationE) Financial Modernization OrganizationAnswer: A65.The act which requires financial institutions to share information about customer identities with government agenciesis:A) The Sarbanes-Oxley ActB) The U.S. Treasury Department ActC) The 9/11 ActD) The USA Patriot ActE) The Gramm-Leach-Bliley ActAnswer: D66.The 1977 law that prevents banks from “redlining” ce rtain neighborhoods, refusing to serve those areas is:A) The National Banking ActB) The Garn-St. Germain ActC) FIRREAD) The Riegle-Neal Interstate Banking and Branching Efficiency ActE) Community Reinvestment Act (CRA)Answer: Emon minimum capital requirements on banks in leading industrialized nations that are based on the riskiness oftheir assets is imposed by:A) The National Banking ActB) FIRREAC) The International Banking ActD) The Basel AgreementE) None of the AboveAnswer: D68.The fastest growing crime in the U.S. is:A) Financial statement misrepresentationB) Bank robberiesC) Individual privacy violationsD) Credit card fraudE) Identity theftAnswer: E69.The oldest federal bank agency is the:A) OCCB) FDICC) FRSD) FHCE) BHCAnswer: A70.The federal agency that regulates the most banks is the:A) OCCB) FDICC) FRSD) FHC23E) BHCAnswer: B71.Which federal banking act requires that financial service providers establish the identity of any customers opening newaccounts?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: B72.Which federal banking act prohibits publishing false or misleading information about the financial performance of apublic company and requires top corporate officers to vouch for the accuracy of their company’s financialstatements?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: A73.Which federal banking act reduces the need for banks to transport paper checks across the country?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: C74.Which federal banking act forces more individuals to repay at least part of what they owe and will push higher-incomeborrowers into more costly forms of bankruptcy?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: E75.Which federal banking act requires the Federal Trade Commission to make it easier for victims of identity theft to maketheft reports and requires credit bureaus to help victims resolve the problem?A) Sarbanes-Oxley ActB) USA Patriot ActC) Check 21 ActD) The FACT ActE) Bankruptcy Abuse Prevention and Consumer Protection ActAnswer: D76.The _________ allows adequately capitalized bank holding companies to acquire banks in any state.A)Riegle-Neal Interstate Banking and Branching Efficiency ActB)Competitive Equality Banking ActC)Financial Institutions Reform, Recovery and Enforcement ActD)Federal Deposit Insurance Corporation Improvement ActE)Depository Institutions Deregulation and Monetary Control ActAnswer: A77.One of the earliest theories regarding the impact of regulation on banks was developed by George Stigler. He contendsthat:A) Firms in regulated industries actually seek out regulations because they bring monopolistic rents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulated firms.D) Depository institutions should be regulated no differently than any other corporation with no subsidies or specialprivileges.E) None of the aboveAnswer: A78.Samual Peltzman had an opposing view to George Stigler on the impact of regulation on banks. He contends that:A) Firms in regulated industries actually seek out regulations because they bring monopolistic rents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulated firms.D) Depository institutions should be regulated no differently than any other corporation with no subsidies or specialprivileges.E) None of the aboveAnswer: B79.There is an important debate raging today regarding whether banks should be regulated at all. George Benstoncontends that:A) Firms in regulated industries actually seek out regulations because they bring monopolistic rents.B) Regulations shelter firms from changes in demand and cost, lowering its risk.C) Regulations can increase consumer confidence which increases customer loyalty to regulated firms.D) Depository institutions should be regulated no differently than any other corporation with no subsidies or specialprivileges.E) None of the aboveAnswer: D80.The European Central Bank has the main goal of:A) Ensuring the economy grows at an adequate rate.B) Keeping unemployment low.C) Ensuring price stability.D) Ensuring an adequate and fair supply of loans.E) All of the aboveAnswer: C81.Which of the following has become the principal tool of central bank monetary policy today?A) Open market operationsB) Changing the discount rateC) Changing reserve requirementsD) Using moral suasionE) None of the above25Answer: A82.The Federal Reserve buys Treasury Bills in the open market. This will tend to:A) Cause interest rates in the market to riseB) Cause interest rates in the market to fallC) Cause reserves held at the Federal Reserve to decreaseD) Cause a decrease in the growth of deposits and loansE) All of the aboveAnswer: B83.Which federal banking act extends deposit insurance coverage on qualified retirement accounts from $100,000 to$250,000 and authorizes the FDIC to periodically increase deposit insurance coverage to keep up with inflation?A) Sarbanes-Oxley ActB) The Gramm-Leach-Bliley ActC) Check 21 ActD) The FACT ActE) Federal Deposit Insurance Reform ActAnswer: E84.The Financial Services Regulatory Relief Act of 2006 does the following:A) Adds selected new service powers to depository institutionsB) Loosens regulations on depository institutionsC) Grants the Federal Reserve authority to pay interest on depository institutions’ legal reservesD) All of the aboveE) None of the aboveAnswer: D85.The Emergency Economic Stabilization Act passed in 2008 during the global credit crisis allowed the following:A) An emergency sale of “bad assets”B) Temporary increase of FDIC deposit insurance to $250,000 for all depositsC) Injections of capital by the government into banks and other qualified lendersD) Closer surveillance of the mortgage market participants, such as brokers and lendersE) All of the aboveAnswer: E谢谢大家下载,本文档下载后可根据实际情况进行编辑修改.再次谢谢大家下载.翱翔在知识的海洋吧.Test Bank, Chapter 226。

商业银行管理罗斯答案

商业银行管理罗斯答案【篇一：商业银行管理彼得s.罗斯英文原书第8版英语试题库chap002]>the impact of government policy and regulation on the financial-services industryfill in the blank questions1.the was created as part of theglass steagall act. in the beginning it insured deposits up to $2,500. answer: fdic2.the ________________________________________ i s the law that states that abank must get approved from theirregulatory body in order to combine with another bank. answer: bank merger act3.one tool that the federal reserve uses to control the money supply is federal reserve will buy and sell t-bills when they are using this tool of monetary policy.answer: open market operations4.the ___________________________________________ was created in 1913 in response to a series of economicdepressions and failures. its principal role is to serve as the lender of last resort and to stabilize the financial markets.answer: federal reserve5.the prevented banks fromcrossing state lines and made nationalbanks subject to the branching laws of their state.this act was later repealed by the riegle neal interstate banking law.answer: mcfadden-pepper act6.because the fdic levies fixed insurance premiums regardless of risk, this leads to a problem called the among banks. the fixed premiums encourage all banks to accept greater risk.answer: moral hazard7.in 1980,was passed and lifted government ceilings on depositinterest rates in favor of free market interest rates.answer: didmca158.one tool that the federal reserve uses to control the money supply is. the federal reserve will change the interest rate they charge for short term loans when they are using this tool of monetary policy.answer: changing the discount rate9.the first major federal banking law in the u.s. was the . this lawwas passed during the civil war and set up a system for chartering national banks and created the occ.answer: national banking act10.the was passed during thegreat depression. it separatedinvestment and commercial banks and created the fdic. answer: glass-steagall act11.the ___________________________________________ b rought bank holding companies under the jurisdiction of thefederal reserve.answer: bank holding company act12.the ___________________________________________ a llows bank holding companies to acquire banks anywhere inthe united states. however, no one bank can control more than 30 percent of the deposits in any one state or more than 10 percent of the deposits across the country.answer: riegle-neal interstate banking act13.firms either through a holding company or as a subsidiary. answer: gramm-leach-bliley act (financial services modernization act)14.customers of financial-service companies may of having their private information shared with a third party such as a telemarketer. however, in order to do this they must tell the financial- services company in writing that they do not want their personal informationshared with outside parties.answer: opt out15.the federal bank regulatory agency which examines the most banks is theanswer: fdic16.the requires financial servicecompanies to report suspicious activity in customer accounts to the treasury department.answer: u.s. patriot act16 test bank, chapter 217.the central bank of the new european union is known as the. answer: european central bank or ecb18.the act prohibits banks and otherpublicly owned firms frompublishing false or misleading financial performance information. answer: sarbanes-oxley19.they use today to carry out this role; open market operations, the discount rate and legal reserve requirements. answer: monetary policy 20.reserve. it consists of seven members appointed by the president for terms not exceeding 14 years. answer: board of governors21.answer: state insurance commissions22.answer: the national credit union administration.23.and allows the public to apply for a free credit report once a year. answer: fair and accurate credit transactions act (fact act)24.allows for banks to electronically send check images instead of shipping paper checks across the country.answer: check 21 act25.treasury department. it is the primary regulator of national banks. answer: office of the comptroller of the currency (occ)26.the proposes variousregulations applying to the financial marketsto combat the recent credit crisis. this “bail-out” bill granted the us treasury the means topurchase troubled loans, allowed the fdic to temporarily increase deposit insurance, andpermitted the government to inject additional capital into the banking system.answer: the emergency economic stabilization act of 2008 true/false questions17t f 27. federal reserve act authorized the creation of the federal deposit insurance corporation.answer: falset f 28. in the united states, fixed fees charged for deposit insurance, regardless of how risky aanswer: truet f 28. government-sponsored deposit insurance typically encourages individual depositors tomonitor their banks behavior in accepting risk.answer: falset f 29. the federal reserve changes reserve requirements frequently because the affect of these changes is so small.answer: falset f 30. the bank merger act and its amendments requires that bank holding companies be underthe jurisdiction of the federal reserve.answer: falset f 31. national banks cannot merge without the prior approval of the comptroller of thecurrency.answer: truet f 32. the truth in lending (or consumer credit protection) act was passed by the u.s.congress to outlaw discrimination in providing bank services to the public. answer: falset f 33. the federal law that states individuals and families cannot be denied a loan merely becauseof their age, sex, race, national origin or religious affiliation is known as the competitiveequality in banking act.answer: falset f 34. under the terms of the 1994 riegle-neal interstate banking law bank holding companiescan acquire a bank anywhere inside the united states, subject to federal reserve boardapproval.answer: truet f 35. nationwide deposits that an interstate banking firm is allowed to control.18 test bank, chapter 2 answer: falset f 36. the term regulatory dialectic refers to the dual system of banking regulation in the and local governments regulate banks.answer: falset f 37. the moral hazard problem of banks is caused by the fixed insurance premiums paid by banks and causes banks to accept greater risk. answer: truet f 38. when the federal reserve buys t-bills through its open market operations, it causes the growth of bank deposits and loans to decrease. answer: falset f 39. when the federal reserve increases the discount rate it generally causes other interest rates to decrease.answer: falset f 40. the national bank act (1863) created the federal reserve which acts as the lender of lastresort.answer: falset f 41. firrea (1989) allowed bank holding companies to acquire nonblank depositoryinstitutions and, if desired, convert them into branch offices. answer: truet f 42. the sarbanes-oxley act allows banks, insurance companies, and securities firms to form financial holding companies (fhcs).answer: falset f 43. the gramm-leach-bliley act of 1999 essentially repeals the glass-steagall act passed inthe 1930s.answer: truet f 44. passed in 1977, the equal credit opportunity act prohibits banks from discriminatingagainst customers merely on the basis of the neighborhood in which they live.answer: falset f 45. the tool used by the federal reserve system to influence the economy and behavior of19【篇二：商业银行管理彼得s.罗斯英文原书第8版英语试题库chap003]the organization and structure of banking and the financial- services industryfill in the blank questions1.a(n)is a machine located at the merchants place of business which allowsdepositors to use their debit card to pay for purchases directly. answer: pos 2.a(n)is a bank which offers its full range of services from several locations.answer: branch bank3.a(n)is a bank which offers its full range of services from only one location.answer: unit bank4.the stock of one or more banks.answer: bank holding company5.managers who value fringe benefits, plush offices and ample travel budgets over the pursuit ofmaximum returns for stockholders are exhibiting signs of. answer: expense preference behavior6.a(n)can invest in corporate stock as sell as loan money to help finance the start of new ventures or support the expansion of existing businesses. answer: merchant bank7.a bank which operates exclusively over the internet is known as a bank. answer: virtual8.one new 21st century bank organizational structures is. this is a special type of holding company that may offer the broadest range of financial services. answer: financial holding company (fhc)28 test bank, chapter 39.knowledgeable about banking practices but may be less informed about products and services of subsidiary companies.answer: span of control10.which banks may provide securities, insurance, and other financial products.answer: universal11.answer: independent12.relationship between a firm’s owners and its managers. answer: agency theory13.the board of directors and stockholders, is more complicated in financial institutions. answer: because of government regulations.14.unit as the firm gets larger.answer: economies of scale15.services using the same organization and resources. answer: economies of scope16.over the years, managers of banks and other financial institutions have evolved different organizational forms to address changes in the industry. indeed, these firms are organized to carry out various roles in the most efficient way. this is referred to as. answer: organizational form follows functiontrue/false questionst f 17.answer: falset f 18. nearly three quarters of all u.s. banks exceed $100 million in asset size apiece.answer: falserose/hudgins, bank management and financial services, 8/e 29t f 19. nearly all u.s. banks with federal or state charters have their deposits insured by thefederal deposit insurance corporation.answer: truet f 20. state-chartered banks in the united states represent about a quarter of all u.s.-charteredbanks, while national banks account for approximately three quarters of all u.s. chartered banks.answer: falsett f 21. the majority of all u.s. banks are members of the federal reserve system. answer: false f 22. a banking corporation chartered by either federal or state governments that operates onlyone full-service office is called a unit bank.answer: truet f 23. over half of all u.s. states today limit branching activity. answer: false t f 24. the average u.s. bank is larger in size (in terms of number of branch offices) than the average canadian bank.answer: falset f 25. despite the rapid growth of automation in u.s. banking, there are more full-service branchbanking offices than automated teller machines across the whole u.s. answer: falset f 26. in the united states there are more one-bank holding companies than multi-bank holding companies.answer: truet f 27. bank holding companies hold more than 90 percent of the industry’s assets in the united states.answer: truet f 28. research evidence suggests that banks taken over by interstate banking organizations have answer: false30 test bank, chapter 3t f 29. the concentration of bank deposits at the local level (that is in urban communities and rural counties) has displayed only moderate changes in recent years.answer: true tt f 30. there is evidence that branch banks charge higher fees for some banking services than do unit banks. answer: true f 31. branch banks tend to offer a wider menu of services than unit banks.answer: falset f 32. recent research suggests that branch banks tend to be more profitable than either unit or holding company banks, while interstate banks tend to be the most profitable of all.answer: falset f 33. less than 10 percent of the largest banks in the u.s. control almost 90 percent of the industry assets.answer: truet f 34. agency theory suggests that bank management will always pursue the goal of maximizingthe return of the banks shareholders.answer: falset f 35. recent research suggests that the relationship between bank size and the cost of production per unit is roughly u shaped.answer: truet f 36. bank holding companies that want to achieve the goal of risk reduction in earnings risk through interstate banking can achieve the same level of risk reduction by entering any of the fifty states.answer: falset f 37. bank holding companies are allowed to own nonbank businesses as long as those businesses offer services closely related to banking. answer: truet f 38. banks tend to have a higher proportion of outside directors than a typical manufacturingfirm.answer: truerose/hudgins, bank management and financial services, 8/e 31t f 39. banks which operate entirely on the web are known as invisible banks.answer: falset f 40. banks acquired by holding companies are referred to as affiliated banks.answer: truet f 41. bank organizational structure has become more complex in recent years.answer: truet f 42. there are only a very small number of unit banks in the u.s. today. answer: falsett f 43. traditional brick-and-mortar bank branch offices are on the decline in the u.s. today. answer: false f 44. community banks are usually smaller banks that are devoted principally to the markets forsmaller, locally based deposits and loans.answer: truef 45. the question of whether financial firms operate as efficiently as possible requiresresearchers to look into the issue of x-efficiency. the concept requires an assessment of thefinancial firm's operating costs in relation to i-effic O etltfrontier.answer: true tmultiple choice questions46.in banking, organizational form follows because banks usually are organized in such a way as to carry out the tasks and supply the services demanded of them. the term that correctly fills in the blank in the sentence above is:a)bank sizeb)managements decisionc)functiond)regulatione)locationanswer: c47.which one of the following is charged with setting policy and overseeing a banks performance?a)stockholdersb)board of directors32 test bank, chapter 3【篇三：商业银行管理彼得s.罗斯英文原书第8版英语试题库chap009]risk management: asset-backed securities, loan sales, credit standbys, and credit derivativesfill in the blank questions1.when a bank sets aside a group of income-earning assets and then sells securities based upon those assets it is those assets.answer: securitizing2.the loans and sells securities.answer: special purpose entity3.a(n)allows a homeowner to borrow against the residual value oftheir residence.answer: home equity loan4.allow the bank to generate fee income after they have sold a loan.the bank continues to collect interest and principal from the borrowers and passes these collections to the loan buyers.answer: servicing rights5.in a an outsider purchasespart of a loan from the selling financialanswer: participation loan6.a(n)is a contingent claim of the bank that issues it. the issuingbank, in return for a fee, guarantees the repayment of a loan received by its customer or the fulfillment of a contract made by its customer to a third party.answer: standby credit agreement7.a(n)occurs when two banks agree to exchange a portion or all ofthe loan repayments of their customers.answer: credit swap8.a(n)guards against the losses in the value of a credit asset. it would pay offif the asset declines significantly in value or if it completely turns bad. answer: credit option.146 test bank, chapter 99.a(n)combines a normal debt instrument with a credit option. itallows the issuer of the debt instrument to lower its loan repayments if some significant factorchanges.answer: credit linked note10.the of a standby letter ofcredit is a bank or other investor who is concerned about the safety of funds committed to the recipient of the standby letter of credit.answer: beneficiary11.a(n)guarantees the swap parties a specific rate of return on their credit asset. bank a may agree to pay the total return on the loan to bank b plus any appreciation in the market value of the loan. in return bank a will often get libor plus a fixed spread plus any depreciation in the value of the loan.answer: total return swap12.the is the party that isrequesting a standby letter of credit.answer: account party13.the is the bank or financialinstitution which guarantees the payment of the loan in a standby letter of credit.answer: issuer14.a(n)is a loan sale where ownership of the loan is transferred to the buyer of the loan, who then has a direct claim against the borrower. answer: assignment15.longer maturity loan, entitling the purchaser to a fraction of the expected loan income.answer: loan strip16.a relatively new type of credit derivative is a cdo which stands for. answer: collateralized debt obligation17.insurance companies are a prime of creditderivatives.answer: seller18.when default occurs on a loan or other debt instrument. answer: credit derivative rose/hudgins, bank management and financial services, 8/e 147 19.to handle comparatively limited declines in value but wants insurance against serious losses.answer: credit default swap20.pools of credit derivatives that mainly insure against defaults on corporate bonds. the creators of these instruments do not have to buy and pool actual bonds but can create these instruments and generate revenues from selling and trading in them.answer: synthetic cdos (collateralized debt obligations)21.that investors have a better idea of what the new securities are likely to be worth.answer: credit rating agency22.default of the underlying loans in a securitization. these can be internal or external to the securitization process and lower the risk of the securities. answer: credit enhancement23.promise a different coupon rate and which have different maturity and risk characteristics.24.lenders can set aside a group of loans on their balance sheet, issue bonds and pledge the loans as the bank’s balance sheet as liabilities. 25.appear to have the unofficial backing of the federal government in the event of default.answer: government sponsored enterprises (gses) true/false questionst f 26. securitization is designed to turn illiquid loans into liquid assets in the form of securities sold in the open market.answer: truet f 27.answer: truet f 28. securitized assets cannot be removed from a banks balance sheet until they mature.answer: falsetest bank, chapter 9 148t f 29. securitization raises the level of competition for the best-quality loans among banks.answer: truet f 30. servicing rights on loans sold consist of the collection of interest and principal payments from borrowers and monitoring borrower compliance with loan terms.answer: truet f 31. a loan sold by a bank to another investor with recourse means the bank has given the answer: falset f 32. an account party will seek a banks standby credit guarantee if the banks fee for issuing the guarantee is less than the value assigned the guarantee by its beneficiary.answer: truet f 33. securitization tends to lengthen the maturity of a banks assets. answer: falset f 34. securitized assets as a source of bank funds are subject to reserve requirements set by thefederal reserve board.answer: falset f 35. securitizations of commercial loans usually carry the same regulatory capital requirements for a bank as the original loans themselves. answer: truet f 36. most loans that banks sell off their balance sheets have minimum denominations of at leasta million dollars.answer: truet f 37. most loans that banks sell off their balance sheets carry interest rates that usually areconnected to long-term interest rates (such as the 30-year treasury bond rate).answer: falset f 38. in a participation loan the purchaser is an outsider to the loan contract between the financialinstitution selling the loan and the borrower.answer: truerose/hudgins, bank management and financial services, 8/e 149 t f 39. answer: truet f 40. under an assignment ownership of a loan is transferred to the buyer, though the buyer stillholds only an indirect claim against the borrower. answer: falset f 41. loan sales are generally viewed as risk-reducing for the selling financial institution.answer: truet f 42. in a cmo, the different tiers (or tranches) of security purchasers face the same prepaymentrisk.answer: falset f 43. a standby letter of credit substantially reduces the issuing banksinterest rate risk and liquidity risk.answer: falset f 44. securitization of loans can easily be applied to business loans since these loans tend to have similar cash flow schedules and comparable risk structures.answer: falset f 45. the advantage of a credit swap is that it allows each bank in the swap to broaden its market area and spread out its credit risk on its loans. answer: truet f 46. bank use of credit derivatives is dominated by the largest banks. answer: truet f 47. the credit derivatives market has grown nine-fold during the recent years.answer: truet f 48. banks are the principal sellers of credit derivatives. answer: falset f 49. banks are one of the principal buyers of credit derivatives. answer: true t150f 50. insurance companies are one of the principal sellers of credit derivatives. test bank, chapter 9。

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap007

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap007Chapter 7Risk Management for Changing Interest Rates: Asset-Liability Management and Duration TechniquesFill in the Blank Questions1. The ___________________ view of assets and liabilities held that the amount and types of depositswas primarily determined by customers and hence the key decision a bank needed to make waswith the assets.Answer: asset management2. Recent decades have ushered in dramatic changes in banking. The goal of __________________was simply to gain control of the bank's sources of funds.Answer: liability management3. The__________________________ is the interest rate that equalizes the current market price of abond with the present value of the future cash flows.Answer: yield to maturity (YTM)4. The __________________ risk premium on a bond allows the investor to be compensated for theirprojected loss in purchasing power from the increase in the prices of goods and services in thefuture.Answer: inflation5. The __________________ shows the relationship between the time to maturity and the yield tomaturity of a bond. It is usually constructed using treasurysecurities since they are assumed tohave no default risk.Answer: yield curve6. The __________________ risk premium on a bond reflects the differences in the ease and ability tosell the bond in the secondary market at a favorable price.Answer: liquidity7. __________________________ are those assets which mature or must be repriced within theplanning period.Answer: Interest-sensitive assets8. __________________________ is the difference between interest-sensitive assets andinterest-sensitive liabilities.Answer: Dollar interest-sensitive gap9. A(n)__________________________ means that the bank has more interest-sensitive liabilitiesthan interest-sensitive assets.Answer: negative interest-sensitive gap (liability sensitive)10. The bank's__________________________ takes into account the idea that the speed (sensitivity)of interest rate changes will differ for different types of assets and liabilities.Answer: weighted interest-sensitive gap11. __________________________ is the coordinated management of both the bank's assets and itsliabilities.Answer: Funds management12. __________________________ is the risk due to changes in market interest rates which canadversely affect the bank's net interest margin, assets and equity.Answer: Interest rate risk13. The__________________________ is the rate of return on a financial instrument using a 360 dayyear relative to the instrument's face value.Answer: bank discount rate14. The __________________________ component of interest rates is the risk premium due to theprobability that the borrower will miss some payments or will not repay the loan.Answer: default risk premium15. __________________ is the weighted average maturity for a stream of future cash flows. It is adirect measure of price risk.Answer: Duration16. __________________________ is the difference between the dollar-weighted duration of the assetportfolio and the dollar-weighted duration of the liability portfolio.Answer: Duration gap17. A(n)__________________________ duration gap means that fora parallel increase in all interestrates the market value of net worth will tend to decline.Answer: positive18. A(n)__________________________ duration gap means that fora parallel increase in all interestrates the market value of net worth will tend to increase.Answer: negative19. The __________________ refers to the periodic fluctuationsin the scale of economic activity.Answer: business cycle20. The__________________________ is equal to the duration of each individual type of assetweighted by the dollar amount of each type of asset out of the total dollar amount of assets.Answer: duration of the asset portfolio21. The__________________________ is equal to the duration of each individual type of liabilityweighted by the dollar amount of each type of asset out of the total dollar amount of assets.Answer: duration of the liability portfolio22. A bank is __________________ against changes in its net worth if its duration gap is equal to zero.Answer: immunized (insulated or protected)23. The relationship between a change in an asset's price and an asset’s change in the yield or interestrate is captured by __________________________.Answer: convexity24. The change in a financial institution's __________________ is equal to difference in the durationof the assets and liabilities times the change in the interest rate divided by the starting interest rate times the dollar amount of the assets and liabilities.Answer: net worth25. When a bank has a positive duration gap a parallel increase in the interest rates on the assets andliabilities of the bank will lead to a(n) __________________ in the bank's net worth.Answer: decrease26. When a bank has a negative duration gap a parallel decrease in the interest rates on the assets andliabilities of the bank will lead to a(n)_________________________ in the bank's net worth.Answer: decrease27. U.S. banks tend to do better when the yield curve is upward-sloping because they tend to have____________ maturity gap positions.Answer: positive28.One government-created giant mortgage banking firms which have subsequently been privatized isthe .Answer: FNMA or Fannie Mae (or FHLMC or Freddie Mac)29.One part of interest rate risk is . This part of interest rate risk reflectsthat as interest rates rise, prices of securities tend to fall.Answer: price risk30.One part of interest rate risk is . This part of interest rate risk reflectsthat as interest rates fall, any cash flows that are received before maturity are invested at a lower interest rate.Answer: reinvestment risk31.When a borrower has the right to pay off a loan early which reduced the lender’s expected rate ofreturn it is called .Answer: call risk32.In recent decades, banks have aggressively sought to insulate their assets and liability portfoliosand profits from the ravages if interest rate changes. Many banks now conduct their asset-liability management strategywith the help of an which often meets daily.Answer: asset-liability committee33. is interest income from loans and investments less interest expenses ondeposits and borrowed funds divided by total earning assets.Answer: Net interest margin (NIM)34. are those liabilities that which mature or must be repriced withinthe planning period.Answer: Interest-sensitive liabilities35.Variable rate loans and securities are included as part of for banks.Answer: repriceable assets36.Money market deposits are included as part of for banks.Answer: repriceable liabilities37.Interest sensitive assets less interest sensitive liabilities divided by total assets of the bank is knownas .Answer: relative interest sensitive gap38.Interest sensitive assets divided by interest sensitive liabilities is known as .Answer: Interest sensitivity ratio39. is a measure of interest rate exposure which is the total difference indollars between those assets and liabilities that can be repriced over a designated time period.Answer: Cumulative gap40. is the phenomenon that interest rates attached to various assets oftenchange by different amounts and at different speeds thaninterest rates attached to variousliabilities,Answer: basis riskTrue/False QuestionsT F 41. Usually the principal goal of asset-liability management is to maximize or at least stabilizea bank's margin or spread.Answer: TrueT F 42. Asset management strategy in banking assumes that the amount and kinds of deposits and other borrowed funds a bank attracts are determined largely by its management.Answer: FalseT F 43. The ultimate goal of liability management is to gain control over a financial institution's sources of funds.Answer: TrueT F 44. If interest rates fall when a bank is in an asset-sensitive position its net interest margin will rise.Answer: FalseT F 45. A liability-sensitive bank will experience an increase in its net interest margin if interest rates rise.Answer: FalseT F 46. Under the so-called liability management view in banking the key control lever banks possess over the volume and mix of their liabilities is price.Answer: TrueT F 47. Under the so-called funds management view bank management's control over assets must be coordinated with its control over liabilities so that asset and liability management are internally consistent.Answer: TrueT F 48. Bankers cannot determine the level or trend of market interest rates; instead, they can only react to the level and trend of rates.Answer: TrueT F 49. Short-term interest rates tend to rise more slowly than long-term interest rates and to fall more slowly when all interest rates in the market are headed down.Answer: FalseT F 50. A financial institution is liability sensitive if its interest-sensitive liabilities are less than its interest-sensitive assets.Answer: FalseT F 51. If a bank's interest-sensitive assets and liabilities are equal than its interest revenues from assets and funding costs from liabilities will change at the same rate.Answer: TrueT F 52. Banks with a positive cumulative interest-sensitive gap will benefit if interest rates rise, but lose income if interest rates decline.Answer: TrueT F 53. Banks with a negative cumulative interest-sensitive gap will benefit if interest rates rise, but lose income if interest rates decline.Answer: FalseT F 54. For most banks interest rates paid on liabilities tend to move more slowly than interest rates earned on assets.Answer: FalseT F 55. Interest-sensitive gap techniques do not consider the impact of changing interest rates on stockholders equity.Answer: TrueT F 56. Interest-sensitive gap, relative interest-sensitive gapand the interest-sensitivity ratio will often reach different conclusions as to whether the bank is asset or liability sensitive.Answer: FalseT F 57. The yield curve is constructed using corporate bonds with different default risks so the bank can determine the risk/return tradeoff for default risk.Answer: FalseT F 58. Financial securities that are the same in all other ways may have differences in interest rates that reflect the differences in the ease of selling the security in the secondary market ata favorable price.Answer: TrueT F 59. Financial institutions face two major kinds of interest rate risk. These risks include price risk and reinvestment risk.Answer: TrueT F 60. Interest-sensitive gap and weighted interest-sensitive gap will always reach the same conclusion as to whether a bank is asset sensitive or liability sensitive.Answer: FalseT F 61. Weighted interest-sensitive gap is less accurate than interest-sensitive gap in determining the affect of changes in interest rates on net interest margin.Answer: FalseT F 62. A bank with a positive duration gap experiencing a rise in interest rates will experience an increase in its net worth.Answer: FalseT F 63. A bank with a negative duration gap experiencing a rise in interest rates will experience an increase in its net worth.Answer: TrueT F 64. Duration is a direct measure of the reinvestment riskof a bond.Answer: FalseT F 65. A bank with a positive duration gap experiencing a decrease in interest rates will experience an increase in its net worth.Answer: TrueT F 66. A bank with a negative duration gap experiencing a decrease in interest rates will experience an increase in its net worth.Answer: FalseT F 67. Duration is the weighted average maturity of a promised stream of future cash flows.Answer: TrueT F 68. Duration is a direct measure of the price risk of a bond.Answer: TrueT F 69. A bond with a greater duration will have a smaller price change in percentage terms when interest rates change.Answer: FalseT F 70. Long-term interest rates tend to change very little with the cycle of economic activity.Answer: TrueT F 71. A bank with a duration gap of zero is immunized against changes in the value of net worth due to changes in interest rates in the market.Answer: TrueT F 72. Convexity is the idea that the rate of change of an asset's price varies with the level of interest rates.Answer: TrueT F 73. The change in the market price of an asset's price from a change in market interest rates is roughly equal to the asset'sduration times the change the interest rate divided by the original interest rate.Answer: TrueT F 74. U.S. banks tend to do better when the yield curve is upward-sloping.Answer: TrueT F 75. Net interest margin tends to rise for U.S. banks when the yield curve is upward-sloping.Answer: TrueT F 76. Financial institutions laden with home mortgages tend be immune to interest-rate risk.Answer: FalseT F 77. If a Financial Institution's net interest margin is immune to interest-rate risk then so is its net worth.Answer: FalseMultiple Choice Questions78.When is interest rate risk for a bank greatest?A)When interest rates are volatile.B)When interest rates are stable.C)When inflation is high.D)When inflation is low.E)When loan defaults are high.Answer: A79. A bank’s IS GAP is defined as:A)The dollar amount of rate-sensitive assets divided by the dollar amount of rate-sensitiveliabilities.B)The dollar amount of earning assets divided by the dollar amount of total liabilities.C)The dollar amount of rate-sensitive assets minus the dollaramount of rate-sensitive liabilities.D)The dollar amount of rate-sensitive liabilities minus the dollar amount of rate-sensitive assets.E)The dollar amount of earning assets times the average liability interest rate.Answer: C80.According to the textbook, the maturing of the liability management techniques, coupled with morevolatile interest rates, gave birth to the __________________ approach which dominates banking today. The term that correctly fills in the blank in the preceding sentence is:A) Liability managementB) Asset managementC) Risk managementD) Funds managementE) None of the above.Answer: D81.The principal goal of interest-rate hedging strategy is to hold fixed a bank's:A) Net interest marginB) Net income before taxesC) Value of loans and securitiesD) Noninterest spreadE) None of the above.Answer: A82. A bank is asset sensitive if its:A) Loans and securities are affected by changes in interest rates.B) Interest-sensitive assets exceed its interest-sensitive liabilities.C) Interest-sensitive liabilities exceed its interest-sensitive assets.D) Deposits and borrowings are affected by changes in interest rates.E) None of the above.Answer: B83.The change in a bank's net income that occurs due to changes in interest rates equals the overallchange in market interest rates (in percentage points) times _____________. The choice below that correctly fills in the blank in the preceding sentence is:A) Volume of interest-sensitive assetsB) Price risk of the bank's assetsC) Price risk of the bank's liabilitiesD) Size of the bank's cumulative gapE) None of the above.Answer: D84. A bank with a negative interest-sensitive GAP:A) Has a greater dollar volume of interest-sensitive liabilities than interest-sensitive assets.B) Will generate a higher interest margin if interest rates rise.C) Will generate a higher interest margin if interest rates fall.D) A and B.E) A and C.Answer: E85.The net interest margin of a bank is influenced by:A) Changes in the level of interest rates.B) Changes in the volume of interest-bearing assets and interest-bearing liabilities.C) Changes in the mix of assets and liabilities in the bank'sportfolio.D) All of the above.E) A and B only.Answer: D86.The discount rate that equalizes the current market value of a loan or security with the expectedstream of future income payments from that loan or security is known as the:A) Bank discount rateB) Yield to maturityC) Annual percentage rate (APR)D) Add-on interest rateE) None of the above.Answer: B87.The interest-rate measure often quoted on short-term loans and money market securities such asU.S. Treasury bills is the:A) Bank discount rateB) Yield to maturityC) Annual percentage rate (APR)D) Add-on interest rateE) None of the aboveAnswer: A88. A bank whose interest-sensitive assets total $350 million and its interest-sensitive liabilitiesamount to $175 million has:A) An asset-sensitive gap of 525 millionB) A liability-sensitive gap of $175 millionC) An asset-sensitive gap of $175 millionD) A liability-sensitive gap of $350 millionE) None of the above.Answer: C89. A bank has a 1-year $1,000,000 loan outstanding, payable in four equal quarterly installments.What dollar amount of the loan would be considered rate sensitive in the 0 – 90 day bucket?A)$0B)$250,000C)$500,000D)$750,000E)$1,000,000Answer: B90. A bank has Federal funds totaling $25 million with an interest rate sensitivity weight of 1.0. Thisbank also has loans of $105 million and investments of $65 million with interest rate sensitivity weights of 1.40 and 1.15 respectively. This bank also has $135 million in interest-bearing deposits with an interest rate sensitivity weight of .90 and other money market borrowings of $75 million with an interest rate sensitivity weight of 1.0. What is the weighted interest-sensitive gap for this bank?A) $50.25B) $-15C) -$50.25D) $34.25E) None of the aboveAnswer: A91. A bond has a face value of $1000 and five years to maturity. This bond has a coupon rate of 13percent and is selling in the market today for $902. Couponpayments are made annually on this bond. What is the yield to maturity (YTM) for this bond?A) 13%B) 12.75%C) 16%D) 11.45%E) Cannot be calculated from the information givenAnswer: C92. A treasury bill currently sells for $9,845, has a face value of $10,000 and has 46 days to maturity.What is the bank discount rate on this security?A) 12.49%B) 12.13%C) 12.30%D) 2%E) None of the aboveAnswer: B93.The _______________ is determined by the demand and supply for loanable funds in the market.The term that correctly fills in the blank in the preceding sentence is:A) The yield to maturityB) The banker's discount rateC) The holding period returnD) The risk-free real rate of interestE) The market rate of interest on a risky loanAnswer: D94. A bank with a positive interest-sensitive gap will have a decrease in net interest income wheninterest rates in the market:A) RiseB) FallC) Stay the sameD) A bank with a positive interest-sensitive gap will never have a decrease in net interest incomeAnswer: B95.The fact that a consumer who purchases a particular basket of goods for $100 today has to pay $105next year for the same basket of goods is an example of which of the following risks:A) Inflation riskB) Default riskC) Liquidity riskD) Price riskE) Maturity riskAnswer: A96. A bank has Federal Funds totaling $25 million with an interest rate sensitivity weight of 1.0. Thisbank also has loans of $105 million and investments of $65 million with interest rate sensitivity weights of 1.40 and 1.15 respectively. This bank also has $135 million in interest-bearing deposits with an interest rate sensitivity weight of .90 and other money market borrowings of $75 million with an interest rate sensitivity weight of 1.0. What is the dollar interest-sensitive gap for this bank?A) $50.25B) $-15C) -$50.25D) $34.25E) None of the aboveAnswer: B97.If a bank has a positive GAP, an increase in interest rates will cause interest income to __________,interest expense to__________, and net interest income to __________.A)Increase, increase, increaseB)Increase, decrease, increaseC)Increase, increase, decreaseD)Decrease, decrease, decreaseE)Decrease, increase, increaseAnswer: A98.If a bank has a negative GAP, a decrease in interest rates will cause interest income to __________,interest expense to__________, and net interest income to __________.A)Increase, increase, increaseB)Increase, decrease, increaseC)Increase, increase, decreaseD)Decrease, decrease, decreaseE)Decrease, decrease, increaseAnswer: E99. A treasury bill currently sells for $9,845, has a face value of $10,000 and has 46 days to maturity.What is the yield to maturity on this security?A) 12.49%B) 12.13%C) 12.30%D) 2%E) None of the aboveAnswer: A100.The Third National Bank of Edmond reports a net interest margin of 5.83%. It has total interest revenues of $275 million and total interest expenses of $210 million. What does this bank'searnings assets have to be?A) $4717 millionB) $3602 millionC) $1115 millionD) $3.790 millionE) None of the aboveAnswer: C101.The Third National Bank of Edmond reports a net interest margin of 5.83%. It has total interest revenues of $275 million and total interest expenses of $210 million. This bank has earnings assets of $1115. Suppose this bank's interest revenues rise by 8 percent and its interest expenses and earnings assets rise by 10 percent next year. What is this bank's new net interest margin?A) 5.83%B) 7.09%C) 3.59%D) 5.38%E) 7.80%Answer: D102. Which of the following is part of funds management?A) The goal of funds management is simply to gain control over the bank's funds sources.B) Since the amount of deposits a bank holds is determined largely by its customers, the focus ofthe bank should be on managing the assets of the bank.C) Management of the bank's assets must be coordinated with management of the bank'sliabilities.D) The spread between interest revenues and interest expenses is unimportant.E) None of the aboveAnswer: C103. If Fifth National Bank's asset duration exceeds its liability duration and interest rates rise, this will tend to __________________ the market value of the bank's net worth.A) LowerB) RaiseC) StabilizeD) Not affectE) None of the aboveAnswer: A104.If Main Street Bank has $100 million in commercial loans with an average duration of 0.40 years;$40 million in consumer loans with an average duration of 1.75 years; and $30 million in U.S.Treasury bonds with an average duration of 6 years, what is Main Street's asset portfolio duration?A) 0.4 yearsB) 1.7 yearsC) 2.7 yearsD) 4.1 yearsE) None of the aboveAnswer: B105.A bank has an average asset duration of 4.7 years and an average liability duration of 3.3 years.This bank has $750 million in total assets and $500 million in total liabilities. This bank has:A) A positive duration gap of 8.0 years.B) A negative duration gap of 2.5 years.C) A positive duration gap of 1.4 years.D) A positive duration gap of 2.5 years.E) None of the above.Answer: D106.A bank has an average asset duration of 1.15 years and an average liability duration of 2.70 years.This bank has $250 million in total assets and $225 million in total liabilities. This bank has:A) A negative duration gap of 1.55 years.B) A positive duration gap of 1.28 years.C) A negative duration gap of 3.85 years.D) A negative duration gap of 1.28 years.E) None of the above.Answer: D107.The duration of a bond is the weighted average maturity of the future cash flows expected to be received on a bond. Which of the following is a true statement concerning duration?A) The longer the time to maturity, the greater the durationB) The higher the coupon rate, the higher the durationC) The shorter the duration, the greater the price volatilityD) All of the above are trueE) None of the above are trueAnswer: A108.A bond has a duration of 7.5 years. Its current market price is $1125. Interest rates in the market are 7% today. It has been forecasted that interest rates will rise to 9% over the nextcouple of weeks.How will this bank's price change in percentage terms?A) This bond's price will rise by 2 percent.B) This bond's price will fall by 2 percent.C) This bond's price will fall by 14 .02 percentD) This bond's price will rise by 14.02 percentE) This bond's price will not changeAnswer: C109.A bank has an average asset duration of 5 years and an average liability duration of 3 years. This bank has total assets of $500 million and total liabilities of $250 million. Currently, market interest rates are 10 percent. If interest rates fall by 2 percent (to8 percent), what is this bank's change in net worth?A) Net worth will decrease by $31.81 millionB) Net worth will increase by $31.81 millionC) Net worth will increase by $27.27 millionD) Net worth will decrease by $27.27 millionE) Net worth will not change at allAnswer: B110.A bank has an average asset duration of 5 years and an average liability duration of 3 years. This bank has total assets of $500 million and total liabilities of $250 million. Currently, market interest rates are 10 percent. If interest rates fall by 2 percent (to8 percent), what is this bank's duration gap?A) 2 yearsB) –2 yearsC) 3.5 yearsD) –3.5 yearsE) None of the aboveAnswer: C111.A bank has an average asset duration of 5 years and an average liability duration of 9 years. This bank has total assets of $1000 million and total liabilities of $850 million. Currently, marketinterest rates are 5 percent. If interest rates rise by 2 percent (to 7 percent), what is this bank'schange in net worth?A) Net worth will decrease by $50.47 millionB) Net worth will increase by $50.47 millionC) Net worth will decrease by $240.95 millionD) Net worth will increase by $240.95 millionE) Net worth will not change at allAnswer: B112.A bank has an average asset duration of 5 years and an average liability duration of 9 years. This bank has total assets of $1000 million and total liabilities of $850 million. Currently, marketinterest rates are 5 percent. If interest rates rise by 2 percent (to 7 percent), what is this bank'sduration gap?A) –4 yearsB) 4 yearsC) 2.65 yearsD) –2.65 yearsE) 12.65 yearsAnswer: D113.A bank has $100 million of investment grade bonds with a duration of 9.0 years. This bank also has $500 million of commercial loans with a duration of 5.0 years. This bank has $300 million ofconsumer loans with a duration of 2.0 years. This bank has deposits of $600 million with a duration of 1.0 years and nondeposit borrowings of $100 million with an average duration of .25 years.What is this bank's duration gap? These are all of the assets and liabilities this bank has.A) This bank has a duration gap of 14.75 yearsB) This bank has a duration gap of 15.03 yearsC) This bank has a duration gap of 3.55 yearsD) This bank has a duration gap of 3.75 yearsE) This bank has a duration gap of 5.15 yearsAnswer: D114. Which of the following statements is true concerning a bank's duration gap?A) If a bank has a positive duration gap and interest rates rise, the bank's net worth will declineB) A bank with a positive duration gap has a longer average duration for its assets than for itsliabilitiesC) If a bank has a zero duration gap and interest rates rise, the bank's net worth will not changeD) If a bank has a negative duration gap and interest rates rise, the bank's net worth will increaseE) All of the above are true statementsAnswer: E115. A bank has an average duration for its asset portfolio of 5.5 years. This bank has total assets of $1000 million and total liabilities of $750 million. If this bank has a zero duration gap, what must the duration of its liabilities portfolio be?A) 7.33 years。

商业银行管理Chap015

1. A ratio of core capital (Tier 1) to total risk-weighted assets of at least 4 percent
2. A ratio of total capital (the sum of Tier 1 and Tier 2 capital) to total risk-weighted assets of at least 8 percent, with the amount of Tier 2 capital limited to 100 percent of Tier 1 capital
• Regulatory Approach to Evaluating Capital Needs
▫ Reasons for Capital Regulation
1. To limit risk of failures 2. To preserve public confidence 3. To limit losses to the government and other institutions
Chapter Fifteen
The Management of Capital
Key Topics
• The Many Tasks of Capital • Capital and Risk Exposures • Types of Capital In Use • Capital as the Centerpiece of Regulation • Basel I and Basel II • Capital Regulation in the Wake of the Great
▫ Research Evidence

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© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Mcnt and Financial Services, 7/e
15-12
The Basel Agreement
• A Bank’s Minimum Capital Requirement is Linked to its Credit Risk • Stockholders' equity is deemed to be the most valuable type of capital • Minimum capital requirement increased to 8% total capital to risk-adjusted assets • Capital requirements were approximately standardized between countries to ‘level the playing field‘ • Capital is divided into Two Tiers
Chapter Fifteen
The Management of Capital
McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
15-2
Key Topics
• The Many Tasks of Capital
▫ Probability of being unable to raise cash when needed at reasonable cost ▫ Probability that changes in interest rates will adversely affect the value of net worth
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e
• Provides a Cushion Against Risk of Failure • Provides Funds to Help Institutions Get Started • Promotes Public Confidence (credit crisis 2007-2009 showed importance) • Provides Funds for Growth • Regulator of Growth • Role in Growth of Bank Mergers • Regulatory Tool to Limit Risk Exposure • Protects the Government’s Deposit Insurance System
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
15-6
Types of Capital
• Common Stock • Preferred Stock • Surplus • Undivided Profits • Equity Reserves
• Interest Rate Risk • Operational Risk
• Exchange Risk • Crime Risk
▫ Probability of adverse affect of earnings due to failures in computer systems, management errors, etc. ▫ Probability of loss due to fluctuating currency prices
• Capital and Risk Exposures • Types of Capital In Use • Capital as the Centerpiece of Regulation • Basel I and Basel II
• Planning to Meet Capital Needs
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
15-4
Key Risks in Financial Institutions Management
• Credit Risk • Liquidity Risk
▫ Probability of default on any promised payments of interest or principal or both
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
15-3
Tasks Performed By Capital
15-5
Defenses Against Risk
• Quality Management • Diversification ▫ Geographic ▫ Portfolio
• Deposit Insurance (increased from $100K to $250K in the Fall of 2008 through Dec 2009) • Owners’ Capital
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
15-8
Reasons for Capital Regulation
The underlying assumption is that the private marketplace does not correctly price the impact of systemic failures. Thus, the purpose of capital regulation is:
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
15-11
The Basel Agreement
• Historically, the minimum capital requirements for banks were independent of the riskiness of the bank
• Subordinated Debentures • Minority Interest in Consolidated Subsidiaries • Equity Commitment Notes
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
15-10
Quick Quiz
• What forms of capital are in use today? What are the key differences between the different types of capital? • What are the most important and least important forms of capital held by U.S.-insured banks? How do small banks differ from large banks in the composition of their capital accounts and in the total volume of capital they hold relative to their assets? • What is the rationale for having the government set capital standards for financial institutions as opposed to letting the private marketplace set those standards?
•To Limit the Risk of Failures •To Preserve Public Confidence •To Limit Losses to the Federal Government Arising from Deposit Insurance Claims
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
▫ Prior to 1990, banks were required to maintain:
a primary capital-to-asset ratio of at least 5% to 6%, and a minimum total capital-to-asset ratio of 6%
McGraw-Hill/Irwin Bank Management and Financial Services, 7/e

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