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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Chap010

Chapter 10The Investment Function in Banking and Financial-Services ManagementFill in the Blank Questions1. A(n) _________________________ is a security issued by the federal government which has lessthan one year to maturity when it is issued.Answer: Treasury bill2. Debt instruments issued by cities, states and other political entities and which are exempt fromfederal taxes are collectively known as _________________________ .Answer: municipal securities3. The investment maturity strategy which calls for the bank to have one half of its investmentportfolio in very short term assets and one half of its investment portfolio in long term assets isknown as the _________________________ .Answer: barbell strategy4. A(n) _________________________ is a security where the interest portion of the security is soldseparately from the principal portion of the security.Answer: stripped security5. _________________________ are the way the federal, state and local governments guarantee thesafety of their deposits with banks.Answer: Pledging requirements6. The most aggressive investment maturity strategy calls for the bank to continually shift thematurities of its securities in responses to changes in interest rates and is called the__________________.Answer: rate expectation strategy7. _________________________ is the risk that the bank will have to sell part of its investmentportfolio before their maturity for a capital loss.Answer: Liquidity risk8. _________________________ is the risk that the economy of the market area they service maytake a down turn in the future.Answer: Business risk9. __________________ is the risk that the company whose bonds the financial institution owns mayretire the entire issue of corporate bonds in advance of their maturity leaving the bank with the risk of earnings losses resulting from reinvesting the cash at lower interest rates.Answer: Call risk10. A security issued by the federal government with 1 to 10 years to maturity when it is issued is calleda(n) _________________________ .Answer: Treasury note11. A short term debt security issued by major corporations is known as __________________.Answer: commercial paper12. The investment maturity strategy which calls for the bank to have all of their investment assets invery short term maturities is called the _________________________.Answer: front-end-loaded policy13. A money market security which represents a bank's commitment to pay a stipulated amount ofmoney on a specific future date under specific conditions and which is often used in international trade is known as a(n) _________________________.Answer: bankers' acceptance14. A(n) _________________________ is an interest-bearing receipt for the deposit of funds in a bankfor a stipulated time period. Ones that are oriented towards business customers or institutions are known as jumbos.Answer: certificate of deposit15. _________________________ are any securities which reach maturity in under one year.Answer: Money market securities16. _________________________ are any securities whose original maturity exceeds one year.Answer: Capital market securities17. Securities sold by Fannie Mae, Freddie Mac and others are known as_________________________.Answer: federal agency securities18. Claims against the expected income and principal generated by a pool of similar-type loans areknown as _________________________.Answer: securitized assets19. The long term debt obligations of major corporations are known as ________________________.Answer: corporate bonds20. The investment maturity strategy which calls for the bank to have all of their investment assets invery long term maturities is known as the _________________________.Answer: back-end-loaded policy21. Financial Institutions may invest in municipal bonds issued by smaller local governments. Thesebonds are known as ____________ bonds.Answer: bank qualified22.Marketable notes and bonds sold by agencies owned by the government or sponsored by thegovernment are known as .Answer: government agency securities23. A security issued by the federal government with greater than 10 years to maturity when it is issuedis called a(n) .Answer: Treasury Bond24.are time deposits of fixed maturity issued by the world’s larges banksheadquartered in financial centers around the globe. The heart of this market is centered in London.Answer: Eurocurrency deposits25. are a type of municipal bond that are backed by the full faith andcredit of the issuing government.Answer: General obligation bonds26. are a type of municipal bond that are paid only from certainstipulated source of funds.Answer: Revenue bonds27. are closely related to CMOs and partition the cash flow from a poolof mortgage loans or mortgage backed securities into multiple maturity classes in order to reduce the cash-flow uncertainty of investors.Answer: Real Estate Mortgage Investment Conduits (REMICs)28. is the risk that loans will be terminated or paid off ahead of schedule.This is a particular problem with residential home mortgages and other consumer loans that are pooled and used as collateral in securitized assets.Answer: Prepayment risk29. A lending institution that sells lower-yielding securities at a loss in order to reduce current taxableincome while simultaneously purchasing higher-yielding new securities in order to boost futurereturns is doing a(n) .Answer: tax swap30.A(n) is a picture of how market interest rates differ across loans securitiesof varying times to maturity.Answer: yield curveTrue/False QuestionsT F 31. Investments in securities provide diversification for a bank's assets because most loans come from the local areas served by a bank's offices.Answer: TrueT F 32. Bank income from loans is fully taxable.Answer: TrueT F 33. Investment securities are expected to "dress up" a bank's balance sheet, according to the textbook.Answer: TrueT F 34. Investment securities are expected to help stabilize a financial institutions's income.Answer: TrueT F 35. A short-term IOU offered by major corporations that is of short maturity (most of these lOUs mature in 90 days or less) is known as a CMO.Answer: FalseT F 36. Prepayment risk on securitized assets generally increases when interest rates rise.Answer: FalseT F 37. Stripping a security eliminates prepayment risk.Answer: FalseT F 38. According to the textbook the dominant security held in U.S. bank investment portfolios is state and local government bonds.Answer: FalseT F 39. Interest income and capital gains from a bank's portfolio of investment securities is taxed in the United States as ordinary income.Answer: TrueT F 40. Eurocurrency deposits that some banks purchase as investments generally carry higher market yields than domestic time deposits issued by comparable-size U.S. banks.Answer: TrueT F 41. Bankers' acceptances are considered to be among the safest of all money market instruments.Answer: TrueT F 42. An eligible acceptance is one that can be used as collateral for borrowing from a Federal Reserve bank.Answer: TrueT F 43. When a bank irrevocably guarantees a commercial paper issue, the bank's credit rating substitutes for the borrower's credit rating.Answer: TrueT F 44. The principal risk banks face from investing in structured notes is credit (default) risk.Answer: FalseT F 45. The principal risk to a financial institution buying CMOs is market risk.Answer: FalseT F 46. Stripped mortgage-backed securities fully protect investors from having to reinvest their income at lower and lower interest rates.Answer: FalseT F 47. Stripped mortgage-backed securities make maturity matching of bank assets and liabilities easier to accomplish than do most other investment securities that banks buy.Answer: FalseT F 48. Lower interest rates increase the present value of all projected cash flows from a loan-backed security so that its market value could rise.Answer: TrueT F 49. Treasury bills are the long term debt obligations issued by the federal government.Answer: FalseT F 50. Commercial paper is the short term debt instrument issued by major banks.Answer: FalseT F 51. Treasury notes and bonds are issued by the federal government and are coupon instruments.Answer: TrueT F 52. Interest rate risk is the risk financial institutions face due to changes in market interest rates.Answer: TrueT F 53. One investment maturity strategy popular among smaller institutions is the ladder or spaced maturity policy. It is popular because it does not take much expertise to implement.Answer: TrueT F 54. One investment maturity strategy, called the front end loaded policy, requires that the bank put all of its investment portfolio in long term securities.Answer: FalseT F 55. Business risk is the risk that the bank will experience a cash shortage and will have to sell some of its investments securities.Answer: FalseT F 56. Inflation risk is the possibility that the purchasing power of interest income and repaid principal from a security or loan will be eroded by rising prices for goods and services.Answer: TrueT F 57. Call risk refers to the right of debt collectors to call in the loans in advance of maturity and get an early repayment.Answer: FalseT F 58. If interest rates fall, a callable bond at par has the potential for large increases in price.Answer: FalseT F 59. The yield to maturity is the discount rate that equates a security’s purchase price with the stream of income expected until it is sold to another investor.Answer: FalseMultiple Choice Questions60.An important investment security popular with banks that must by law mature within one year fromthe date of issue and which has a high degree of safety and marketability is the:A) Treasury billB) Treasury noteC) FNMA noteD) Bankers' acceptanceE) Eurodollar CDAnswer: A61.A bank's promise to pay the holder a designated amount of money on a designated future date and isoften used in international trade is known as a (or an):A) Promissory guaranteeB) Discount securityC) Bankers' acceptanceD) In the money optionE) Accretion noteAnswer: C62.Pools of mortgages put together either by a government agency or by a private investment bankingcorporation to raise more loanable funds for the issuer are known as a (or an):A) Accretion bondB) Participation certificateC) CMOD) Stripped securityE) Commercial paperAnswer: C63.Fluctuations in the timing of cash payments flowing from an underlying pool of securitized assetsis referred to as:A) Income riskB) Prepayment riskC) Liquidity riskD) Capital riskE) None of the aboveAnswer: B64.Principal roles that a financial institution's investment portfolio play include which of thefollowing?A) Income stabilityB) Geographic diversificationC) Hedging interest rate riskD) Backup liquidityE) All of the aboveAnswer: E65._____________ is the method by which banks can provide a safeguard for the deposits ofgovernmental units.A) HedgingB) CollateralizationC) PledgingD) SecuritizationE) Window dressingAnswer: C66.The most aggressive investment maturity strategy that calls for the bank to continually shift thematurities of its securities in response to changes in interest rates and other economic conditions is theA) Barbell strategyB) Rate expectations approachC) Front-end-loaded policyD) Ladder approachE) None of the aboveAnswer: B67.Which of the following statements is (are) correct regarding duration?A) In comparing two bonds with the same yield to maturity and the same maturity, a bond with ahigher coupon rate will have a longer duration.B) In comparing two loans with the same maturity and the same interest rate, a fully amortizedloan will have a shorter duration than a loan with a balloon payment.C) The duration will always be shorter than the maturity for all debt instruments.D) All of the aboveE) B and CAnswer: B68.Which of the following is not one of the Capital Market instruments in which banks invest?A) U.S. Treasury notesB) Corporate notes and bondsC) U.S. Treasury bondsD) Municipal bondsE) Commercial paperAnswer: E69.Which of the following is true of Treasury bills?A)Interest on Treasury bills is exempt from state income taxes.B)Interest on Treasury bills is exempt from federal income taxes.C)Treasury bills pay a lower pretax yield than comparable corporate securities.D)All of the above are true.E) A and C onlyAnswer: E70.In recent years security dealers have assembled pools of federal agency securities whose principalinterest yield may be periodically reset based on what happens to a stated interest rate or may carry multiple coupon rates that are periodically adjusted; the foregoing describes a:A) Financial futures contractB) Revenue-anticipation noteC) Zero coupon instrumentD) Structured noteE) None of the aboveAnswer: D71.Banks are generally not allowed to invest in speculative grade bonds. What kind of risk is thisdesigned to limit?A) Liquidity riskB) Business riskC) Credit riskD) Tax exposureE) Interest rate riskAnswer: C72. A security where the interest payments and the principal payments are sold separately is called:A) A Treasury noteB) An accretionC) A structured noteD) A stripped securityE) None of the aboveAnswer: D73.Which of the following is true? Mortgage prepayment risk:A) Is higher on high interest rate mortgagesB) Is felt most dramatically when interest rates riseC) Is eliminated by the use of mortgage backed securitiesD) Is eliminated by the purchase of a stripped mortgage obligationE) All of the above are trueAnswer: A74. A bank replaces 5-year corporate bonds with a yield to maturity of 9.75 percent with 5-yearmunicipal bonds with a yield to maturity of 7 percent. This bank is in the 35 percent tax bracket and these bonds have the same default risk. What is the most likely reason this bank changed from the corporate to the municipal bonds?A) Liquidity riskB) Business riskC) Credit riskD) Tax exposureE) Interest rate riskAnswer: D75.Suppose a bank has found bank qualified municipal bonds which have a nominal gross rate ofreturn of 8 percent and that it can borrow funds needed for this purchase at a rate of 6.25 percent.This bond is in the 35 percent tax bracket. What is the net after-tax return on this bond?A) 5.20 percentB) 3.5 percentC) 1.75 percentD) 0 percentE) None of the aboveAnswer: B76.An investor can invest in either a tax-exempt security that pays 5% or a taxable corporate securityof comparable risk and maturity that pays 8%. At what marginal tax rate will the investor beindifferent between these two securities?A)25.0%B)32.5%C)37.5%D)57.5%E)62.5%Answer: C77.Which of the following would not be considered a bank qualified municipal security?A) A Columbia County general obligation bond to modernize the county fire department.B) A Bucks County general obligation bond to build a new sewer plant.C) A City of San Marcos general obligation bond to pay for street repairs.D) A City of Chicopee general obligation bond to pay for a new city jail.E) A Treasury bond to finance government debt.Answer: E78. A bond has three years to maturity and has a coupon rate of 15 percent. This bond is selling in themarket for $1072 and has a yield to maturity of 12%. What is the duration of this bond?A) 3 yearsB) 1 yearC) 1.92 yearsD) 2.45 yearsE) 2.64 yearsAnswer: E79. A bond has six years to maturity and has a coupon rate of 7.5 percent. Coupon payments are madeannually and this bond has a face value of $1000. This bond is selling in the market for $1127.What is the yield to maturity on this bond?A) 7.5 percentB) 5 percentC) 11.5 percentD) 2.5 percentE) None of the aboveAnswer: B80. A bond has eight years to maturity and a coupon rate of 6.5 percent. Coupon payments are madeannually and this bond has a face value of $1000. This bond is selling in the market for $862. What is the yield to maturity on this bond?A) 6.5 percentB) 10 percentC) 8.5 percentD) 9 percentE) None of the aboveAnswer: D81. A bond has eight years to maturity and a coupon rate of 6.5 percent. Coupon payments are madeannually and this bond has a face value of $1000. This bond is selling in the market for $862. If this bond is sold at the end of four years for $1046, what is the holding period return on this bond?A) 6.5 percentB) 12 percentC) 9 percentD) 6 percentE) None of the aboveAnswer: B82. A security which was created by the Treasury to protect against inflation risk is called a(n):A) CMOB) FNMAC) GNMAD) TIPSE) CDAnswer: D83. A financial institution that is concerned about the possibility that the purchasing power of both theinterest income and principal income will decline on a loan is concerned about which of thefollowing things?A) Business riskB) Liquidity riskC) Tax exposureD) Credit riskE) Inflation riskAnswer: E84. A bank that is concerned that the economic conditions of the market area they serve may take adownturn with falling demand for loans and higher bankruptcies in the areas is concerned about which of the following things?A) Business riskB) Liquidity riskC) Tax exposureD) Credit riskE) Inflation riskAnswer: A85.Which of the following is a characteristic of Treasury bills?A) They are coupon instrumentsB) They are the short term debt instruments issued by major corporationsC) They are discount securitiesD) They have more risk than other money market securitiesE) All of the above are characteristics of Treasury billsAnswer: C86.The investment maturity strategy which calls for the bank to put all of their investment assets intovery long term securities is called the:A) Front-end-loaded maturity policyB) Back-end-loaded maturity policyC) Ladder or spaced maturity policyD) Barbell investment portfolio strategyE) Rate expectation approachAnswer: B87. The Lancaster State Bank is thinking about purchasing a corporate bond that has a yield of 8.5%.This bank has a marginal tax rate of 25%. What is the after-tax yield on this bond?A) 11.33%B) 8.5%C) 6.375%D) 2.125%E) None of the aboveAnswer: C88.The Ferson National Bank is thinking about purchasing a municipal bond that has a yield of 5.5%.This bank has a marginal tax rate of 30%. What is the after-tax yield on this bond?A) 7.86%B) 5.5%C) 3.85%D) 1.65%E) None of the aboveAnswer: B89.The Stumbaugh State Bank is thinking about purchasing a corporate bond that has a yield of 9%.This bank has a marginal tax rate of 40%. What is the after-tax yield on this bond?A) 15%B) 9%C) 5.4%D) 3.6%E) None of the above90.The Price Perpetual Bank has purchased a bond that has a coupon rate of 5.5% and a face value of$1000. It has 11 years to maturity and is selling in the market for $887.52. The bond makes annual coupon payments. What is the yield to maturity on this bond?A) 7%B) 5.5%C) 11%D) 4.70%E) None of the aboveAnswer: A91.The Price Perpetual Bank has purchased a bond that has a coupon rate of 5.5% and a face value of$1000. It has 11 years to maturity and is selling in the market for $887.52. The bond makes annual coupon payments. The Price Perpetual Bank is planning on selling this bond at the end of 5 years for $1036.50. What is the holding period return on this bond?A) 5.5%B) 7%C) 11%D) 9%E) None of the aboveAnswer: D92.The Farmer National Bank has purchased a bond that has a coupon rate of 11.5% and a face valueof $1000. It has 16 years to maturity and is selling in the market for $1309.80. The bond makes annual coupon payments. What is the yield to maturity on this bond?A) 11.5%B) 16%C) 8%D) 12.21%E) None of the aboveAnswer: C93.The Farmer National Bank has purchased a bond that has a coupon rate of 11.5% and a face valueof $1000. It has 16 years to maturity and is selling in the market for $1309.80. The bond makes annual coupon payments. The Farmer National Bank plans on selling this bond at the end of 8 years for $1071. What is the holding period return on this bond?A) 7%B) 8%C) 11.5%D) 16%E) None of the aboveAnswer: A94.The Johnson National Bank has purchased a bond that has a coupon rate of 5.5% and a face value of$1000. It has 4 years to maturity and is selling in the market for $917. The bond makes annual coupon payments. What is the yield to maturity on this bond?A) 5.5%B) 4.0%C) 1.5%D) 8%E) None of the above95.The Johnson National Bank has purchased a bond that has a coupon rate of 5.5% and a face value of$1000. It has 4 years to maturity and is selling in the market for $917. The bond makes annual coupon payments. What is the duration of this bond?A) 3.38 yearsB) 3.68 yearsC) 4.00 yearsD) 5.50 yearsE) None of the aboveAnswer: B96.The Sheets Savings and Loan Association has purchased a bond that has a coupon rate of 7.5% anda face value of $1000. It has 5 years to maturity and is selling in the market for $1063. The bondmakes annual coupon payments. What is the duration of this bond?A) 7.50 yearsB) 5.00 yearsC) 4.65 yearsD) 4.37 yearsE) None of the aboveAnswer: D97.The Dillinger State Bank has purchased a bond from the Interstate Manufacturing Company thathas 15 years to maturity and has a coupon rate of 12.5%. Market interest rates have recentlydeclined to 8% and the Dillinger State Bank is worried that the Interstate Manufacturing Company will retire the bond and issue new ones with a lower coupon rate. What type of risk is the Dillinger State Bank worried about?A) Credit riskB) Interest-rate riskC) Business- riskD) Call riskE) Prepayment riskAnswer: E98.The Terrell State Bank is a small bank located in Guyman, Oklahoma. All of their loans areagriculture and small business loans in Guyman. They want to buy a municipal bond from the state of South Carolina. What type of risk are they likely trying to reduce with this purchase?A) Credit riskB) Interest-rate riskC) Business riskD) Call riskE) Prepayment riskAnswer: C99.The Caldwell National Bank has purchased a bond that pays a coupon rate of 10.5%. They are alittle concerned because they believe rates will decrease in the future and they will not be able to reinvest the coupon payments at the same rate. What type of risk are they concerned about?A) Credit riskB) Interest rate riskC) Business riskD) Call riskE) Prepayment riskAnswer: B100.Moody’s Investor Service has added the numbers 1, 2 and 3 to some of their ratings. What type of risk are these ratings attempting to measure?A) Credit riskB) Interest rate riskC) Business riskD) Call riskE) Prepayment riskAnswer: A101.The Roy State Bank has just purchase a portfolio of asset backed securities. What type of risk do these securities have that other securities do not have?A) Credit riskB) Interest rate riskC) Business riskD) Call riskE) Prepayment riskAnswer: E102.The Carey State Bank has purchased a bank-qualified municipal bond with a yield of 6%. This bank has had to borrow funds to make this purchase at a cost of 5.25%. This bank is in the 40% tax bracket. What is the net after-tax return on this bank-qualified municipal bond?A) 6.00%B) .75%C) 2.85%D) 2.43%E) None of the aboveAnswer: D103.The Wesson Wisconsin State Bank has purchased a bank-qualified municipal bond with a yield of7.5%. This bank had to borrow funds to make this purchase at a cost of 6%. This bank is in the 25%tax bracket. What is the net after-tax return on this bank-qualified municipal bond?A) 7.5%B) 2.7%C) 3.0%D) 1.5%E) None of the aboveAnswer: B104.The Goodknight Company has issued securities with 45 days to maturity. What type of security have they issued?A) Commercial PaperB) Banker’s AcceptanceC) Corporate BondD) Certificate of DepositE) Municipal BondAnswer: A105.The Dakota National Bank has purchased a security issued by the state of Tennessee that has 20 years to maturity. What type of security have they purchased?A) Commercial PaperB) Banker’s AcceptanceC) Corporate BondD) Certificate of DepositE) Municipal BondAnswer: E。

商业银行学答案第八版罗斯Chap005

CHAPTER 5THE FINANCIAL STATEMENTS OF BANKS AND THEIR PRINCIPALCOMPETITORSGoal of This Chapter: The purpose of this chapter is to acquaint the reader with the content, structure and purpose of bank financial statements and to help managers understand how information from bank financial statements can be used as tools to reveal how well their banks are performing.Key Topics in this Chapter•An Overview of the Balance Sheets and Income Statements of Banks and Other Financial Firms•The Balance Sheet or Report of Condition•Asset Items•Liability Items•Recent Expansion of Off-Balance Sheet Items•The Problem of Book-Value Accounting and 〞Window Dressing〞•Components of the Income Statement: Revenues and Expenses•Appendix: Sources of Information on theFinancial-Services IndustryChapter OutlineI. Introduction: The Statements Reviewed in This ChapterII An Overview of Balance Sheets and Income StatementsIII The Balance Sheet (Report of Condition)A. The Principal Types of AccountsB. Assets of the Banking Firm1. Cash and Due from Depository Institutions2. Investment Securities: The Liquid Portion3. Investment Securities: The Income-Generating Portion4. Trading Account Assets5. Federal Funds Sold and Reverse Repurchase Agreements6. Loans and Leases7. Loan Losses8. Specific and General Reserves9. International Loan Reserves10.Unearned Income11.Nonperforming (noncurrent) Loans12.Bank Premises and Fixed Assets13.Other Real Estate Owned (OREO)14.Goodwill and Other Intangible Assets15.All Other AssetsC. Liabilities of the Banking Firm1. Deposits2. Borrowings from Nondeposit Sources3. Equity Capital for the Banking Firma. Preferred Stockb. Common EquityD. Comparative Balance Sheet Ratios for Different Size BanksE. Recent Expansion of Off-Balance-Sheet Items in BankingF. The Problem of Book-Value AccountingG. Auditing: Assuring Reliability of Financial StatementsIV. Components of the Income Statement (Report of Income)A. Financial Flows and Stocks1. Interest Income2. Interest Expenses3. Net Interest Income4. Loan Loss Expense5. Noninterest Income6. Noninterest Expenses7. Net Operating Income and Net IncomeB. Comparative Income Statement Ratios for Different-Size Financial FirmsV. The Financial Statements of Leading Nonbank Financial Firms: A Comparison to Bank StatementsVI. An Overview of Key features of Financial Statements and Their ConsequencesVII. Summary of the ChapterConcept Checks5-1. What are the principal accounts that appear on a bank's balance sheet (Report of Condition)The principal asset items on a bank's Report of Condition are loans, investments in marketable securities, cash, and miscellaneous assets. The principal liability items are deposits and nondeposit borrowings in the money market. Equity capital supplied by the stockholders rounds out the total sources of funds for a bank.5-2. Which accounts are most important and which are least important on the asset side of a bank's balance sheetThe principal bank asset items from most important to least important are::Rank Order Assets1 Cash2 Investment Securities3 Loans4 Miscellaneous Assets5-3. What accounts are most important on the liability side of a balance sheetThe principal bank liability items from most important to least important are:Rank Order Liabilities and Equity Capital1 Deposits2 Nondeposit Borrowings3 Equity Capital4 Miscellaneous Liabilities5-4. What are the essential differences among demand deposits, savings deposits, and time depositsDemand deposits are regular checking accounts against which a customer can write checks or make any number of personalwithdrawals. Regular checking accounts do not bear interest under current U.S. law and regulation.Savings deposits bear interest (normally, they carry the lowest rate paid on bank deposits) but may be withdrawn at will (though a bank usually will reserve the right to require advance notice of a planned withdrawal).Time deposits carry a fixed maturity and the bank may impose a penalty if the customer withdraws funds before the maturity date is reached. The interest rate posted on time deposits is negotiated between the bank and its deposit customer and may be either fixed or floating.A NOW account combines features of a savings account and a checking account, while a money market deposit account encompasses transactional powers similar to a regular checking account (though usually with limitations on the number of checks or drafts that may be written against the account) but also resembles a time deposit with an interest rate fixed for a brief period (such as weekly) but then becomes changeable over longer periods to reflect current market conditions.5-5. What are primary reserves, and secondary reserves and what are they supposed to doPrimary reserves consist of cash, including a bank's vault cash and checkable deposits held with other banks or any other funds such as reserves with the Federal Reserve that are accessible immediately to meet demands for liquidity made against the bank.Secondary reserves consist of assets that pay some interest (though usually pay returns that are much lower than earned on other assets, such as loans) but their principal feature is ready marketability. Most Secondary reserves are marketable securities such as short term government securities and private securities such as commercial paper.Both primary and secondary reserves are held to keep the bank in readiness to meet demands for cash (liquidity) from whatever source those demands may arise.5-6. Suppose that a bank holds cash in its vault of $1.4 million, short-term government securities of $12.4 million, privately issued money market instruments of $5.2 million, deposits at the Federal Reserve banks of $20.1 million, cash items in the process of collection of $0.6 million, and deposits placed with other banks of $16.4 million. How much in primary reserves does this bank hold In secondary reservesThe bank holds primary reserves of:Vault Cash + Deposits at the Fed + Cash Items in Collection +Deposits With Other Banks= $1.4 mill. + $20.1 mill. + $0.6 mill. + $16.4 mill.= $38.5 millionThe bank has secondary reserves of:Short-term Government Securities + Private Money-Market Instruments= $12.4 mill. + $5.2 mill.= $17.6 million5-7. What are off-balance-sheet items and why are they important to some financial firmsOff-balance-sheet items are usually transactions that generate fee income for a bank (such as standby credit guarantees) or help hedge against risk (such as financial futures contracts). They are importantas a supplement to income from loans and to help a bank reduce its exposure to interest-rate and other types of risk.5-8. Why are bank accounting practices under attack right now In what ways could financial institutions improve their accounting methodsThe traditional practice of banks has been to record the value of assets and liabilities at their value on the day the accounts were originally created and not change those values over the life of the account. The SEC and FASB started questioning this practice in the 1980’s because they were concerned that investors in bank securities would be misled about the true value of the bank. Using this historical value accounting method may in fact conceal a bank that insolvent in a current market value sense.The biggest controversy centered on the banks’ investment portfolio which would appear to be easy to value at its current market price. At a minimum, banks could help themselves by marking their investment portfolio to market. This would give investors an indication of the true value of the bank’s investment portfolio. Banks could also consider using the lower of historical or market value for other accounts on the balance sheet.5-9. What accounts make up the Report of Income (income statement of a bank)The Report of Income includes all sources of bank revenue (loan income, investment security income, revenue from deposit service fees, trust fees, and miscellaneous service income) and all bank expenses (including interest on all borrowed funds, salaries, wages, and employee benefits, overhead costs, loan loss expense, taxes, and miscellaneous operating costs.) The difference between operating revenues and expenses (including tax obligations) is referred to as net income.5-10. In rank order, what are the most important revenue and expense items on a Report of IncomeBy dollar volume in most recent years the rank order of the revenue and expense items on a bank's Report of Income is:Rank Order Revenue Items Expense Items1 Loan Income Deposit Interest2 Security Income Interest on Nondeposit Borrowings3 Service Charges on Deposits Salaries, Wages, andand Other Deposit Fees Employee Benefits4 Other Operating Revenues Miscellaneous Expenses5-11. What is the relationship between the provision for loan losses on a bank's Report of Income and the allowance for loan losses on its Report of ConditionGross loans equal the total of all loans currently outstanding that are recorded on the bank's books. Net loans are equal to gross loans less any interest income on loans already collected by the bank but not yet earned and also less the allowance for loan-loss account (orbad-debt reserve).The allowance for loan losses is built up gradually over time by an annual noncash expense item that is charged against the bank's current income, known as the Provision for Loan Losses. The dollar amount of the annual loan-loss provision plus the amount of recovered funds from any loans previously declared worthless (charged off) less any loans charged off as worthless in the current period is added to the allowance-for-loan-losses account.If current charge-offs of worthless loans exceed the annual loan-loss provision plus any recoveries on previously charged-off loans the annual net figure becomes negative and is subtracted from the allowance-for-loan-losses account.5-12. Suppose a bank has an allowance for loan losses of $1.25 million at the beginning of the year, charges current income for a $250,000 provision for loan losses, charges off worthless loans of $150,000, and recovers $50,000 on loans previously charged off. What will be the balance in the allowance for loan losses at year-endThe balance in the allowance for loan loss (ALL) account at year end will be:Beginning ALL = $1.25 millionPlus: Annual ProvisionRecoveries onCharged OffMinus: ChargeOffs of Worthless =LoansEnding ALL = $1.40 million5-13. Who are banking’s chief com petitors in the financial servicesThe closest competitors of banks in recent years (at least in terms of the similarity of their financial statements) are the thrift institutions. These include credit unions and savings associations. If we move a little further away from banks both in terms of what they do and the way their financial statements look, banks also compete with finance companies, life and property casualty insurance companies and security brokers and dealers.5-14. How do the financial statements of major nonbank financial firms resemble or differ from bank financial statements Why do these differences or similarities existBanks have very similar financial statements to credit union and savings associations. The only difference may be in the structure of their loan portfolio. Credit unions probably have more loans to individuals and savings associations may have more real estate loans as well as loans to individuals.More differences exist between banks and other major competitors. These diff erences exist because of each company’s unique function. Finance companies have loans but on their balance sheet they are called accounts receivables. In addition, they show heavy reliance on money market borrowings instead of deposits. Insurance companies are different in that loans they make to businesses show up on the balance sheet as bonds, stocks, mortgages and other securities. On the liability side, insurance companies receive the majority of their funds from insurance premiums paid by customers for insurance protection.Mutual funds hold primarily corporate stocks, bonds, asset-backed securities and money market instruments and their liabilities consist primarily of units of the mutual fund sold to the public. Security brokers and dealers tend to hold a similar range of securities funded by borrowings in the money and capital markets.5-15. What major trends are changing the content of the financial statements prepared by financial firmsThe content of the financial statements of financial firms is changing for several reasons. One trend that has affected the financial statements of financial firms is the call for those statements to reflect the true market value of the assets held by the financial firm. More accounts are being listed at the lower of historical or market value so that investors can get a better understanding of the true value of the firm.Another trend that is affecting financial firms is the increased use of off-balance sheet items. The notional amount of these items issometimes surpassing the value of the items on the balance sheet, especially for larger financial institutions. This has led regulators to change their reporting requirements for financial firms and there are likely to be additional requirements in the future.Another trend that is affecting financial firms is the convergence of the various types of financial firms. In addition, financial firms are becoming larger and more complex and more financial holding companies are formed. These are also leading to changes in the content and structure of the financial statements of financial firms. 5-16. What are the key features or characteristics of the financial statements of banks and similar financial firms What are the consequences of these statement features for managers of financial-service providers and for the publicThe financial statements of financial-service firms exhibit three main characteristics that have important consequences for managers of these firms and the public.The first characteristic of these firms is that they have lower operating leverage. They have small amounts of buildings, equipment and other fixed assets. Operating leverage adds risk to the firm and firms with large amount of operating leverage can face large fluctuations in net income and earnings per share for small changes in revenues.Financial-service firms do not have this problem. However, financial service firms have large amounts of financial leverage. Financial leverage comes from how the firm finances their assets. If a firm borrows a lot, they face have larger financial leverage and have a larger amount of risk as a result. Financial service firms finance approximately 90% of their assets with debt and therefore face significant financial leverage.Small changes in revenues can lead to large changes in net income and earnings per share as a result. In addition, changes in interest rates can have significant effects on the net income and capital position of financial firms. Finally, most of the liabilities of financial firms are short term. This means that financial firms can face significant liquidity problems. A sudden demand by depositors for funds can lead to large problems for financial firms.Problems5-1. Jasper National Bank has just submitted its Report of Condition to the FDIC. Please fill in the missing items from itsstatement shown below (all figures in millions of dollars): Report of ConditionTotal assets $2,50Cash and due from Depository Institutions 87 Securities233 Federal Funds Sold andReverse Repurch.45Gross Loans and Leases 1,90* Gross Loans and Leases = Net Loansand Leases+Loan Loss Allowance200Loan Loss Allowance Net Loans and Leases1700Trading Account Assets20Bank Premises and FixedAssets25*This is the only asset missing and so is total assetsless all of the rest of the assets listed hereOther Real Estate Owned15 Goodwill and Other Intangibles200 All Other Assets175Total Liabilities and Capital 2,50*Total Liabilities and Capital = TotalassetsTotal Liabilities 2,26* Total Liabilities = Total Liabilitiesand Capital-Total Equity CapitalTotal Deposits 1,60*Total Deposits = Total Liabilities LessAll of theOther LiabilitiesFederal Funds Purchased and Repurchase Agreements.80 Trading Liabilities10 Other Borrowed Funds50 Subordinated Debt480 All Other Liabilities40Total Equity Capital240Total Equity Capital = Perpetual Preferred Stock +Common Stock+Surplus+Undivided ProfitPerpetual Preferred Stock2 Common Stock24 Surplus144 Undivided Profit705-2. Along with the Report of Condition submitted above, Jasper has also prepared a Report of Income for the FDIC. Please fill in the missing items from its statement shown below (all figures in millions of dollars):Report of IncomeTotal Interest Income$120Total Interest Expense80* Total Interest Expense = Total Interest Income - Net Interest IncomeNet Interest Income40Provision for Loan and Lease Losses4* Provision for Loan and Lease Losses = Net Interest Income + Total Noninterest Income - Total Noninterest Expense - Pretax Net Operating IncomeTotal Noninterest Income58 Fiduciary Activities8 Service Charges on Deposit Accounts6Trading Account Gains and Fees14* There are four areas of Total NoninterestIncome and only one is missing and the totalis givenAdditional Noninterest Income30 Total Noninterest Expense77Salaries and Benefits47*There are three areas of Total NoninterestExpense and only one is missing and the totalis givenPremises and Equipment Expense10 Additional Noninterest Expense20 Pretax Net Operating Income17 Securities Gains (Losses)1 Applicable Income Taxes5Income Before Extraordinary Income13*Pretax Income Plus Security Gains LessTaxes is income before extraordinary incomeExtraordinary Gains – Net2Net Income15* Net Income = Income Before Extraordinary Income + Extraordinary Gains – Net5-3. If you know the following figures:Total Interest Income$140Provision for Loan Loss$5 Total Interest Expenses100Income Taxes5Total Noninterest Income15Increases in bank’s undivided profits6Total Noninterest Expenses35 Please calculate these items:Net Interest Income40*Total Interest Income Less Total Interest ExpenseNet Noninterest Income -2*Total Noninterest Income Less Total Noninterest ExpensePretax net operating income15*Net Interest Income Plus Net Noninterest Income Less PLLNet Income After Taxes10*Pretax net operating income less PLL less TaxesTotal Operating Revenues 155*Interest Income Plus Noninterest IncomeTotal Operating Expenses 14*Interest Expenses Plus Noninterest Expenses Plus PLLDividends paid to Common Stockholders4Net Income After Taxes Less Increases in bank’s undivided profits5-4. If you know the following figures:Gross Loans$275Trading Account Securities Allowance for Loan Losses5Other Real Estate Owned Investment Securities36Goodwill and other Intangibles Common Stock5Total LiabilitiesSurplus19Preferred StockTotal Equity Capital39Nondeposit BorrowingsCash and Due from Banks9Bank Premises and Equipment, Ne Miscellaneous Assets38Bank Premises and Equipment, Gross34Please calculate these items:Total Assets414*Total Liabilities Plus Total Equity CapitalNet Loans270*Gross Loans Less ALLUndivided Profit12*Total Equity Capital less PS less CS Less Surpl Fed funds sold23*This is the only asset missing so subtract all otassets from total assetsDepreciation5* Bank Premises and Equipment, Gross less Ban Total Deposits355*Total Liabilities less Nondeposit Borrowings5-5. The Mountain High Bank has Gross Loans of $750 million with an ALL account of $45 million. Two years ago the bank made a loan for $10 million to finance the Mountain View Hotel. Two million in principal was repaid before the borrowers defaulted on the loan. The Loan Committee at Mountain High Bank believes the hotel will sell at auction for $7 million and they want to charge off the remainder immediately.a. The dollar figure for Net Loans before the charge-off isNet Loans = Gross Loans –ALL = $750 - $45 = $705b. After the charge-off, what are the dollar figures for GrossLoans, ALL and Net Loans assuming no other transactions.Gross Loans = $750 - $1 = $749 The gross loans nowreflect the realizable value.ALL = $45 - $1 = $44 *The amount of the loan that is badNet Loans = $749 -$44 = $705c. If the Mountain View Hotel sells at auction for $8 million, thebank recovers full principal on the loan.Gross Loans = $750 - $8 = $742ALL = $45 ALL is restored to original amountNet Loans = $742 -$45 = $6975-6. For each of the following transactions, which items on a bank’s statement of income and expenses (Report of Income) would be affecteda. Office supplies are purchased so the bank will have enoughdeposit slips and other necessary forms for customer andemployee use next week.This would be part of Additional noninterest expense and part of Total Noninterest Expense.b. The bank sets aside funds to be contributed through itsmonthly payroll to the employee pension plan in the name of all its eligible employees.This would be part of Salaries and Benefits and part of Total Noninterest Expenses.c. The bank posts the amount of interest earned on the savings account of one of its customers.This would be part of Total Interest Expenses.d. Management expects that among a series of real estate loans recently granted the default rate will probably be close to 3 percent.This would be part of PLL to go into reserves for future bad debts.e. Mr. And Mrs. Harold Jones just purchased a safety deposit box to hold their stock certificates and wills.This would be part of Additional Noninterest Income and part of Total Noninterest Incomef. The bank colleges $1 million in interest payments from loans it made earlier this year to Intel Composition Corp.This would be part of Total Interest Incomeg. Hal Jones’s checking account is charged $30 for two of Hal’s checks that were returned for insufficient funds.This would be part of Service Charges on Deposit Accounts and then part of Total Noninterest Incomeh. The bank earns $5 million in interest on government securities it has held since the middle of last year.This would be part of Total Interest Income.i. The bank has to pay its $5,000 monthly utility bill today to the local electric company.This would be part of Premises and Equipment Expenses and part of Total Noninterest Expensesj. A sale of government securities has just netted the bank a $290,000 capital gain (net of taxes).This would be part of Security Gains (Losses)5-7. For each of the transactions described here, which of at least two accounts on a bank’s balance sheet (Report of Condition) would be affected by each transactiona. Sally Mayfield has just opened a time deposit in the amountof $6,000 and these funds are immediately loaned to RobertJones to purchase a used car.Gross Loans +$6,000Total Deposits +$6,000b. Arthur Blode deposits his payroll check for $1000 in the bank and the bank invests the funds in a government security.Securities + $1,000Total Deposits +$1,000c. The bank sells a new issue of common stock for $100,000 to investors living in its community, and the proceeds of that sale are spent on the installation of new ATMs,Bank Premises & Equipment, Gross +$100,000Common Stock /Surplus +$100,000d. Jane Gavel withdraws her checking account balance of $2,500 from the bank and moves her deposit to a credit union; the bank employs the funds received from Mr. Alan James, who just paid off his home equity loan, to provide Ms. Gavel with the funds she withdrew.Gross Loans -$2,500Total Deposits -$2,500e. The bank purchases a bulldozer from Ace Manufacturing Company for $750,000 and leases it to Cespan Construction Company.Cash and Due from Bank-$750,000Gross Loans and Leases+750,000f. Signet National Bank makes a loan of reserves in the amount of $5 million to Quesan State Bank and the funds are returned the next day.On the day the funds are loaned the accounts are affected in the following manner:Cash and Due from Bank-$5,000,000Federal Funds Sold+$5,000,000and when the finds are returned the next day, the process is reversed.g. The bank declares its outstanding loan of $1 million from theDeprina Corp. to be uncollectible.Gross Loans -$1,000,000ALL -$1,000,0005-8. The Nitty Gritty Bank is developing a list of off-balance-sheet items for its call report. Please fill in the missing items from its statement shown below. Using Table 5-5, describe how Nitty Gritty compares with other banks in the same size category regarding its off-balance sheet activities.Off-balance-sheet items for Nitty Gritty Bank (in millions of $)Total unused commitments$7,000Standby letters of credit andforeign office guarantees$1,350(Amount conveyed to others)($50)Commercial Letters of Credit$48Securities Lent$2,200Derivatives (total)$97,000Notional Amount of CreditDerivatives$22,000Interest Rate Contracts54000Foreign Exchange Rate Contracts 19,800Total Derivatives LessAll Other DerivativesContracts on other commoditiesand equities$1,200 All other off - balance -sheetliabilities$49Total off-balance-sheet Items$107,597 The sum of all of the off-balance sheet itemTotal Assets (on-balance sheet)$10,500Off-balance-sheet assets ÷1025%on-balance-sheet assetsThis looks very similar to other banks of the same size.5-9. See if you can determine the amount of Cardinal State Bank’s current net income after taxes from the figures below (stated in millions of dollars) and the amount of its retained earnings from current income that it will be able to reinvest in the bank. (Be sure to arrange all the figures given in correct sequence to derive the bank’s Report of Income.)Total Interest IncomeInterest on Loans$86Int earned on Govt. Bonds andNotes$9Total$95Total Interest ExpenseInterest Paid on Fed FundsPurchased$5Interest Paid to Customers Timeand Savings Deposits$34Total$39Net Interest Income$56Provision for Loan Loss$2Total Noninterest IncomeService Charges Paid byDepositors$3Trust Department Fees$3Total$6Total Noninterest ExpensesEmployee Wages, Salaries andBenefits$13Overhead Expenses$3Total$16 Net Noninterest Income($10) Pretax Income$44 Taxes Paid (28%)$12 Securities Gains/(Losses)$(7) Net Income$25 Less Dividends$4 Retained Earnings from CurrentIncome$215-10. Which of these account items or entries would normally occur on a ba nk’s balance sheet (Report of Condition) and which on a bank’s income and expense statement (Report of Income)The items which would normally appear on a bank's balance sheet are:Federal funds sold Deposits due to BankCredit card loans Leases of BusinessEquipment ToCustomersVault cash Savings DepositAllowance for loanlossesUndivided profitsCommercial and Industrial Loans Mortgage Owed on the Bank’s BuildingsRepayment of Credit Card Loan Other Real Estate OwnedCommon Stock Additions toUndivided profitsFederal fundspurchasedThe items which would normally appear on a bank’s income statement are:Interest Receivedon Credit CardLoansDepreciation on Plantand EquipmentInterest Paid on Money Market Deposits Provision for Loan LossesSecurity Gains or Losses Service Charges on。

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ROSE7e课后答案chapter-

商业银行管理ROSE7e课后答案chapter_CHAPTER 10THE INVESTMENT FUNCTION IN BANKING AND FINANCIAL SERVICES MANAGEMENTGoal of This Chapter: The purpose of this chapter is to discover the types of securities that financial institutions acquire for their investment portfolio and to explore the factors that a manager should consider in determining what securities a financial institution should buy or sell.Key Topics in This ChapterNature and Functions of InvestmentsInvestment Securities Available: Advantages and DisadvantagesMeasuring Expected ReturnsTaxes, Credit, and Interest Rate RisksLiquidity, Prepayment, and Other RisksInvestment Maturity StrategiesMaturity Management T oolsChapter OutlineI. Introduction: The Roles Performed by Investment Securities in Bank PortfoliosII. Investment Instruments Available to Banks and Other Financial FirmsIII. Popular Money-Market InstrumentsA. Treasury BillsB. Short-Term Treasury Notes and BondsC. Federal Agency SecuritiesD. Certificates of DepositE. International Eurocurrency DepositsF. Bankers' AcceptancesG. Commercial PaperH. Short-Term Municipal ObligationsIV. Popular Capital Market InstrumentsA. Treasury Notes and BondsB. Municipal Notes and BondsC. Corporate Notes and BondsIII. Other Investment Instruments Developed More RecentlyA. Structured NotesB. Securitized AssetsC. Stripped SecuritiesIV. Investment Securities Actually Held by BanksV. Factors Affecting the Choice of Investment SecuritiesA. Expected Rate of ReturnB. Tax Exposure1. The Tax Status of State and Local Government Bonds2. Bank Qualified Bonds3. Tax Swapping Tool4. The Portfolio Shifting ToolC. Interest-Rate RiskD. Credit or Default RiskE. Business RiskF. Liquidity RiskG. Call RiskH. Prepayment RiskI. Inflation RiskJ. Pledging RequirementsVI. Investment Maturity StrategiesA. The Ladder or Spaced-Maturity PolicyB. The Front-End Load Maturity PolicyC. The Back-End Load Maturity PolicyD. The Barbell StrategyE. The Rate Expectations ApproachVII. Maturity Management ToolsA. The Yield CurveB. DurationVIII. Summary of the ChapterConcept Checks10-1. Why do banks and institutions choose to devote a significant portion of their assets to investment securities?Investments perform many different roles that act as a necessary complement to the advantages loans provide. Investments generally have less credit risk than loans, allow the bank or thrift institution to diversify into different localities than most of its loans permit, provide additional liquid reserves in case more cash is needed, provide collateral as called for by law and regulation to back government deposits, help to stabilize bank income over the business cycle, and aid banks in reducing their exposure to taxes.10-2. What key roles do investments play in the management of a bank or other depository institution?See answer to 10-110-3. What are the principal money market and capital market instruments available to institutions today? What are their most important characteristics?Banks purchase a wide range of investment securities. The principal money market instruments available to banks today are Treasury bills, federal agency securities, CD's issued by other depository institutions, Eurodollar deposits, bankers' acceptances, commercial paper, and short-term municipalobligations. The common characteristics of most these instruments is their safety and high marketability. Capital market instruments available to banks include Treasury notes and bonds, state and local government notes and bonds, mortgage-backed securities, and corporate notes and bonds. The characteristics of these securities is their long run income potential.10-4. What types of investment securities do banks prefer the most? Can you explain why?Commercial banks clearly prefer these major types of investment securities: United States Treasury securities, federal agency securities, and state and local government (municipal) bonds and notes. They hold small amounts of equities and other debt securities (mainly corporate notes and bonds). They pick these types because they are best suited to meet the objectives of a banks investment portfolio, such as tax sheltering, reducing overall risk exposure, a source of liquidity and naturally generating income as well as diversifying their assets.10-5. What are securitized assets? Why have they grown so rapidly in recent years?Securitized assets are loans that are placed in a pool and, as the loans generate interest and principal income, that income is passed on to the holders of securities representing an interest in the loan pool. These loan-backed securities are attractive to many banks because of their higher yields and frequent federal guarantees (in the case, for example, of most home-mortgage-backed securities) as well as their relatively high liquidity and marketability10-6. What special risks do securitized assets present to institutions investing in them?Securitized assets often carry substantial interest-rate riskand prepayment risk, which arises when certain loans in the securitized-asset pool are paid off early by the borrowers (usually because interest rates have fallen and new loans can be substituted for the old loans at cheaper loan rates) or are defaulted. Prepayment risk can significantly decrease the values of securities backed by loans and change their effective maturities.10-7. What are structured notes and stripped securities? What unusual features do they contain?Structured notes usually are packaged investments assembled by security dealers that offer customers flexible yields in order to protect their customers' investments against losses due to inflation and changing interest rates. Most structured notes are based upon government or federal agency securities.Stripped securities consist of either principal payments or interest payments from a debt security. The expected cash flow from a Treasury bond or mortgage-backed security is separated into a stream of principal payments and a stream of interest payments, each of which may be sold as a separate security maturing on the day the payment is due. Some of these stripped payments are highly sensitive to changes in interest rates.10-8. How is the expected yield on most bonds determined?For most bonds, this requires the calculation of the yield to maturity (YTM) if the bond is to be held to maturity or the planned holding period yield (HPY) between point of purchase and point of sale. YTM is the expected rate of return on a bond held until its maturity date is reached, based on the bond's purchase price, promised interest payments, andredemption value at maturity. HPY is a rate of discount bringing the current price of a bond in line with its stream ofexpected cash inflows and its expected sale price at the end of the bank's holding period.10-9. If a government bond is expected to mature in two years and has a current price of $950, what is the bond's YTM if it has a par value of $1,000 and a promised coupon rate of 10 percent? Suppose this bond is sold one year after purchase for a price of $970. What would this investor's holding period yield be?The relevant formula is:$950 = 221Y TM) 1(1000$Y TM) (1$100 Y TM) 1(100$+++++ Using a financial calculator we get:YTM = 12.99%If the bond is sold after one year, the formula entries change to:$950 = 11Y TM) (1$970 Y TM) 1(100$+++and the YTM is:YTM = 12.63%10-10. What forms of risk affect investments?The following forms of risk affect investments: interest-rate risk, credit risk, business risk, liquidity risk, prepayment risk, call risk, and inflation risk. Interest-rate risk captures the sensitivity of the value of investments to interest-rate movements, while credit risk reflectsthe risk of default on either interest or principal payments. Business risk refers to the impact of credit conditions and the economy, while liquidity risk focuses on the price stability and marketability of investments. Prepayment risk is specific to certain types of investments and focuses on the fact that some loans which the securities are based on can be paid off early. Call risk refers to the early retirement of securities and inflation riskrefers to their possible loss of purchasing power.。

6商业银行管理(罗斯)

Relationship
Pricing Deposits at Cost Plus Profit Margin
Cost-plus deposit pricing encourages banks to determine what costs they are incurring in labor and management time, materials, etc., in offering each deposit service. Cost-plus pricing generally calls for a bank to charge deposit service fees adequate to cover all the costs of offering the service plus a small margin for profit.
CHAPTER SIX
MANAGING AND PRICING DEPOSIT SERVICES
Key topics
Types of Deposit Accounts Offered The Changing Mix of Deposits and Deposit Costs Pricing Deposit Services and Deposit Interest Rates Conditional Deposit Pricing Rules for Deposit Insurance Coverage Disclosure of Deposit Terms Lifeline Banking
Marginal cost = Change in total cost = New interest rate × Total funds raised at new rate － Old interest rate × Total funds raised at old rate

《商业银行管理》课后习题答案IMChap4

CHAPTER 4THE FINANCIAL STATEMENTS OF A BANKGoal of This Chapter: To help readers become more comfortable and knowledgeable about the financial statements prepared by banks, including bank balance sheets (Reports of Condition), income statements (Reports of Income), sources and uses statements, and the statement of stockholders' equity capital.Key Terms Presented in This ChapterReport of Condition Sources and Uses of Funds StatementReport of Income Statement of Stockholders’ EquityFunds-Flow StatementChapter OutlineI. Introduction: The Statements We Will Review in This ChapterII. An Overview of Bank Balance Sheets and Income StatementsA. Financial Inputs and Outputs on Bank Balance Sheets and Income StatementsB. The Bank's Balance Sheet (Report of Condition)1. The Principal Types of Accounts on a Bank's Report of Condition2. Bank Assetsa. The Cash Accountb. Investment Securities: The Liquid Portionc. Investment Securities: The Income-Generating Portiond. Loanse. Federal Funds Sold and Securities Purchased under ResaleAgreementsf. Customer's Liability on Acceptancesg. Miscellaneous Assets3. Bank Liabilitiesa. Depositsb. Borrowings from Nondeposit Sourcesc. Capital Accounts1. Subordinated Notes and Debentures2. Preferred Stock3. Common Equity4. Comparative Balance-Sheet Ratios for Different Size Banks5. The Expansion of Off-Balance-Sheet Items in Banking6. The Problem of Book-Value Accounting in BankingC. Components of the Income Statement (Report of Income)1. The Determinants of a Bank's Net Income2. Financial Flows and Stocksa. Interest Incomeb. Interest Expensesc. Net Interest Incomed. Loan-Loss Expensee. Noninterest Incomef. Noninterest Expensesg. Net Income3. Comparative Income-Statement Ratios for Different-Size BanksD. Other Useful Bank Financial Statements1. The Funds-Flow or Sources-and-Uses-of-Funds Statement2. The Capital-Account Statement or Statement of Stockholders' EquityCapitalIll. Summary of the ChapterConcept Checks4-1. What are the principal accounts that appear on a bank's balance sheet (or Report of Condition)?The principal asset items on a bank's Report of Condition are loans, investments in marketable securities, cash, and miscellaneous assets. The principal liability items are deposits and nondeposit borrowings in the money market. Equity capital supplied by the stockholders rounds out the total sources of funds for a bank.4-2. Which accounts are most important and least important on the asset side of a bank's balance sheet?The rank order of assets by dollar volume appearing on U.S. bank balance sheets are as follows: Rank Order Assets1 Loans2 Investment Securities3 Cash4 Miscellaneous Assets4-3. What accounts are most important on the liability side of a bank's balance sheet?The principal bank liability items from most important to least important are:Rank Order Liabilities and Equity Capital1 Deposits2 Nondeposit Borrowings3 Equity Capital4 Miscellaneous Liabilities4-4. What are the essential differences between demand deposits, savings deposits, and time deposits?Demand deposits are regular checking accounts against which a customer can write checks or make any number of personal withdrawals. Regular checking accounts do not bear interest under current U.S. law and regulation. Savings deposits bear interest (normally, they carry the lowest rate paid on bank deposits) but may be withdrawn at will (though a bank usually will reserve the right to require advance notice of a planned withdrawal). Time deposits carry a fixed maturity and the bank may impose a penalty if the customer withdraws funds before the maturity date is reached. The interest rate posted on time deposits is negotiated between the bank and its deposit customer and may be either fixed or floating. A NOW account combines features of a savings account and a checking account, while a money market deposit account encompasses transactional powers similar to a regular checking account (though usually with limitations on the number of checks or drafts that may be written against the account) but also resembles a time deposit with an interest rate fixed for a brief period (such as weekly) but then becomes changeable over longer periods to reflect current market conditions.4-5. What are primary and secondary reserves and what are they supposed to do?Primary reserves consist of cash, including a bank's vault cash and checkable deposits held with other banks or any other funds that are accessible immediately to meet demands for liquidity made against the bank. Secondary reserves consist of assets that pay some interest (though usually pay returns that are much lower than earned on other assets, such as loans) but their principal feature is ready marketability. Both primary and secondary reserves are held to keep the bank in readiness to meet demands for cash (liquidity) from whatever source those demands may arise.4-6. Suppose that a bank holds cash in its vault of $1.4 million, short-term government securities of $12.4 million, privately issued money market instruments of $5.2 million, deposits at the Federal Reserve banks of $20.1 million, cash items in the process of collection of $0.6 million, and deposits placed with other banks of $16.4 million. How much in primary reserves does this bank hold? in secondary reserves?The bank holds primary reserves of:Vault Cash + Deposits at the Fed + Cash Items in Collection + Deposits With OtherBanks= $1.4 mill. + $20.1 mill. + $0.6 mill. + $16.4 mill.= $38.5 millionThe bank has secondary reserves of:Short-term Government Securities + Private Money-Market Instruments= $12.4 mill. + $5.2 mill.= $17.6 million4-7. What are off-balance-sheet items and why are they important to some banks?Off-balance-sheet items are usually transactions that generate fee income for a bank (such as standby credit guarantees) or help hedge against risk (such as financial futures contracts). They are important as a supplement to income from loans and to help a bank reduce its exposure to interest-rate risk.4-8. Why are bank accounting practices under attack right now? In what ways could banks improve their accounting methods?The traditional practice of banks has been to record the value of assets and liabilities at their value on the day the accounts were originally created and not changing those values over the life of the acc ount. The SEC and FASB started questioning this practice in the 1980’s because they were concerned that investors on bank securities would be misled about the true value of the bank. Using this historical value accounting method may in fact conceal a bank that insolvent in a current market value sense. The biggest controversy centered on the banks’ investment portfolio which would appear to be easy to value at its current market price. At a minimum, banks could help themselves by marking their investment portfolio to market. This would give investors an indication of the true value of the bank’s investment portfolio. Banks could also consider using the lower of historical or market value for other accounts on the balance sheet.4-9. What accounts make up the Report of Income (income statement) of a bank?The Report of Income includes all sources of bank revenue (loan income, investment security income, revenue from deposit service fees, trust fees, and miscellaneous service income) and all bank expenses (including interest on all borrowed funds, salaries, wages, and employee benefits, overhead costs, loan-loss expense, taxes, and miscellaneous operating costs.) The difference between operating revenues and expenses (including tax obligations) is referred to as net income. 4-10. In rank order what are the most important revenue and expense items on a bank's Report of Income?By dollar volume in most recent years the rank order of the revenue and expense items on a bank's Report of Income is:Rank Order Revenue Items Expense Items1 Loan Income Deposit Interest2 Security Income Interest on Nondeposit Borrowings3 Service Charges on Deposits Salaries, Wages, andand Other Deposit Fees Employee Benefits4 Other Operating Revenues Miscellaneous Expenses4-11. Can you explain the relationship between the Provision for Loan Losses on a bank's Report of Income and the Allowance for Loan Losses on its Report of Condition?Gross loans equal the total of all loans currently outstanding that are recorded on the bank's books. Net loans are equal to gross loans less any interest income on loans already collected by the bank but not yet earned and also less the allowance for loan-loss account (or bad-debt reserve). The allowance for loan losses is built up gradually over time by an annual noncash expense item that is charged against the bank's current income, known as the Provision for Loan Losses. The dollar amount of the annual loan-loss provision plus the amount of recovered funds from any loans previously declared worthless (charged off) less any loans charged off as worthless in the current period is added to the allowance-for-loan-losses account. If current charge-offs of worthless loans exceed the annual loan-loss provision plus any recoveries on previously charged-off loans the annual net figure becomes negative and is subtracted from the allowance-for-loan-losses account. 4-12. Suppose a bank has an allowance for loan losses of $1.25 million at the beginning of the year, charges current income for a $250,000 provision for loan losses, charges off worthless loans of $150,000, and recovers $50,000 on loans previously charged off. What will be the balance in the bank's allowance for loan losses at year-end?The balance in the allowance for loan loss (ALL) account at year end will be:Beginning ALL = $1.25 millionPlus: Annual Provisionfor Loan Losses = +0.25Recoveries onLoans Previously = +0.05Charged OffMinus: ChargeOffs of Worthless = -0.15LoansEnding ALL = $1.40 million4-13. What types of information are provided in a Funds-Flow or Sources-and-Uses-of-Funds Statement?A bank's sources-and-uses-of-funds statement captures changes in its assets and liability items as well as income from bank operations. It shows where the bank has raised its operating funds over a given period of time and how those funds were allocated over that same time period. Generally, increases in any liability item (such as deposits) represent a source of funds, while increases in any asset item are uses of funds.4-14. What does the Statement of Stockholders' Equity reveal about how well a bank is being managed and what stresses it is under?The Statement of Stockholders' Equity Capital reflects any changes that have occurred in a bank's equity capital account. The most common items causing changes in a bank's equity capital account include the proportion of current profits (net after-tax income) retained in the bank (which, if positive, increases equity capital or, if negative, decreases equity) and changes in the number of shares of stock outstanding. If more stock is sold, the equity capital account increases.4-15. Suppose a bank has an initial balance in its capital account of $26 million, receives net income during the year of $3 million, pays out stockholder dividends of $2 million, and issues $1 million in new stock during the year. What balance remained in the bank's capital account at the end of the year?The balance in the bank's capital account at year end will be:Beginning Capital Account Balance = $26 millionPlus: Net Income During Year = +3New Shares of Stock Issues = +1Less: Stockholders Dividends = -2Ending Capital Account Balance = $28 million.Problems4-1. The missing items from the Report of Condition and Report of Income of Evergreen National Bank are given below:Report of Condition Itemsfrom Banks $ 27 (550-43-18-10-348-11-6-87 = 27)Gross Loans 373 (348+6+19 = 373)36 (440-21-227-49-107 = 36)Savings Depositsand NOW AccountsStockholders'50 (550-440-41-19 = 50)Equity CapitalReport of Income ItemsInterest and Fees$168 (180-5-7 = 168)on LoansService Charges on11 (39-20-8 = 11)Customer DepositsWages, Salaries, and42 (54-5-7 = 42)Employee BenefitsNet Interest Income 21 (180-159 = 21)-15 (39-54 = -15)Net NoninterestIncome0 (180+39-159-54-4-2=-120)Net Income AfterTaxesAlternative Scenario 1:Given: Total revenues increase to $225, total interest expense increases to $185, total noninterest income increases to $51, and total noninterest expenses increase to $72.Solution: Net Income after taxes = $225-185-72-4-2 = -$38Alternative Scenario 2:Given: All revenue items increase by 100% and all expense items increase by 92%.Solution: Net Income after taxes = [($180+39) X 2]-[($159+54+4+2) X 1.921= [$219 X 2] -[$339 X 1.92] = $438- $421 = $174-2. The items requiring calculation and their dollar amounts are:Net Interest Income = Total Interest Income - Total Interest Expense= $271 -$205 = $66Net Noninterest Income = Total Noninterest Income - Total Noninterest Expense= $23- $40 = -$17Total Operating Revenues = Total Interest Income + Total Noninterest Income= $271 + $23 = $294Total Operating Expense = Total Interest Expenses + Total Noninterest Expenses +Provision for Loan Loss= $205 + $40 + $13 = $258Net Income Before Taxes = Total Operating Revenues - Total Operating Expenses= $294 - $258 = $36Net Income After Taxes = Net Income Before Taxes - Income Taxes= $36 - $5 = $31Increase in Bank's Undivided Profits = Net Income After Taxes - Common Dividends= $31 -$11 = $20Alternative Scenario 1:Given: Gap between Total Interest Income and Total Interest Expenses decreases by 10 percent. Solution: Net Income After Taxes = [($271 - $205) X 0.9] + $23 - $40 - $13 - $5= $59.4 + $23- $40- $13- $5 = $24.4This is a decrease of $6.6 ($31 - $24.4) or a 21.3% decrease as a result of a percent decrease in the interest revenue-expense gap.Alternative Scenario 2:Given: Provision for Loan Loss triples (from $13 to $39).Solution: Net Income After Taxes = $271 - $205 + $23 - $40 - $39 - $5 = $5This is a decrease of $26 ($31 - $5) or an 83.9% decrease.4-3. The items requiring calculation and the dollar figures required are:Total Assets = Total Liabilities + Stockholders' Equity = $380 + $49 = $429.Net Loans = Gross Loans - Allowance for Loan Losses - Unearned Discount on Loans = $294 -$13- $5 = $276Undivided Profits = Total Equity Capital - Capital Reserves - Surplus - Common Stock –Preferred Stock= $49 -$8- $11 -$12- $3 = $15Investment Securities = Total Assets - Miscellaneous Assets - Net Bank Premises-Customers' Liability on Acceptances - Net Loans - Trading Account Securities - Federal Funds Sold -Cash and Due from Banks= $429 - $38 - $29 - $7 - $276 - $2 - $26 - $9 = $42Depreciation = Gross Bank Premises - Net Bank Premises = $34 - $29 = $5Total Deposits = Total Liabilities - Nondeposit Borrowings - Acceptances Outstanding = $380 - $10.- 7 = $363.The reader should note that the asset item, Customer Liability on Acceptances, should have an equal liability item, Acceptances Outstanding.Alternative Scenario 1:Given: All Assets and all Liabilities double.Solution: Total Equity Capital = Total Assets - Total Liabilities= ($429 X 2) ($380 X 2) = $858 - $760 = $98Therefore, Total Equity, as expected, would also double.Undivided Profits = Total Equity Capital - Capital Reserves - Surplus - Common Stock –Preferred Stock= $98- $8- $11 - $12 -$3 = $64This represents an increase of $49 ($64 - $15), or over a 300% increase, and results from the doubling of total equity without concurrent increases in Common or Preferred Stock Issues, which would also cause changes in Capital Reserves and Surplus.Alternative Scenario 2:Given: Total deposits increase by 10 percent and gross loans increase by only 5 percent.Solution: There are two asset items that could increase to fill in the difference. Federal Fund: Sold is the most likely candidate for temporary use of these extra deposits. Cash and due from banks could also increase some, depending on the need for reserve requirement coverage.4-4. The reconstructed bank balance sheet is as follows:Balance Sheet (Report of Condition)Assets LiabilitiesCash and Due from Depository $ 3,992 Noninterest-bearing deposits $ 6,569 Institutions Interest-bearing deposits 27,486 Federal Funds Sold and 1,359 Total Deposits $34,055 Repurchase AgreementsSecurities 9,837 Federal Funds Purchased and 2,757 Loans to Financial Institutions 406 Reverse Repurchase Agreements Agricultural Production Loans 246 Demand Notes Issued to the 439 Credit Cards and Related Plans 790 Treasury and Other BorrowingsOther Loans to Individuals 5,032 Mortgage Indebtedness 45 Real Estate Loans, Total 9,544 Subordinated Notes andCommercial and Industrial Loans 6,372 Debentures 116 All Other Loans 2,258Lease Financing Receivables 147 All Other Liabilities 756 Loans and Leases, Gross 24,795 Total Liabilities 38,168 Less: Allowance for Loan 361 Common Stock 414 Losses Perpetual Preferred Stock 12 Less: Unearned Income 368 Surplus 758 Loans and Leases, Net 24,066 Undivided Profits 1,812 Premises and Fixed Assets 648 Total Equity Capital 2,996 Other Real Estate Owned 89 Total Liabilities andIntangible Assets 86 Equity CapitalAll Other Assets 1,087Total Assets $41,164 $41,164 The reconstructed bank income statement appears as follows:Interest Income:Domestic Office Loan Revenues $ 2,368,736Foreign Office Loan Revenues 5,290Income from Interest Earned on 70,073Balances Due from Depository InstitutionsIncome from Lease Financing Receivables 15,269Interest and Dividend Income on Securities 755,7158,696Interest Income from Trading AccountSecuritiesInterest Income from Federal Funds Sold and 91,362Repurchase AgreementsTotal Interest Income $ 3,315,141Interest Expense:Interest on Domestic Office Deposits $ 1,585,024Interest on Foreign Office Deposits 15,710175,624Expense of Federal Funds Purchased andReverse Repurchase AgreementsInterest on Demand Notes issued to the U.S. 23,163Treasury and Other BorrowingsInterest on Mortgage Indebtedness 3,811Interest on Subordinated Notes and Debentures 6,694Total Interest Expense $1,810,476Net Interest Income $ 1,504,665Provision for Loan and Lease Losses and221,967Allocated Transfer RiskNet Interest Income After Provision for1,282,698Possible Loan LossesNoninterest Income:Service Charges on Deposit Accounts 179,680Other Noninterest Income 326,847Total Noninterest Income $ 506,527Noninterest Expense:Salaries and Employee Benefits $ 619,207Expense of Premises and Fixed Assets, 187,676Net of Rental IncomeOther Noninterest Expenses 538,125Total Noninterest Expenses $1,345,008(838,481)Net Noninterest Income (or NoninterestMargin)Income (or Loss) Before Income Taxes 444,217Applicable Income Taxes 399,806Income Before Extraordinary Items 44,411Securities Gains (or Losses), Net of Taxes 4,845Net Income (Loss) After Taxes and Securities $ 49,256Gains or Losses4-5. First National Bank of Irwin reported loan losses for the current year of $ 1.34 million, $1.19 million one year ago, $1.08 million two years ago, $0.85 million three years ago, $ 0.71 million four years ago, and $ 0.59 million five years ago. With total assets of $465 million and eligible loans of $ 279 million First National in Irwin can use either the experience method (an average of actual losses for the current year plus the past five years) or the specific charge-off method (in which only loans declared uncollectible can be written off). After the 1986 Tax Reform Act, however, banks or bank holding companies with assets of $500 million or more must use the specific charge-off method. Therefore, when First National reached $507 million in total assets the following year it then had to use the specific-charge-off method in accounting for loan losses.4-6. The correct accounts into which the transactions described would be entered are:A. Office expenses F. Interest on loansB. Employee benefits G. Service charges onnoninterest income H. Interest earned on securitiesC. Interest on deposits I. Overhead expenseD. Provision for loan losses J. Securities gains, net of taxesE. Noninterest income4-7. The balance-sheet transactions described in this problem would affect the followingaccounts:A. Time Deposits $6,000; Automobile Loans $6,000B. Demand Deposits $1 ,000; Investment Securities $1,000C. Common Stock $100,000; Plant and Equipment $100,000D. Home Equity Loans - $2,500; Demand Deposits - $2,500E. Lease Receivables or Gross Loans $750,000; Cash Assets - $750,000F. Federal Funds Sold + $5 million; Reserves (cash assets) - $5 million; the next daywe have Federal Funds Sold - $5 million; and Reserves + $5 millionG. Allowance for Loan Losses, -$1 million4-8. The balance sheet for River's Edge National Bank should appear as follows:Balance Sheet (Report of Condition)Assets LiabilitiesCash $ 13 Demand deposits 55 Deposits due from Time deposits 40other banks 25 Money market deposits 31U.S. Treasury bills 10 Deposits due to other banks 5 Municipal bonds 12 Federal funds purchased 34 Federal funds sold and Securities sold under repurchasesecurity RPs 5 agreements 4Loans to commercial Mortgages against the bank'sand industrial firms 64 building 26 Automobile loans 21 Subordinated notes and 20Credit card loans 22 debenturesReal estate loans 42 EquityLeases of assets to Equity capital 9business customers 3 Total liabilities and equity capital $224Bank building andequipment 7Total assets $224Clearly, equity capital of $9 million must be added to bring the bank's balance sheet fully into balance.4-9. The income statement for Rosebush State Bank should be arranged as follows: Interest and Fees on Loans $62Interest and Dividends Earned on$9Government Bonds and NotesTotal Interest Income 71Interest paid to customers holding time andsavings deposits 32Interest paid on federal funds purchased 6Total Interest Expense 38Net interest income 33Service charges paid by depositors 4Trust department fees 1Total noninterest income 5Employee wages, salaries, and benefits 13Overhead expenses 3Provision for loan losses 28Depreciation on the bank's plant andequipmentTotal noninterest expenses 26Net income before taxes 12Taxes paid 3Dividends paid to common stockholders 2Retained earnings 74-10. The items which would normally appear on a bank's balance sheet are:Federal funds sold Savings depositsCredit card loans Common stockVault cash Mortgage owed on the bank'sbuildingAllowance for loan losses Undivided profitsDeposits due to banks Customer liability on acceptancesLeases of business Retained earningsequipment tocustomersThe items normally showing up on a bank's income statementare:Depreciation of bank Securities gains or lossesplant and equipment Employee benefitsInterest received on credit Service charges on depositscard loans Utility expensesInterest paid on moneymarket deposits4-11. The following items are calculated given the information in the problem.Net Interest Income = Total Interest Income –Total Interest Expenses750 = X - .5XTotal Interest Income = $1500Total Interest Expenses = $750Net Noninterest Income = Total Noninterest Income – Total Noninterest Expenses-$300 = .75X –XTotal Noninterest Expenses = $1200Total Noninterest Income -= $900PLL = .01 * Total Interest Income = .01*1500 = $15Taxes = .25 * Net Income Before Taxes = .25*45 = $11.25Dividends = .5*Net Income = .5*$20 = $10Web Site Problems1. Suppose you want to compare in size Wells Fargo Bank and J. P. Morgan. What web site could you use to do a size comparison of these two banks? What did you find when you got there? Have these two Banks changed in size relative to each other over the past decade? Why do you think this has happened?The best web site to find this information is the FDIC web site. It appears as if J.P. Morgan has continuously been larger. However, this information is deceiving. J.P. Morgan is no longer an independent bank. It has merged with Chase Manhattan. Wells Fargo before the merger was larger than J.P. Morgan because they were actively acquiring new banks. A decade ago, J.P. Morgan was larger.2. Which bank is larger as of the latest quarterly balance sheet (Report of Condition), Bank of America or Chase Manhattan Bank? Which web site could you use to answer this question? What did you find when you checked? Which bank holds the most loans? Deposits? Off Balance Sheet Derivatives?This information can be found from the FDIC web site very easily. Chase Manhattan is now J.P. Morgan Chase. These two banks are now very similar is size. Bank of America is slightly larger with TA of $609 billion while Chase has $602 billion in TA. However, they look very different in other respects. Bank of America has $398 billion in loans while Chase has $210 billion in loans. Bank of America has $386 billion in deposits and Chase has $294 billion in deposits. They also have very different amounts of off-balance sheet derivatives. Bank of America has $7,405 billion in off-balance sheet items while Chase has $24,140 billion in off-balance sheet items.。

商业银行管理彼得S.罗斯第八版课后答案

商业银行管理彼得S.罗斯第八版课后答案第一章现代商业银行的概述1.解释现代商业银行的定义和特点。

商业银行是一种金融机构，主要从事存款、贷款、支付和其他与金融活动相关的业务。

其特点包括但不限于：收取利息和手续费、进行风险管理、提供信贷和储蓄服务、发行货币等。

2.列举现代商业银行的主要功能。

现代商业银行的主要功能包括但不限于：存款业务、贷款业务、国际业务、支付结算、外汇交易、信用和担保、投资银行业务、资金运作等。

3.商业银行与其他金融机构的区别是什么？和其他金融机构相比，商业银行的最大区别在于其可以发行货币，并具有相应的存储和支付功能。

此外，商业银行还可以从中央银行和其他金融机构获得流动性支持。

此外，商业银行还拥有广泛的客户群体和网络，可以提供多样化的金融产品和服务。

第二章商业银行的治理结构1.解释商业银行的治理结构。

商业银行的治理结构是指银行内各个决策层级和机构之间相互关系的安排和管理方式。

这包括董事会、监事会、高级管理层等。

2.详细描述商业银行治理结构中各种角色的职责和权力。

•董事会：负责制定银行的战略方向和政策，监督高级管理层的工作表现。

•监事会：负责审计和监督董事会和高级管理层的工作，确保其合法、合规。

•高级管理层：负责银行的日常经营管理，执行董事会决策，负责风险管理和业绩目标的实现。

•内部控制机构：负责制定和实施内部控制制度，保障银行运营的合规性和风险控制。

3.商业银行的治理结构有哪些挑战和改进措施？商业银行的治理结构面临的主要挑战包括：信息不对称、利益冲突、监管合规等。

为了改善这些问题，银行可以采取以下措施：加强内部控制机制、设立独立董事、加强风险管理和合规审查等。

第三章商业银行的资本管理1.商业银行为什么需要资本？商业银行需要资本来保证其业务的顺利运作。

资本可以用于覆盖银行风险、偿还债务、承担损失等。

同时，一定水平的资本也是银行移植的法定要求。

2.商业银行的资本可以来源于哪些渠道?商业银行资本的主要来源有：股东投资、利润留存、债务融资、政府注资等。

商业银行学答案第八版罗斯Chap013

CHAPTER 13MANAGING NONDEPOSIT LIABILITIESGoal of This Chapter: The purpose of this chapter is to learn about the principal nondeposit sources of funds that financial institutions can borrow to help finance their activities and to see how managers choose among the various nondeposit funds sources currently available to them.Key Topics in this ChapterLiability ManagementCustomer Relationship DoctrineAlternative Nondeposit Funds SourcesMeasuring the Funds GapChoosing Among Different Funds SourcesDetermining the Overall Cost of FundsChapter OutlineI. IntroductionII. Liability Management and the Customer Relationship DoctrineA. Customer Relationship DoctrineB. Liability ManagementIll. Alternative Nondeposit Sources of FundsA. Federal Fund s Market (“Fed Funds”)B. Repurchase Agreements as a Source of FundsC. Borrowing from Federal Reserve Banks1. Primary Credit2. Secondary Credit3. Seasonal CreditD. Advances from Federal Home Loan BanksE. Development and Sale of Large Negotiable CDsF. Eurocurrency Deposit MarketG. Commercial Paper MarketE. Long-Term Nondeposit Funds SourcesIV. Choosing Among Alternative Nondeposit SourcesA. Measuring a Financial Firm’s Total Need for Nondeposit Funds:The Available Funds GapB. Nondeposit Funding Sources: Factors to Consider1. Relative Costs2. The Risk Factor3. The Length of Time Funds Are Needed4. The Size of the Borrowing Institution5. RegulationsV. Summary of the ChapterConcept Checks13-1. What is liability management?Liability management involves the conscious control of the funding sources of a financial institution, using the interest rates (yields) offered on deposits and other borrowings to regulate the inflow of funds to match the bank's immediate funding needs.13-2. What advantages and risks does the pursuit of liability management bring to a borrowing institution?Improved control over funding sources enables a borrowing institution to plan its growth more completely, but liability management opens up certain risks, particularly of the interest-rate risk and solvency (default or failure) risk variety, because it tends to be more sensitive to changes in market interest rates.13-3. What is the customer relationship doctrine, and what are its implications for fundraising by lending institutions?The customer relationship doctrine places lending to customers at the top of the priority list, which proclaims that the first priority of a lending institution is to make loans to all those customers from whom the lender expects to receive positive net earnings. It argues that a lending institution should make all good loans that is, all loans that meet the institution's quality and profitability standards and then find the funds needed to fund those loans they decide to make. Funds uses thus become a higher immediate priority item than funds sources.13-4. For what kinds of funding situations are Federal funds best suited?Federal funds are best suited for institutions short of reserves to meet their legal reserve requirements or to satisfy customer loan demand. It satisfies this demand by tapping immediately usable funds.13-5. Chequers State Bank loans $50 million from its reserve account at the Federal ReserveBank of Philadelphia to First National Bank of Smithville, located in the New York Federal Reserve Bank's district, for 24 hours with the funds returned the next day. Can you show the correct accounting entries for making this loan and for the return of the loaned funds?Step 1 - Lending the $50 millionChequers State BankStep 2 - Using the borrowed funds can also be shown, though it is not mentioned in the problem. You could show First National Bank of Smithville making a loan for $50 million under Assets, giving up $50 million from its reserve account.First National Bankof SmithvilleAssets LiabilitiesReserves Federal FundsAt Fed + $50 mill.Purchased +$50 mill.Step 3 - Repaying the Loan of Federal FundsChequers State BankFirst National Bank of Smithvilleat Fed - $50 mill.purchased - $50 mill.13-6. Hillside Savings Association has an excess balance of $35 million in a deposit at its principal correspondent, Sterling City Bank, and instructs the latter institution to loan the funds today to another bank or thrift institution, returning them to its correspondent deposit the next business day. Sterling loans the $35 million to Imperial Security National Bank for 24 hours. Can you show the proper accounting entries for the extension of this loan and the recovery of the loaned funds by Hillside Savings?Step 1 - Lending Federal Funds to a CorrespondentHillside Security BankSterling City BankAssets LiabilitiesFederal fundspurchased+$35 mill.RespondentBank's deposit-$35 mill.Step 2 - The Correspondent Bank Loans Funds to another BankSterling City BankImperial Security National BankStep 3 - Repaying the Loan to the Respondent BankHillside Security BankSterling City BankLess popular than Fed funds and more complex are repurchase agreements (RPs). RPs are agreements to sell securities temporarily by a borrower of funds to a lender of funds with the borrower agreeing to buy back the securities at a guaranteed price at a set time in the future. Both are instruments available for short term borrowing. However, RP agreements are collateralized loans and thus, the lender is not exposed to credit risk as they are with Federal funds transactions. Most RPs are transacted across the Fed Wire system, just as are Fed funds transactions. RPs may take a bit longer to transact then a Fed funds loan because the seller of funds (the lender) must be satisfied with the quality and quantity of securities provided as collateral.13-8. What are the principal advantages to the borrower of funds under an RP agreement?RPs are a low-cost and low-risk way of borrowing loanable funds for short periods of time (usually 3 or 4 days). They are low risk because they are essentially a collateralized loan. The securities that are sold as part of the agreement act as collateral.13-9. What are the advantages of borrowing from the Federal Reserve banks or other central bank? Are there any disadvantages? What is the difference between primary, secondary, and seasonal credit? What is the Lombard rate and why might such a rate be useful in achieving monetary policy goals?Borrowing from the Federal Reserve banks is a viable alternative to the Federal funds market. These loans are made for a short term (usually two weeks). Primary credits are short term loans available to sound depositary institutions. Secondary credits are short term loans available to institutions that do not qualify for primary credit. Seasonal credit refers to loans given to small and medium sized institutions to cover seasonal swings in their deposits and loans.The Lombard rate is the Feds discount rate which is set above the Federal funds rate. If borrowing from the discount window is more expensive than the Fed funds market, banks will use the discount window less frequently and central banks do not have to restrict access to the discount window and do not have to worry about banks borrowing at the discount window and lending these funds at the Federal funds rate. Thus, the “Lombard” rate effectively acts as a ceiling on overnight borrowing rates.13-10. How is a discount window loan from the Federal Reserve secured? Is collateral really necessary for these kinds of loans?A discount window loan must be secured by collateral acceptable to a Federal Reserve bank (usually U.S. government securities). Most banks keep government securities in the vaults of the Federal Reserve for this purpose. The Federal Reserve bank will also accept some government agency securities and high-grade commercial paper as collateral.Each type of discount window loan carries its own loan rate, with secondary credit generally posting the highest interest rate and seasonal credit the lowest. For example, in March 2008 the Federal Reserve’s discount window loan rates were 2.50 percent for primary credit, 3.00 percent for secondary credit, and 2.95 percent for seasonal credit.13-11. Posner State Bank borrows $10 million in primary credit from the Federal Reserve Bank of Cleveland. Can you show the correct entries for granting and repaying this loan?The proper entries are:Step 1 - Securing a Loan from the Fed.Posner State Bankat the FederalReserve Bank + $10 millpayable +$10 mill.Federal Reserve Bank of ClevelandStep 2 - Repaying the Loan to the Fed.Posner State BankFederal Reserve Bank of Cleveland13-12. Which institutions are allowed to borrow from the Federal Home Loans Banks? Why is this source so popular for many institutions?Federal Home Loan Banks lend to institutions that grant mortgage loans and uses those as collateral. These loans are very popular because they represent a stable source of funds at below market lending rates.13-13. Why were negotiable CDs developed?Negotiable CDs were developed to attract large corporate deposits and savings from wealthy individuals. Because these were not insured they paid a higher interest rate than traditional deposits. The concept of liability management and short-term borrowing to supplement depositgrowth was given a significant boost early in the 1960s with the development of negotiable CD.13-14 What are the advantages and disadvantages of CDs as a funding source?Negotiable CDs offer a way to attract large amounts of funds quickly and for a known time period. However, these funds are highly interest sensitive and often are withdrawn as soon as the maturity date arrives unless management aggressively bids in terms of yield to keep the CD.13-15. Suppose a customer purchases a $1 million, 90-day CD, carrying a promised 6 percent annualized yield. How much in interest income will the customerearn when this 90-day instrument matures? What total volume of funds will be available to the depositor at the end of 90 days?Interest Income Princi pal *Days to Maturity *AnnualRateTo Customer 360 days OfInterest06.36090000,000,1$⨯⨯== $15,000Total amount=Principal+Interestdue Customer=$1,000,000+$15,000=$1,015,00013-16. Where do Eurodollars come from?Eurodollars arise from dollar deposits made in financial institutions and at branch offices outside U.S. territory. Many Eurodollar deposits arise from U.S. balance-of-payments deficits that give foreigners claims on U.S. assets and from the need to pay in dollars for some international commodities (such as oil) that are denominated principally in U.S. dollars.13-17. How does a bank gain access to funds from the Eurocurrency markets?Access to these funds is obtained by contacting correspondent banks by telephone, wire, or cable.13-18. Suppose that JP Morgan Chase Bank in New York elects to borrow $250 million from Barclay’s Bank of London, loans the borrowed funds for a week to a security dealer, and then returns the borrowed funds. Can you trace through the resulting accounting entries?If, Chase borrows from Barclay’s Bank of London, the entries would appear as follows:JP Morgan-ChaseU.S. Bank Serving as Correspondent to Barclay’sBarclay’s Lending to JP Morgan-Chase BankJP-Morgan Chase lending the funds to a security DealerWhen JP Morgan-Chase repays its loans we have:JP Morgan-Chase BankU.S. Bank Serving as Correspondent to ForeignBankForeign Bank Lending Eurodollars13-19. What is commercial paper? What types of organizations issue such paper?Commercial paper consists of short-term notes, with maturities ranging from three or four days to nine months, issued by well-known companies to raise working capital. The notes are generally sold at a discount from their face value through security dealers or through direct contact between the issuing company and interested investors.Commercial paper is a high-quality, short-term debt obligation with an excellent credit rating to provide for short-term cash needs. There are two types of commercial paper. The first type is industrial paper generally issued by industrial companies to purchase inventories of goods or raw materials. The second type if finance paper is issued mainly by finance companies or financial holding companies to purchase loans of the books of other financial firms in the same organization so that more loans can be made.13-20. Suppose that the finance company affiliate of Citigroup issues $325 million in 90 day commercial paper to interested investors and uses the proceeds to purchase loans from Citibank. What accounting entries should be made on the balance sheets of Citibank and Citigroup’s fi nance company affiliates?The appropriate entries for the above transaction are:Step 1 - Commercial Paper is Sold by the Affiliated Finance CompanyCitibankFinance AffiliateStep 2 - The Affiliated Finance Company Purchases Loans from CitibankCitibankFinance Affiliate13-21. What long-term nondeposit funds sources do banks and some of their closest competitors draw upon today? How do these interest costs differ from those costs associated with most money market borrowings?Long-term nondeposit funds include mortgages, capital notes, and debentures. Generally, the interest costs on these funds sources are substantially higher than money market loans but are more stable usually.13-22. What is the available funds gap?The funds gap is the difference between current and projected credit and deposit flows that creates a need for raising additional reserves or for profitably investing any excess reserves that may arise. The difference between current and projected outflows and inflows of funds yields anestimate of each institution’s available funds gap.13-23. Suppose J.P. Morgan Chase Bank of New York discovers that projected new loan demand next week should total $325 million and customers holding confirmed credit lines plan to draw down $510 million in funds to cover their cash needs next week, while new deposits next week are projected to equal $680 million. The bankalso plans to acquire $420 million in corporate and government bonds next week. What is the bank's projected available funds gap?The expected funds gap (with all figures in millions of dollars) would be:Projected = $325 + $510 + $420 - $680 = $575.Funds Gap13-24. What factors must the manager of a financial institution weigh in choosing among the various nondeposit sources of funding available today?A manager must weigh factors such as relative costs, risk, length of time funds are needed, size of the institution and its funding need, and regulations in choosing what nondeposit funds sources to use. Other factors held constant, management will seek out the lowest cost nondeposit funding sources available subject to the risk of availability problems and the danger of interest-rate volatility. When funds are needed for longer periods, negotiable CDs and Eurodollars are usually the preferred sources whereas very short-term cash needs usually will be met by Federal funds and RPs or by borrowing from the Federal Reserve banks. However, regulations impose reserve requirements on some funding sources (e.g., CDs) which increases their cost and these rules limit access to some sources (e.g., borrowings from the Fed's Discount Window).Problems13-1. Robertson State Bank decides to loan a portion of its reserves in the amount of $70 million held at the Federal Reserve Bank to Tenison National Security Bank for 24 hours. For its part, Tenison plans to make a 24-hour loan to a security dealer before it must return the funds to Robertson State Bank. Please show the proper accounting entries for these transactions.Step 1 - Lending the $70 millionRobertson State BankTenison National Security BankStep 2 - Loaning the Borrowed Funds Tenison National Security BankStep 3 - Repaying the Loan of Federal FundsRobertson State BankTenison National Security Bank13-2. Masoner Savings, headquartered in a small community, holds most of its correspondent deposits with Flagg Metrocenter Bank, a money center institution. When Masoner has a cash surplus in its correspondent deposit, Flagg automatically invests the surplus in Fed funds loans to other money center banks. A check of Masoner’s records this morning reveals atemporary surplus of $11 million for 48 hours. Flagg will loan this surplus for two business days to Secoro Central City Bank, which is in need of additional reserves. Please, show the correct balance sheet entries to carry out this loan and to pay off the loan when its term ends.Step 1 - Lending Federal Funds to a CorrespondentMasoner Savingsloaned+11 mill.Flagg Metrocenter BankStep 2 - The Correspondent Bank Loans Funds to Another Bank Flagg Metrocenter BankSecoro Central City BankStep 3 - Repaying the Loan to the Respondent BankMasoner SavingsFlagg Metrocenter Bank13-3. Relgade National Bank secures primary credit from the Federal Reserve Bank of San Francisco in the amount of $32 million for a term of seven days. Please show the proper entries for granting this loan and then paying off the loan.The correct entries are:Step 1 - Receiving a Loan from the FedRelgade National BankFederal Reserve Bank of San FranciscoStep 2 - Repaying the Loan to the Fed.Relgade National BankFederal Reserve Bank of San Francisco13-4. Rockfish Corporation purchases a 60-day negotiable CD with a $5 million denomination from Bait Bank and Trust, bearing a 3.75 percent annual yield. How much in interest will the bank have to pay when this CD matures? What amount in total will the bank have to pay back to Rockfish at the end of 60 days?Interest 6Owed0To Rockfish Corp.=$5,000,000*360*0.0375By Bank= $31,250.00Totalamountowed Rockfish=$5,000,000+$31,250.00in 45 daysinprincipleininterest= $5,031,250.0013-5. Lost Valley Bank borrows $125 million overnight through a repurchase agreement (RP) collateralized by Treasury bills. The current RP rate is 2.75 percent. How much will the bank pay in interest cost due to this borrowing?= $9,548.61 Interest cost of RP = $125,000,000 x 0.0275 x 136013-6. Rosemary Bank of New York expects new deposit inflows next month of $375million and deposit withdrawals of $500 million. The bank's economics department has projected that new loan demand will reach $460 million and customers with approved credit lines will need $175 million in cash. The bank will sell $480 million in securities, but plans to add $85 million in new securities to its portfolio. What is the projected available funds gap?The estimated available funds gap (with all figures in millions of dollars) is:Projected funds gap = $460 + $175 + [$85 - $480] - [$375 - $500] = $365 million13-7. Wells Fargo Bank borrowed $150 million in Fed funds from J.P. Morgan Chase Bank in New York City for 24 hours to fund a 30 day loan. The prevailing Fed funds rate on loans of this maturity stood at 2.25 percent when these two institutions agreed on the loan. The funds loaned by Morgan were in the reserve deposit that bank keeps at the Federal Reserve Bank of New York. When the loan to Wells Fargo Bank was repaid the next day, J.P. Morgan used $50 million of the returned funds to cover its own reserve needs and loaned $100 million in Fed funds to Bank of America, Charlotte, for a two day period at the prevailing funds rate of 2.40 percent. With respect to these transactions,(a) Construct T-account entries similar to those you encountered in this chapter, showing the original Fed funds loan and its repayment on the books of J.P. Morgan, Wells Fargo, and Bank of America Savings.(b) Calculate the total interest earned by Morgan on both Fed funds loans.1. Wells Fargo Bank Loan: 0.0225 X $150 Million X 1/360 = $9,3752. Bank of America Savings: 0.024 X $100 Million X 2/360 = $13,33313-8. Clear Skies Bank of Florida issues a 3-month (90-day) negotiable CD in the amount of $25 million to ABC Insurance Company at a negotiated annual interest rate of 3.25 percent (360 day basis). Calculate the value of this CD account on the day it matures and the amount of interest income ABC will earn. What interest return will ABC Insurance earn in a 365 day year?= Principal + (Principal * Days to Maturity / 360 * Annual Interest Rate)= $25 million + ($25 million * 90 / 360 * 0.0325) = $25,203,125The amount of interest income Travelers will earn is:$25 million *90 / 360 * 0.0325 = $203,125.On the basis of a 365-day year Travelers' APY will be:or 3.34%13-9. Banks and other lending affiliates within the holding company ofGoodtimes Financial are reporting heavy loan demand this week from companies in the southeastern United States that are planning a significant expansion ofinventories and facilities before the beginning of the fall season. The holding company plans to raise $850 million in short-term funds this week, of which about $835 million will be used to meet these new loan requests. Fed funds are currently trading at 2.25 percent, negotiable CDs are trading in New York at 2.40 percent, and Eurodollar borrowings are available in London at all maturities under one year at 2.30 percent. One-month maturities of directly placed commercial paper carry market rates of 2.35 percent, while the primary credit discount rate of the Federal Reserve Bank of Richmond is currently set at 3.25 percent a source that Interstate has used in each of the past two weeks. Noninterest costs are estimated at 0.25 percent for Fed funds, discount window borrowings, and CDs; 0.35 percent for Eurodollar borrowings; and 0.50 percent for commercial paper. Calculate theeffective cost rate of each of these sources of funds for Interstate and make a management decision on what sources to use. Be prepared to defend your decision.Effective Federal Funds Cost Rate = Million$835Million $850 x 0.0025 Million $850 x 0.0225+=million835$million $2.125 million $19.13+= 2.54%Effective CD Cost Rate = million$835million $850 * 0.0025 million $850 * 0.024+=million$835million$2.125million$20.40= 2.70%Effective Eurodollar Cost Rate =million $835million $850 * 0.0035 million $850 * 0.023+ =million $835million $2.975 million .5591$+= 2.70%Effective Commercial Paper Cost Rate =million 835$million $850 * 0.0050 million $850 * 0.0235+ =million$835million $4.25 million $19.98+= 2.90%Effective Cost of Borrowing from the Fed =million835$million $850 * 0.0025 million $850 * 0.0325+ =million 835$million $2.125 million $27.63+= 3.56%The cheapest source of all would be borrowing from the Fed Funds Market.13-10. Surfs-Up Security Savings is considering the problem of trying to raise $80 million in money market funds to cover a loan request from one of its largest corporate customers, which needs a 6-week loan. However, current forecasts call for a rise in money market interest rates over the next six weeks. Current money market interest rates are currently at the levels indicated below:Federal funds, average for week just concluded 1.98%Discount window of the Federal Reserve bank 2.25CDs (prime rated, secondary market):One month 2.52Three months 2.8Six months 3.18Eurodollar deposits (three months)3Commercial paper (directly placed):One month 2.33Three months 2.7Unfortunately, Surfs-Up’s economics department is forecasting a substantial rise in money market interest rates over the next six weeks. What would you recommend to its funds management department regarding how and where to raise the money needed? Be sure to consider such cost factors as legal reserve requirements, regulations, and what happens to the relative attractiveness of each funding source if interest rates rise continually over the period of the proposed loan.Federal funds could be used to fund this loan, but not only do they happen to be the most expensive source in terms of interest cost right now, but also the Fed funds rate is very sensitive to market pressures and, therefore, will rise along with other market interest rates if the bank's forecast turns out to be correct. Either 3-month CDs or 3-month commercial paper appear to represent good alternatives because the bank, presumably, can lock in the interest cost to fund this loan for the entire life of the loan. Assuming that the money market shares the expectations of the bank that interest rates will rise over the next six weeks, the bank will very likely have to pay a premium over the current rates on either the CDs or commercial paper. However, locking in these rates would still represent the better alternative.Alternative Scenario:What if Surf’s-Up's economists are wrong and money market rates decline significantly over the next six weeks? How would your recommendations to funds management department change on how and where to raise the funds needed?Significantly declining interest rates would make shorter-term sources much more attractive to the bank. Federal funds, for example, although currently the one of the most expensive sources may well be a good alternative, since the federal funds rate is very sensitive to interest rate changes. One-month CDs would also be a good alternative, as would one-month commercial paper. With the shorter maturities, the bank could readjust its costs downward as the interest rates continue to fall, maintaining the spread between the rate the bank is charging the borrower, which will be declining as rates fall, and the rate it is paying for its funds.13-11. Firefly Bank and Trust has received $800 million in total funding, consisting of $200 million in checkable deposit accounts, $400 million in time and savings deposits, $100 million in money market borrowings, and $100 million in stockholde rs’ equity. Interest costs on time and savings deposits are 2.50 percent, on average, while noninterest costs of raising these particular deposits equal approximately 0.50 percent of their dollar volume. Interest costs on checkable deposits average only 0.75 percent because many of these deposits pay no interest, but noninterest costs of raising checkable accounts are about 2 percent of their dollar total. Money market borrowings cost Firefly an average of 3.25 percent in interest costs and 0.25 percent in noninterest costs. Management estimates the cost of stockholders’ equity capital at 13 percent before taxes. (The bank is currently in the 35-percent corporate tax bracket.) When reserve requirements are added in, along with uncollected dollar balances, these factors are estimated to contribute another 0.75 percent to the cost of securing checkable deposits and 0.50 percent to the cost of acquiring time and savings deposits. Reserve requirements (on Eurodeposits only) and collection delays add an estimated 0.25 percent to the cost of the money market borrowings.(a) Calculate Firefly’s weighted average interest cost on total volume funds raised, figured on a before-tax basis?(b) If the bank's earning assets total $700 million, what is its break-even cost rate?(c) What is Firefly 's overall historical weighted average cost of capital?Funding Source Amount Interest Costs Noninterest Costs Total Funding Costs($ millions)Checkable Deposits200 1.5 5.57Time & Savings Deposits40010414Money-Market Borrowings100 3.250.5 3.75Stockholders' Equity10013013Totals80014.751024.75a) Weighted Average Interest Cost = (Total dollar interest) / (Total deposits and borrowing)= $14.75 million / $700 million = 0.0211 or2.11%b) Break-even cost rate = (Total funding costs) / (earning assets)= $24.75/$700 = 0.0354 or 3.54%。

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap005

Chapter 5The Financial Statements of Banks and Their Principal CompetitorsFill 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, are often 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 statement whichallows the bank to account for future bad loans.Answer: Provision for loan losses4.__________________________ is the difference between interest income and interest expensesfor 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 that isused generally consists of T-Bills.Answer: repurchase agreement8.A(n)__________________________ is a deposit account which pays an interest rate competitivewith money market mutual funds and which generally has limited check writing ability.Answer: money market deposit account9._____________________ is the sum of all outstanding IOU's owed to the bank in the form ofconsumer, real estate, commercial and agriculture loans as well as other types of creditextensions.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 from fiduciaryactivities 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 by the bankon a given date.Answer: Report of Condition (balance sheet)14.______________ is labeled "Accounting for Derivative Instruments and Hedging Activities."Answer: FASB 13315.________________ labeled “Accounting for Derivative Instruments and Hedging Activities” andits recent amendments, FASB 138, are designed to make derivatives 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 traded market so as toinfluence the price is known as _________________.Answer: painting the tape18.The activity of manipulating the financial statements to artificially enhance the banks financialstrength is known as ___________________.Answer: window dressing or ‘creative accounting’19. is direct and indirect investment in real estate. These areproperties obtained for compensations for nonperforming loans.Answer: Other Real Estate Owned (OREO)20. consists of interest income received on loans from customers thathas 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 andpermit drafts from being written against the account to pay third parties.Answer: Now accounts22.In the worldwide banking system, represent transferable time depositsin 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 POS transactions.Answer: Other Noninterest Income24.Fees that arise from a financial firm’s trust activities, fees for managing a corporations’ interestand dividend payments and fees for managing corporate or individual retirement plans are allincluded in the category of fees arising from .Answer: fiduciary activities25.Checking account maintenance fees and overdraft fees are included in the noninterest incomeaccount under .Answer: service charges on deposit accountsTrue/False QuestionsT F26.On a bank's income statement (Report of Income) deposit costs are financial inputs.Answer: TrueT F27.Loans and leases are financial outputs on a financial institution's balance sheet or Report of Condition.Answer: TrueT F28.Nondeposit borrowings are a financial input on a bank's balance sheet or Report of Condition.Answer: TrueT F29.The cost of nondeposit borrowings is a financial input on a bank's income statement or Report of Income.Answer: TrueT F30.Securities income is a financial output listed on a financial institution's Report of Condition.Answer: FalseT loans on a bank's balance sheet are derived by deducting the allowance for loan losses and unearned discounts from gross loans.Answer: TrueT F32.When a loan is classified as nonperforming any accrued interest recorded on the bank's books, but not actually received, must be deducted from a bank's loan revenues.Answer: TrueT F33.In U.S. banking, securities gains are treated as ordinary income.Answer: TrueT F34.Most banks report securities gains as a component of their total noninterest income.Answer: FalseT F35. A bank displaying trading account securities on its balance sheet is serving as a security dealer and plans to sell those securities before they reach maturity.Answer: TrueT F36.Bad loans normally do not affect a bank's current income.Answer: TrueT F37.The expensing of a worthless loan usually must occur in the year that loan become worthless.Answer: TrueT F38.Recoveries on loans previously charged off are added to the Provision for Loan Losses (PLL) account on a bank's income statement.Answer: FalseT F39.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 as specific reserves.Answer: TrueT F40.U.S. banks (especially those with $500 million or more in total assets) are required to file financial statements audited by an independent public accountant with their principalfederal regulatory agency.Answer: TrueT F41.Off-balance-sheet items for a bank are fee generating transactions which are not recorded on their balance sheet.Answer: TrueT F42.The experience method of accounting for future loan loss reserves allows a bank to deduct from their income statement up to .6 percent of their eligible loans.Answer: FalseT F43.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 loss reserves.Answer: FalseT F44.The number one source of revenue for a bank based on dollar volume is loan income.Answer: TrueT F45.In looking at comparative balance sheets, it can be seen that large banks rely more heavily on nondeposit borrowings while small banks rely more heavily on deposits.Answer: TrueT F46.The Pension Fund industry is now larger than the Mutual Fund industry.Answer: FalseT F47.Off-balance-sheet items for banks have declined in recent years.Answer: FalseT F48.Except for banks, Savings & Loans and Savings Banks hold the most deposits.Answer: TrueT F49."Painting the tape" refers to the practice whereby banks understate their nonperforming loans.Answer: FalseT F50.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 obtain net loans andleases?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.The noncash expense item on a bank's Report of Income designed to shelter a bank's currentearnings 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, is called:A)Unearned income or discountB)Allowance for possible loan lossesC)Intangible assetsD)Customer liability on acceptancesE)None of the aboveAnswer: B58.When a bank serves as a security dealer for certain kinds of securities (mainly federal, state, andlocal government obligations) the value of these securities is usually recorded in what account ona 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's Report ofIncome 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.The account that is built up by annual noncash expense deductions and is subtracted from GrossLoans 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.Nonperforming loans are credits on which any scheduled loan repayments and interest paymentsare past due for more than:A)30 daysB)60 daysC)90 daysD)180 daysE)None of the above.Answer: C62.One-time only transactions that often involve financial assets or real property pledged ascollateral behind a loan and upon which the bank has foreclosed affect a 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.The use of fixed assets, rather than financial assets, in order to increase earnings flowing to abank's stockholders is known as:A)Plant and equipment investmentB)Financial leverageC)Operating leverageD)Nondeposit capitalE)None of the above.Answer: C64.Banks depend heavily upon borrowed funds supplied by customers with little owners' capitalinvested. This means that banks make heavy use of:A)Financial leverageB)Capital restructuringC)Operating LeverageD)Margin borrowingE)None of the above.Answer: A65.When a loan is considered uncollectible, the bank's accounting department will write (charge) itoff the books by reducing the ______ and the accounts. Which choice belowcorrectly 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.The common banking practice of selling those investment securities that have appreciated inorder to reap a capital gain and holding onto those securities whose prices have declined is known as:A)Gains tradingB)Performance bankingC)Loss control tradingD)Selective portfolio managementE)None of the above.Answer: A67.Noninterest revenue sources for a bank are called:A)Commitment fees on loansB)Fee incomeC)Supplemental incomeD)Noninterest marginE)None of the above.Answer: Brge U.S. banks must use which of the methods listed below to determine their provision forloan 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 the balance 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 the market. Whichtwo 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, charges off worthlessloans 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 income of $14 million.This bank has total interest expenses of $35 million and total noninterest 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 income of $14 million.This bank has total interest expenses of $35 million and total noninterest 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 income of $14 million.This bank has total interest expenses of $35 million and total noninterest 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)$7C)$18D)$32E)None of the aboveAnswer: A76.Which of the following financial statements shows the revenues and expense of a bank over a setperiod 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.Which 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.Which 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.What financial service industry category is second to the banking industry in total assets held:A)Mutual fundsB)ThriftsC)Investment banksD)Insurance companiesE)Pension fundsAnswer: A80.FASB Rule 115 focuses primarily on bank:A)Deposit sourcesB)Investments in marketable securitiesC)Derivatives tradingD)Loan-loss reservesE)Federal funds81.Which of the following most accurately describes the principal type(s) of bank noninterestincome:A)Fees from fiduciary transactionsB)Fees from deposit transactionsC)Fees from securities transactionsD)Fees from additional noninterest incomeE)All of the aboveAnswer: E82.Fee 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 Net Income 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) $800C) $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$700 Given 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) $1000D) $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) $300D) $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) $800E) $500Answer: A100.You 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 $750 Given this information, what is this firm’s Net Interest Income?A) $150B) $210C) $400D) ($250)E) $750Answer: E101.You 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 $750 Given this information, what is this firm’s Net Non Interest Income?A) $150B) $210C) $400D) ($250)E) $750Answer: D102.You 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 Operating Income or Net Income BeforeExtraordinary Income?A) $150B) $210C) $400D) ($250)E) $750Answer: C103.You 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 Income?A) $150B) $210C) $400D) ($250)E) $750Answer: B104.You 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 Increase in Undivided Profits?A) $150B) $210C) $400D) ($250)E) $750Answer: ARose/Hudgins, Bank Management and Financial Services, 8/e77。

《商业银行管理》课后习题答案IMChap15

CHAPTER 15MANAGING NONDEPOSIT LIABILITIES AND OTHER SOURCES OF BANK FUNDS Goal of This Chapter: To discover the major nondeposit sources of borrowed funds banks use today and to learn the factors a banker must consider in choosing among various deposit and nondeposit funds sources.Key Terms Presented in This ChapterCustomer Relationship Doctrine Commercial Paper MarketLiability Management Repurchase Agreement (RP)Federal Funds Market Funds GapDiscount Window Interest-Rate RiskNegotiable CD Credit Availability RiskEurocurrency DepositChapter OutlineI. Introduction: The Consequences of Deposit Shortfalls and the Need to Use NondepositSources of FundsII. Liability ManagementA. Customer Relationship DoctrineB. Purpose of Liability ManagementIll. Alternative Nondeposit Sources of Bank FundsA. Federal Funds MarketB. Borrowing from the Federal Reserve Bank in the DistrictC. The Development and Sale of Large Negotiable CDsD. Eurocurrency Deposit MarketE. The Commercial Paper MarketF. Repurchase Agreements as a Source of Bank FundsG. Long-Term Nondeposit Funds SourcesIV. Choosing Among Alternative Nondeposit SourcesA. Measuring a Bank's Total Need for Nondeposit Funds - The Funds GapB. Nondeposit Funding Sources: Factors to Consider1. Relative Costs2. The Risk Factor3. Length of Time for Which Funds Are Needed4. The Size of the Borrowing Bank and Its Funding Need5. RegulationsV. Summary of the ChapterConcept Checks15-1. What is liability management?181182Liability management involves the conscious control of the funding sources of a bank,using the interest rates (yields) offered on deposits and other borrowings to regulate the inflow of funds to match the bank's immediate funding needs.15-2. What advantages and risks does the pursuit of liability management bring to a bank?Improved control over funding sources enables a bank to plan its growth more completely, but liability management opens up certain risks, particularly of the interest-rate risk and solvency (default or failure) risk variety, because it tends to be more sensitive to changes in market interest rates.15-3. What is the customer relationship doctrine and what are its implications for bank fund-raising?The customer relationship doctrine places lending to customers at the top of a bank's priority list. It argues that a bank should make all good loans - that is, all loans that meet the bank's quality and profitability standards - and then find the funds needed to fund those loans the bank decides to make. Funds uses thus become a higher immediate priority item than funds sources.15-4. For what kinds of bank funding situations are federal funds best suited?Federal funds are best suited for banks short of reserves to meet their legal reserve requirements or to satisfy customer loan demand. It satisfies this demand by tapping immediately usable funds.15-5. Chequers State Bank loans $50 million from its reserve account at the Federal Reserve Bank of Philadelphia to First National Bank of Smithville, located in the New York Federal Reserve Bank's district, for 24 hours with the funds scheduled to be returned the next day. The proper accounting entries in this case would be:Step 1 - Lending the $50 millionChequers State BankStep 2 - Using the borrowed First National Bank of Smithvillefunds can also be shown, though it is not mentioned in the problem. You could show First National Bank of Smithville making a loan for $50 million under Assets, giving up $50 million from its reserve account.Step 3 - Repaying the Loan of Federal FundsChequers State BankFirst National Bank of Smithville15-6. Hillside Security Bank has an excess balance of $35 million in a deposit at its principal correspondent, Sterling City Bank, and instructs the latter institution to loan the funds today to another bank, returning them to its correspondent deposit the next business day. Sterling loans the $35 million to Imperial Security National Bank for 24 hours. The proper accounting entries would be:Step 1 - Lending Federal Funds to a CorrespondentHillside Security BankSterling City BankAssets LiabilitiesFederal fundspurchased +$35 mill.RespondentBank's deposit -$35 mill.183Step 2 - The Correspondent Bank Loans Funds to Another BankSterling City BankImperial Security National BankStep 3 - Repaying the Loan to the Respondent BankHillside Security BankSterling City Bank15-7. What are the advantages of borrowing from the Federal Reserve banks?Borrowing from the Federal Reserve banks is usually the lowest interest-cost source of funds. However, there are strict rules for borrowing by banks and borrowing for rate arbitrage is prohibited, although there is some evidence it does occur.15-8. How is a discount window loan from the Federal Reserve secured?A discount window loan must be secured by collateral acceptable to a Federal Reserve bank (usually U.S. government securities). Most banks keep government securities in the vaults of the Federal Reserve for this purpose. The Federal Reserve bank will also accept some government agency securities and high-grade commercial paper as collateral.18415-9. Posner State Bank borrows $10 million in adjustment credit from the Federal Reserve Bank of Cleveland. Can you show the correct entries for the granting and repayment of this loan? The proper entries are:Step 1 - Securing a Loan from the Fed.Posner State BankFederal Reserve Bank of ClevelandStep 2 - Repaying the Loan to the Fed.Posner State BankFederal Reserve Bank of Cleveland15-10. Why were negotiable CDs developed?Negotiable CDs were developed by banks to attract large corporate deposits and savings from wealthy individuals.15-11. What are the advantages and disadvantages of CDs as a bank funding source? Negotiable CDs offer a way to attract large amounts of funds quickly and for a known time period. However, these funds are highly interest sensitive and often are withdrawn as soon as the maturity date arrives unless a banker aggressively bids in terms of yield to keep the CD.18515-12. Suppose a bank customer purchases a $1 million, 90-day CD, carrying a promised 6 percent annual yield. How much in interest income will the customer earn when this 90-day instrument matures? What total volume of funds will be available to the depositor at the end of 90 days?Interest Income = Principal * Days to Maturity * Annual RateTo Customer 360 days Of Interestx 0.06= $1,000,000 x 1360= $15,000Total amount = Principal + Interestdue Customer = $1,000,000 + $15,000= $1,015,00015-13. Where do Eurodollars come from?Eurodollars arise from dollar deposits made in banks and at branch offices outside U.S. territory. Many Eurodollar deposits arise from U.S. balance-of-payments deficits that give foreigners claims on U.S. assets and from the need to pay in dollars for some international commodities (such as oil) that are denominated principally in U.S. dollars.15-14. How does a bank gain access to funds from the Eurocurrency markets?Access to these funds is obtained by contacting correspondent banks by telephone, wire, or cable.15-15. Suppose that JP Morgan-Chase elects to borrow $250 million from one of its London branches, then loans the borrowed funds for a week to a security dealer, and then returns the borrowed funds to its branch office in London. Can you trace through what accounting entries must be made? What if JP Morgan-Chase had decided instead to borrow the $250 million from a foreign bank not related to JP Morgan-Chase? How do the accounting entries differ in these two cases?If JP Morgan-Chase borrows from its own branch office the entries would appear as possible:Home Office of JP Morgan-Chase BankForeign Branch Office of JP Morgan-ChaseAssets Liabilities186When JP Morgan-Chase's home office makes a loan to a security dealer the entries are:Home Office of JP Morgan-Chase BankWhen the Loan is repaid and funds are returned to JP Morgan-Chase’s foreign branch we have:Home Office of JP Morgan-Chase BankForeign Branch Office of JP Morgan-ChaseIf, instead, JP Morgan-Chase borrows from another bank abroad not affiliated with JP Morgan-Chase, the entries would appear as follows:JP Morgan-ChaseU.S. Bank Serving as Correspondent to Foreign BankForeign Bank Lending to JP Morgan-Chase Bank187Deposit at U.S.CorrespondentBank +$250 mill.Eurodollar loan toJP-Morgan ChaseBank -$250 mill.When JP Morgan-Chase repays its loans we have:JP Morgan-Chase BankU.S. Bank Serving as Correspondent to Foreign BankForeign Bank Lending Eurodollars15-16. What is commercial paper?Commercial paper is a high-quality, short-term debt obligation issued by a large corporation with an excellent credit rating to provide for short-term cash needs.15-17. Suppose that the finance company affiliate of Citicorp issues $325 million in 9 day commercial paper to interested investors and uses the proceeds to purchase loans from Citibank. What accounting entries should be made on the balance sheets of Citibank and Citicorp's finance company affiliates?The appropriate entries for the above transaction are:Step 1 - Commercial Paper is Sold by the Affiliated Finance Company188CitibankFinance AffiliateStep 2 - The Affiliated Finance Company Purchases Loans from CitibankCitibankFinance Affiliate15-18. How do RPs arise?RPs are agreements to sell securities temporarily by a borrower of funds to a lender of funds with the borrower agreeing to buy back the securities at a guaranteed price at a set time in the future.15-19. What are the principal advantages to the borrower of funds under an RP agreement?RPs are a low-cost and low-risk way of borrowing loanable funds for short periods of time (usually 3 or 4 days). They are low risk because they are essentially a collateralized loan. The securities that are sold as part of the agreement act as collateral.15-20. What long-term nondeposit funds sources do banks draw upon today? How do these interest costs differ from most money market borrowings?Long-term nondeposit funds include mortgages, capital notes, and debentures. Generally, the interest costs on these funds sources are substantially higher than money market loans but are more stable usually.15-21. What is the funds gap for a bank?189The funds gap is the difference between current and projected credit and deposit flows that creates a need for raising additional bank reserves or for profitably investing any excess reserves that may arise.15-22. Suppose that Bankers Trust Company of New York estimates next week's new loan demand at $325 million and customer drawings on confirmed credit lines of $510 million, while new deposits next week are projected to equal $680 million. If the bank also plans to acquire $420 million in corporate and government bonds next week, what is the bank's projected funds gap?The expected funds gap (with all figures in millions of dollars) would be:Projected = $325 + $510 + $420 - $680 = $575.Funds Gap15-23. What factors must a bank manager weigh in choosing among the various nondeposit sources of bank funding available today?A bank manager must weigh factors such as relative costs, risk, length of time funds are needed, size of bank and its funding need, and regulations in choosing what nondeposit funds sources to use. Other factors held constant, bank management will seek out the lowest cost nondeposit funding sources available subject to the risk of availability problems and the danger of interest-rate volatility. When funds are needed for longer periods, negotiable CDs and Eurodollars are usually the preferred sources whereas very short-term cash needs usually will be met by Federal funds and RPs or by borrowing from the Federal Reserve banks. However, regulations impose reserve requirements on some funding sources (e.g., CDs) which increases their cost and these rules limit access to some sources (e.g., borrowings from the Fed's Discount Window).Problems15-1. Robertson State Bank of Clayton decides to loan $70 million of its reserves at the Fed to Tenison National Security Bank for 24 hours. In turn, Tenison National plans to loan the funds to a security dealer for 24 hours and then return the funds to Robertson State Bank. The correct accounting entries are:Step 1 - Lending the $70 millionRobertson State Bank190Tenison National BankStep 2 - Loaning the Borrowed FundsTenison National BankStep 3 - Repaying the Loan of Federal FundsRobertson State BankTenison National Bank15-2. Masoner National Bank holds most of its correspondent deposits with Flagg Metrocenter Bank which automatically reinvests any surpluses which Masoner may have. This morning Masoner has a correspondent deposit surplus of $11 million expected to last for 48 hours. Flagg will loan this surplus for two business days to Secoro Central City Bank and then the funds will be returned to Masoner's correspondent deposit at Flagg Metrocenter Bank.Step 1 - Lending Federal Funds to a CorrespondentMasoner National Bank191loaned +11 mill.Flagg Metrocenter BankStep 2 - The Correspondent Bank Loans Funds to Another BankFlagg Metrocenter BankSecoro Central City BankStep 3 - Repaying the Loan to the Respondent BankMasoner National BankFlagg Metrocenter Bank19215-3. Relgade National Bank secures adjustment credit from the Federal Reserve Bank of San Francisco in the amount of $32 million for a term of 7 days. Please show the proper entries for granting this loan and then paying off the loan.The correct entries are:Step 1 - Receiving a Loan from the FedRelgade National BankFederal Reserve Bank of San FranciscoStep 2 - Repaying the Fed's loanRelgade National BankFederal Reserve Bank of San Francisco15-4. Itec Corporation purchases a 45-day negotiable CD with a $5 million denomination from Payson Guaranty Bank and Trust, bearing a 6.75 percent annual yield. How much in interest will the bank have to pay when this CD matures? What amount in total will the bank have to pay back to Itec at the end of 45 days?Interest Owed 45To Itec Corp. = $5,000,000 * 360 * 0.0675By Bank= $42,187.50193Total amountowed Itec = $5,000,000 + $42,187.50in 45 days in principle in interest= $5,042,187.5015-5. International Commerce Bank borrows $125 million overnight through a repurchase agreement (RP) collateralized by Treasury bills. The current RP rate is 4.5 percent. How much in interest cost will the bank have to pay?Interest cost= $15,624.50of RP = $125,000,000 x 0.045 x 136015-6. National Commerce Bank of New York expects new deposit inflows next month of $330 million and deposit withdrawals of $275 million. The bank's economics department has projected the new loan demand will reach $621 million and customers with approved credit lines will need $266 million in cash. The bank will sell $480 million in securities, but plans to add $155 million in new securities to its portfolio. What is the bank's projected funds gap?The estimated funds gap (with all figures in millions of dollars) is:Projectedfunds gap = $621 + $266 + [ $155 - $480 ] - [ $300 - $275 ]= $537 million15-7. First National borrowed $150 million in Federal funds from JP Morgan Chase Bank in New York City for 24 hours. After the loan was repaid JP Morgan-Chase loaned $100 million in federal funds to Texas Commerce Bank of Houston.(a) Illustrate these transactions using T-account entries.194(b) The interest income generated for JP Morgan-Chase from the above transactions was:1. Manufacturers' Loan: 0.0785 X $150 Million X 1/360 = $32,7082. Texas Commerce Loan: 0.0792 X $100 Million X 2/360 = $44,00015-8. BancOne of Ohio issues a 3-month (90-day) negotiable CD for $14 million to Travelers Insurance, bearing an annual 360-day yield of 8.47 percent. The value of the CD (including interest income) on its maturity date is:= Principal + (Principal * Days to Maturity / 360 * Annual Interest Rate)= $14 million + ($14 million * 90 / 360 * 0.0847) = $14.29645 millionThe amount of interest income Travelers will earn is:$14 million *90 / 360 * 0.0847 = $296,450.On the basis of a 365-day year Travelers' will earn365/360 * 0.0847 = 0.0859 or 8.59%.15-9. As a result of heavy loan demand experienced by banks within its holding company,195Interstate National Bank plans to raise $850 million in short-term funds this week, of which about $835 million will be used to meet these new loan requests. Current annual interest rates on alternative sources of funds are:Market Interest Rates Noninterest Cost RatesFederal Funds 8.73% 0.25%Negotiable CDs 8.69 0.25Eurodollars 9.11 0.35Commercial paper 8.65 0.50Fed. Discount Rate 7.25 0.25Calculate the effective cost rates on the above sources for Interstate and make a management decision on what sources to use.Effective Federal Funds Cost Rate =Million$835Million $850x0.0025Million$850x0.0873+=million835$million$2.125million $74.205+= 9.14%Effective CD Cost Rate =million$835million $850*0.0025million$850*0.0869+=million$835million$2.125million $73.865+= 9.10%Effective Eurodollar Cost Rate =million$835million $850*0.0035million$850*0.0911+=million$830million$2.975million77.435$+= 9.63%Effective Commercial Paper Cost Rate =million835$million $850*0.0050million$850*0.0865+196=million$835million$4.25million $73.525+= 9.31%Effective Cost of Borrowing from the Fed =million835$million $850*0.0025million$850*0.0725+=million835$million$2.125million$61.625+= 7.63%The cheapest source of all would be borrowing from the Federal Reserve bank. However, the bank has borrowed from the Fed in each of the past two weeks. Thus, it has probably come close to "wearing out its welcome" at the Reserve bank and, at least for the next week, should probably plan on borrowing from the next cheapest source - in this case, the Federal funds market.15-10. Hamilton Security Bank wants to raise $80 million in money market funds to cover a loan request from one of its largest corporate customers, who needs a 6-week loan. However, current forecasts call for a rise in money market interest rates over the next six weeks. Current money market rates are given below:Source Current RateFederal Funds 8.72%Discount Window at the Federal Reserve 7.00CDs (prime rated): One Month 8.45Three Months 8.49Six Months 8.58Eurodollar Deposits(Three Months) 8.58Commercial Paper: One Month 8.55Three Months 8.42What would you recommend to the bank's funds management department regarding how and where to raise the funds needed?Federal funds could be used to fund this loan, but not only do they happen to be the most expensive source in terms of interest cost right now, but also the Fed funds rate is very sensitive to market pressures and, therefore, will rise along with other market interest rates if the bank's forecast turns out to be correct. The Discount Window at the Federal Reserve looks very attractive, but the Fed prohibits borrowing to relend. Either 3-month CDs or 3-month commercial paper appear to represent good alternatives because the bank, presumably, can lock in the interest cost to fund this loan for the entire life of the loan. Assuming that the money market shares the expectations of the bank that interest rates will rise over the next six weeks, the bank will very likely have to pay a premium over the current rates on either the CDs or commercial paper. However, locking in these rates would still represent the better alternative.197Alternative Scenario:Given: Hamilton's economists are wrong and money market rates decline significantly over the next six weeks. How might your recommendations to the bank's funds management department change on how and where to raise the funds needed?Significantly declining interest rates would make shorter-term sources much more attractive to the bank. Federal funds, for example, although currently the most expensive source, may well be a good alternative, since the federal funds rate is very sensitive to interest rate changes. One-month CDs would also be a good alternative, as would one-month commercial paper. With the shorter maturities, the bank could readjust its costs downward as the interest rates continue to fall, maintaining the spread between the rate the bank is charging the borrower, which will be declining as rates fall, and the rate it is paying for its funds.Web Site Problems1. Which banks in the U.S. banking system seem to rely most heavily on deposits as a source of funding and which on nondeposit borrowings and liability management? To find out, select the name of a small local bank (or banks) in your area and look it up in the appropriate FDIC web site. Enter the bank’s name, city and state and determine its ratio of total deposits to total assets in the latest report available. Now compare this ratio to the same deposit to asset ratio for Bank of America and JP Morgan-Chase Bank. What did you find? Can you explain the reasons behind the different ratio values you observed?After examining the UBPR for the First National Bank of Edmond as well as Bank of America and JP Morgan-Chase (of New York) the following table can be formed.As can be seen, the First National Bank of Edmond has a much higher depositor base. Both of the other banks are very large banks and large banks tend to rely less on core deposits. However there are differences even between these large banks. JP Morgan-Chase is in New York City and has even less of a depositor bases that Bank of America. It must rely more heavily on liability management than Bank of America.198。

商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap001

Chapter 1An Overview of the Changing Financial-Services SectorFill in the Blank Questions1._______________________ is a traditional service provided by banks in which the banks storethe valuables of their customers and certify their true value.Answer: Safekeeping of valuables2.The fact that financial institutions make loans based on confidential information is the_______________________ theory of banking.Answer: delegated monitoring3._______________________ refers to when a financial institution trades one form of currency foranother. An example of this would be when the bank trades dollars for yen for a fee.Answer: currency exchange4.A(n) _______________________ is a traditional service which permits a depositor to write adraft （汇票）in payment for goods and services.Answer: demand deposit (checking account)5._______________________ is a service provided by banks where the bank lends money toindividuals for the purchase of durable and other goods.Answer: Consumer lending6.The _______________________ of a bank is a traditional service where the bank manages thefinancial affairs and property of individuals (and in some cases businesses).Answer: trust servicespanies such as Merrill Lynch and Sears which offered some but not all banking services inthe 1980s were called _______________________.Answer: nonbank banks8.The loosening of government regulation and control of financial institutions is called_______________________.Answer: deregulation9.___________________________ is an alternative to lending in which the financial institutionpurchases the equipment and rents it to its customers.Answer: Equipment leasing services10.The___________________________ is a landmark act which allows financial service providersto offer an expanded menu of financial services for the customer. This law allows banks to truly become conglomerate financial service providers.Answer: Financial Services Modernization Act (Gramm-Leach-Bliley Act)11.The country with the most banks is _______________________.Answer: United States12.According to Congress a ____________ is defined as any institution that can qualify for depositinsurance administered by the FDIC.Answer: Bank13. A bank which spans regions, nations, and continents, offering the widest menu of financialservices is known as a __________bank.Answer: money-center bank14._____________ refers to the movement of businesses across industry lines in order to broaden itsbase.Answer: Convergence15.Banks which serve primarily households and small firms are known as ____________ banks.Answer: retail16.Banks that sell deposits and make loans to businesses and individuals are known as ______banks.Answer: commercial17.Banks which underwrite issues of new securities for their corporate customers are known as________ banks.Answer: investment18.Banks which function under a federal charter through the Comptroller (审计署)of the Currency inthe United States are known as ____________ banks.Answer: National19.Banks which supply both debt and equity capital to businesses are known as _________ banks.Answer: merchant（商人）20. A bank that offers its services only over the internet is known as a(n) .Answer: virtual bank（虚拟银行）21.When a local merchant sells the accounts receivables they hold against their customer to a bankthis generally known as .Answer: discounting commercial notes22.A(n) offers loans to commercial enterprises (such as appliancedealers) or to individuals using funds borrowed in the open market or from other financialinstitutions. Examples of this type of financial service provider include GMAC FinancialServices and Household Finance.Answer: finance company23.A(n) buys and sells securities on behalf of their customers and fortheir own accounts. Examples of this type of financial service provider include Merrill Lynchand Charles Schwab.Answer: security broker (or dealer)24.A(n) sells shares mainly to upscale investors in a broadgroup of different kinds of assets including nontraditional investments in commodities, realestate, loans to ailing companies and other risky assets.Answer: hedge fund25.When a bank agrees to handle the cash collections and disbursements for a company and investany temporary cash surpluses in interest bearing assets, they are providing services to their customers.Answer: cash managementTrue/False QuestionsT F26.Under U.S. federal law, an institution making only loans to households a nd offering uninsured checkable deposits and savings deposits qualifies as a commercial bank.Answer: FalseT F27.Nonbank banks can offer deposits to the public, but these deposits are not eligible（合适的） for insurance coverage by the FDIC.Answer: FalseT F28.The etymological roots of the word "bank" trace this word back to an Italian term referring to a "money-changer's table".Answer: TrueT F29.According to the textbook, banks are those financial institutions that today offer the widest range of financial services of any business firm in the economy.Answer: TrueT F30.According to the delegated monitoring theory banks are able to attract borrowing customers because they pledge confidentiality.Answer: TrueT F31.Managing the financial affairs and property of individuals and business firms falls under the type of banking service line known as cash management services.Answer: FalseT F32.The role performed by banks in the economy in which they transform savings into credit is known as the intermediation role.Answer: TrueT F33.The role performed by banks in which they stand behind their customers when those customers are unable to pay a debt obligation is known as the guarantor role.Answer: TrueT F34.When banks serve as conduits（中转机构） for government policy this is referred to as their agency role.Answer: FalseT F35.According to the textbook, high-volume banking is required to make efficient use of automation and other technological innovations.Answer: TrueT F36.The number of independently owned banks has risen in the United States over the last decade.Answer: FalseT F37.Money-center banks usually service local communities, towns, and cities, offering a narrow menu of services to the public.Answer: FalseT F38. A greater proportion of major corporations have deserted the banking system in recent years to raise borrowed funds directly from the open market.Answer: TrueT F39.The recent erosion of the banking market share relative to other financial institutions means that banking is a dying industry.Answer: FalseT F40.Lending institutions act as delegated monitors and can diversify and reduce their risk exposure, resulting in increased safety for savers’ funds.Answer: TrueT F41.Current theory suggests that banks exist because of imperfections in our financial system.Answer: TrueT F42.Today U.S. banks account for approximately fifty percent of the largest banks in the world.Answer: FalseT F43.According to the textbook, traditional banking may be on the decline.Answer: TrueT F44.Convergence refers to the fact that the number of bank mergers has increased in recent years.Answer: FalseT F45.Banks which offer virtually all financial services are known as universal banks（综合银行）.Answer: TrueT F46.Life insurance companies, securities firms, and mortgage（抵押） companies all compete with the traditional bank.Answer: TrueMultiple Choice Questions47.In the United States a commercial bank qualifies as a "bank" under federal law if it offers:A)Consumer installment loans, CDsB)Savings deposits, commercial loansC)Checking accounts, commercial loansD)Security investments, inventory loans to business customersE)Commercial deposit accounts, consumer savings plansAnswer: C48. E. F. Hutton, J.C. Penney, and Sears Roebuck are among leading firms that in the1980’sorganized competitors with banks that are known as:A)Nonbank BanksB)Discount Security Brokerage CompaniesC)Money Market FundsD)Finance CompaniesE)Investment Banking UnitsAnswer: A49. A study of history shows that one of the first services offered by banks was:A)Equipment LeasingB)Currency ExchangeC)Security Brokerage and UnderwritingD)Sale of Real EstateE)None of the aboveAnswer: B50.Banks perform the indispensable task of:A)Creating money without making loan.B)Absorbing the excess liquidity created by other financial institutionsC)Intermediating between surplus-spending individuals or institutions and deficit-spendingindividuals or institutionsD)Issuing risky depositsE)None of the aboveAnswer: C51.The view that depositors hire banks to analyze the financial condition of prospective borrowersand continually evaluate the condition of outstanding loans is referred to as:A)Delegated monitoringB)The concept of financial intermediationC)The liquidity function in bankingD)Market imperfection theoryE)The efficiency contribution of bankingAnswer: A52. Which of the following has been an important trend regarding consolidation and geographicexpansion in banks?A)Increased bank branching activityB)The formation of more holding companies to purchase smaller banksC)Mergers among some of the largest banks in the industryD) A and C aboveE)All of the above.Answer: E53.Included among leading structural trends in the U.S. banking industry in recent years are:A)The number of independently owned banks has declinedB)The average size of individual banking firms has increasedC)Entry across state lines from neighboring states has increasedD) A and B onlyE)All of the above.Answer: E54.Smaller, locally focused commercial and savings banks that offer narrower but more personalizedmenu of financial services are known as:A)Money center banksB)Community banksC)Mutual FundsD) State banksE)Fringe banks.Answer: B55.The banking services that includes executing buy and sell orders for security trading customersand marketing new securities to raise funds for corporations and other institutions is referred to:A)Comprehensive PackagingB)Wrap-around AccountsC)Investment BankingD)Professional BankingE)None of the above.Answer: C56. A bank that wires funds for the purchase of a beach house in South Carolina for a customer inOklahoma is carrying out the __________ of banks.A)The intermediation roleB)The payment roleC)The guarantor roleD)The agency roleE)The policy roleAnswer: B57.Examples of imperfections in the financial system which allow banks to exist include which ofthe following?A)Informational asymmetryB)Efficiency of marketsC)All individuals and businesses have full information about all investment opportunities.D)All individuals and businesses have no difficulty meeting their liquidity needs on their own.E)All of the above are examples of the imperfections that exist.Answer: A58. A bank which manages the investment portfolio and pays the bills of an elderly customer who isunable to do it for him or herself is carrying out the __________ of banks.A)The intermediation roleB)The payment roleC)The guarantor roleD)The agency roleE)The policy roleAnswer: D59.Which of the following is a trend that has affected all banks today?A)Increased isolation of banks in the U.S.B)Decreased competition from other financial institutionsC)Decreased amount of services provided by modern banksD)Rising funding costsE)Increased regulationsAnswer: D60.Which of the following is not a current trend in the banking industry?A)The number of banks is decliningB)The number of bank branches is decliningC)The number of bank services is increasingD)The number of bank competitors is increasingE)Bank industry convergenceAnswer: B61.Which of the following types of banks would most likely offer the largest number of financialservices?A) A retail bankB) A community bankC) A commercial bankD) A universal bankE)An international bankAnswer: D62.The phenomenon of convergence refers to:A)Financial service firms expanding into other product linesB)Firms reducing their product linesC)Bank merger activityD)Globalization in bankingE)Technological innovation in bankingAnswer: A63.Bank equipment leasing activity involves:A) A bank leasing its office facilities instead of buyingB) A bank buying equipment and then leasing the item to a customerC) A customer buying equipment and then leasing it to a bankD) A bank leasing computer equipmentE)None of the aboveAnswer: B64.Wholesale banks are those banks that:A)Sell at a discount relative to all commercial banksB)Only make loans to the wholesale industryC)Lend almost exclusively to farmersD)Are large banks which serve corporations and governmentE)Have only retail customersAnswer: D65.Jonathan Robbins has an account in a bank that does not have a physical branch. Jonathan doesall of his banking business over the internet. What type of bank does Jonathan have his account at?A) Virtual BankB) Mortgage BankC) Community BankD) Affiliated BankE) None of the aboveAnswer: A66.The Edmond National Bank serves only the City of Edmond, Oklahoma and concentrates onproviding the best possible service to this city. What type of bank is this most likely to be?A) Virtual BankB) Mortgage BankC) Community Bank（社区银行）D) Affiliated BankE) None of the aboveAnswer: C67.The Charleston Southern Bank makes loans for families to purchase new and existing homes butdoes not take deposits. What type of bank is this most likely to be?A) Virtual BankB) Mortgage BankC) Community BankD) Affiliated BankE) None of the aboveAnswer: B68.Which of the following is considered a fringe bank?A) Community BankB) Wholesale BankC) Merchant BankD) Payday LenderE) None of the aboveAnswer: D69.During the middle ages, banks encountered religious opposition because:A) Loans to the poor often carried high interest ratesB) Loans and deposits were primarily for wealthy customersC) The Industrial Revolution demanded new methods of making payments and obtaining creditD) Savings and wealth were lost due to war, theft and expropriation by governmentsE) All of the aboveAnswer: A70.Religious opposition decreased during the Renaissance because:A) Loans to the poor often carried high interest ratesB) Loans and deposits were primarily for wealthy customersC) The Industrial Revolution demanded new methods of making payments and obtaining creditD) Savings and wealth were lost due to war, theft and expropriation by governmentsE) All of the aboveAnswer: B71.Banks like the Medici Bank in Italy and the Hochstetter Bank in Germany were successfulbecause and they responded well to these new needs.A) Loans to the poor often carried high interest ratesB) Loans and deposits were primarily for wealthy customersC) The Industrial Revolution demanded new methods of making payments and obtaining creditD) Savings and wealth were lost due to war, theft and expropriation by governmentsE) All of the aboveAnswer: C72.Early European banks were places for safekeeping of wealth because:A) Loans to the poor often carried high interest ratesB) Loans and deposits were primarily for wealthy customersC) The industrial revolution demanded new methods of making payments and obtaining creditD) Savings and wealth were lost due to war, theft and expropriation by governmentsE) All of the aboveAnswer: D73.The U.S. government wants to prevent money laundering by drug cartels. To promote this goal,they have asked banks to report any cash deposits greater than $10,000 to the government.Which of the following roles is the bank performing?A) The intermediation roleB) The payment roleC) The risk management roleD) The guarantor roleE) The policy roleAnswer: E74.The Edmond Wine and Cheese shop wants to buy 30 cases of French Champagne on credit.Bank of America writes a letter of credit stating that the Edmond Wine and Cheese shop is a good risk and that if they do not pay off the loan, Bank of America will. Which of the following roles is the bank performing?A) The intermediation roleB) The payment roleC) The risk management roleD) The guarantor（保证人） roleE) The policy roleAnswer: D75.Alexander Phua goes to his local bank and gets an insurance policy that protects him against lossin case he is in a car accident. Which of the following roles is the bank performing?A) The intermediation roleB) The payment roleC) The risk management roleD) The guarantor roleE) The policy roleAnswer: C76.Chris Jones gets a cashier’s check from Wachovia Bank to make his down payment on a newhome. Which of the following roles is the bank performing?A) The intermediation roleB) The payment roleC) The risk management roleD) The guarantor roleE) The policy roleAnswer: B77.The Bank, N.A. accepts deposits from thousands of individuals and lends that money to (amongothers) the Stillwater Body Shop to expand their work bays. Which of the following roles is the bank performing?A) The intermediation（仲裁） roleB) The payment roleC) The risk management roleD) The guarantor roleE) The policy roleAnswer: A78.Major trends affecting the performance of financial firms today include all of these except:A) Greater product-line diversificationB) Reduced branchingC) Geographic diversificationD) ConvergenceE) Increasing automationAnswer: B79.The First National Bank of Lakeland makes risky loans to business to expand and grow theirbusinesses while at the same time accepting funds into checking accounts that are insured by the FDIC. Which of the following services is this bank offering to their customers?A) Risky arbitrage servicesB) Liquidity servicesC) Ability of the bank to evaluate informationD) Divisibility of money servicesE) Credit servicesAnswer: A80.Jonathan Wynn knows that if he wanted to purchase a Treasury Bill, the minimum amount hewould spend would be close to $10,000. He also knows that he could deposit $1,000 in a money market deposit account at a bank and earn about the same rate of interest. Jonathan does not have $10,000 to invest in a Treasury Bill. If Jonathan puts his money in the bank, which service that a bank can provide is he taking advantage of?A) Risky arbitrage servicesB) Liquidity servicesC) Ability of the bank to evaluate informationD) Divisibility of money servicesE) Credit servicesAnswer: D81.Nick Rodr gets a loan from the First State Bank of Guthrie to purchase a new refrigerator（冰箱）for his condo. What service that a bank provides is he taking advantage of?A) Risky arbitrage servicesB) Liquidity servicesC) Ability of a bank to evaluate informationD) Divisibility of money servicesE) Credit servicesAnswer: E82.Drew Davis goes to his local bank to get help developing a financial plan and making investmentdecisions. Which of the more recent services banks offer is Drew taking advantage of?A) Getting a consumer loanB) Getting financial adviceC) Managing cashD) Getting venture capital servicesE) Buying a retirement planAnswer: B83.The Bartholemew Bakery receives a lot of payments in cash. They deposit it in their local bankwho invests the money in an interest bearing account until it is needed to pay bills. Which of the financial services banks offer is the Bartholemew bakery taking advantage of?A) Getting a consumer loanB) Getting financial adviceC) Managing cashD) Getting venture capital servicesE) Buying a retirement planAnswer: C84.MyWebCast is a new company that makes it easy for individuals to create streaming videos onthe internet to share with friends and family for a small fee. MyWebCast wants to expand their offerings of video streaming services but needs cash to be able to do this. The Second National Bank of Oklahoma City, through a subsidiary, gives them the cash they need for an ownership share in the company. Which of the more recent services that banks offer is MyWebCast taking advantange of?A) Getting a consumer loanB) Getting financial adviceC) Managing cashD) Getting venture capital servicesE) Buying a retirement planAnswer: D85.Chandriga Suppiah has opened a Roth IRA with North Carolina State Bank and plans on makingregular contributions to this account until she retires. Which of the financial services isChandriga taking advantage of?A) Getting a consumer loanB) Getting financial adviceC) Managing cashD) Getting venture capital servicesE) Buying a retirement planAnswer: E86.Banks with less than ___________in assets are generally called community banks.A)More than $1 billionB)Less than $1 billionC)More than $10 billionD)Less than $1 trillionE)More than $1 trillionAnswer: B87.The principal functions and services offered by many financial-service firms today include:A) Lending and investing moneyB) Making payments of behalf of customers to facilitate their purchases of goods and servicesC) Managing and protecting customers’ cash and other propertyD) Assisting customers in raising and investing funds profitablyE) All of the aboveAnswer: E88.Which of the following is considered a depository financial institution?A)Mortgage companyB)Mutual fundC)Savings and Loan associationsD)Federal ReserveE)Insurance companyAnswer: C89.Which of the following is not a purpose of bank regulation:A)Guarantee minimal profitability of the banking system（保证银行体系的最低利润）B)Provide monetary stabilityC)Ensure safety and soundness of banksD)Provide competitive financial systemE)Protect consumers from abuses by banksAnswer: A90.During the financial crisis of 2007-2009, the collapse of Lehman Brothers and the bailout of BearStearns reaffirmed the importance of the fundamental principle of:A) Superior managementB) GlobalizationC) Government bailoutD) Regulatory arbitrageE) Public trust and confidence in the systemAnswer: E。

商业银行管理rose7e课后答案

商业银行管理R O S E7e课后答案(总33页)-CAL-FENGHAI.-(YICAI)-Company One1-CAL-本页仅作为文档封面，使用请直接删除II. Evaluating a Bank's PerformanceA. Determining Long-Range ObjectivesB. Maximizing The Value of the Firm: A Key Objective for Nearly All Financial-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 Bank Performance--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 riskBanks 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 institutionThe 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 corporationA 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 stockIn this constant dividend growth rate problem the current value of the bank's stock would be: P o = D1 / (k – g) = $4 / – = $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 firmsReturn 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 questionThe bank's return on equity capital should be:ROE =Net Income =$51 million= .098 or percentEquity Capital$1,444 $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 competitorsReturn 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 outThe bank's return on assets would be:ROA =Net Income=$155 mill. - $107 mill.= or percentTotal 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 for comparable 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 spreadThe 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=The bank's earnings spread and earnings base are:Earnings=$16 mill.-$12 mill.Spread$480 mill * $480 mill. *= .0392=.0333Earnings Base=$480 mill. - $480 mill. * = or 85 percent$480 mill.6-11. What are the principal components of ROE and what do each of these components measureThe 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 percent and an equity multiplier of 12x. What is its ROE Suppose this bank's ROA falls to percent. What size equity multiplier must it have to hold its ROE unchangedThe bank's ROE is:ROE = percent *12 = percent.If ROA falls to percent, the bank's ROE and equity multiplier can be determined from:ROE = % = percent * Equity MultiplierEquity Multiplier = percent = 16x.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 indicatorThe bank's ROE must be:ROE = 50$12$ = or 24 percentIts 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= or percent = 12 x6-14. What are the most important components of ROA and what aspects of a financial institution’s performance do they reflectThe 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 %, a noninterest margin of %, and a ratio of provision for loan losses, taxes, security gains, and extraordinary items of %, what is its ROAThe bank's ROA must be:ROA = percent - percent - percent = percent6-16. To what different kinds of risk are banks and their financial-service competitors subjected todaya. 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 earn ings 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 applyThere 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 $.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. Calculate as 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.or percent or percentEquity Capital = $130 mill. Stock Price $60Total Assets $1,443 mill. Earnings Per Share $= or percent = 24 XNonperforming Assets = $43 mill. = or 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 percent .3089 or percentBook Value of Assets = $1324 = or 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 year 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 stock10D $12P $100r-g .15.03===-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 $ 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 holdingPoquoson’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 b ank’s stock be in today’s market0233$3.00$4.50$6.00$55P $43.94(1.17)(1.17)(1.17)(1.17)=+++=++++P 0 = $ per share.6-3 Depositors Savings Association has a ratio of equity capital to total assets of 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 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 allowDepositors Savings Association has an equity-to-asset ratio of percent which means its equity multiplier must be:1/ (Equity Capital / Assets) =AssetsEquityCapital= 1 / =In contrast, Newton Savings has an equity multiplier of:1/ (Equity Capital / Assets) =10.06=With an ROA of percent Depositors Savings Association would have an ROE of:ROE = x = percent.With an ROA of .85 percent Newton Savings would have an ROE of: ROE = x = 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 Securities12Total Interest Income77Interest Paid on Deposits496Interest on NondepositBorrowingsTotal Interest Expense55Net Interest Income22Provision for Loan Losses2Noninterest Income and Fees7Noninterest Expenses:Salaries and Employee Benefits12Overhead Expenses5Other Noninterest Expenses 3Total Noninterest Expenses20Net Noninterest Income-13Pre Tax Operating Income7Securities Gains (or Losses)1Pre Tax Net Operating Income 8Taxes1Net Operating Income7Net 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$35 Total Assets$980 Total Ca$80Total Earnings Assets$830 Interest Bearing Deposits$650Fill in the missing items on the income and expense statement. Using these statements, calculate the following performance measures:Net Income $6ROE = .075 or 7.5%Total Equity Capital $80==Net Income $6ROA = .00612 or .612%Total Assets $980==Net Interest Income $22Net Interest Margin = .0224 or 2.24%Total Assets $980==-$13Net Noninterest Margin = .0133 or -1.33 percent $980=-Total Operating Revenues - Total Operating Expenses $84$77Net Operating Margin = .00714 or .714%Total Assets $980-==Total Interest Income Total Interest Expenses $77$55Earnings Spread = .01531 or 1.53 %Total Earnings Assets Total Interest Bearing Liabilities $830$710-=-=Net Income $6Net Profit Margin = .0714 or 7.14 percent Total Operating Revenues $84==Total Operating Revenues $84Asset Utilization = .0857 or 8.57%Total Assets $980==Total Assets $980Equity Multiplier = 12.25Total Equity Capital $80x ==85.7%or 857.7$6$Incom e Operating Net Tax Pre Incom e Net Efficiency Managem ent Tax ===8.33%or 0833.84$7$Revenue Operating Total Incom e Operating Net Tax Pre Efficiency Control Ex pense ===Total Operating Revenues $84Asset Management Efficiency Ratio = .0857 or 8.57%Total Assets $980==Total Assets $980Funds Management Efficiency Ratio =12.25Total Equity Capital $80x ==91.76%or 9176.gains) securities (including 85$ tax es)(including 78$Revenues Operating Total Ex penses Operating Total Ratio Efficiency Operating ===6-5. The following information is for Shallow National BankInterest Income $2,100 Interest Expense $1,400 Total Assets$30,000Securities Gains (losses) $21 Earning Assets $25,000 Total Liabilities $27,000Taxes Paid$16 Shares of Common Stock 5,000 Noninterest income $700 Noninterest Expense $900 Provision for Loan Losses$100ROE = $405ROA = $405 $30,000 - $27,000 $30,000or percentor percentEarnings =$405 = $.081 per sharePer Share5000Net Interest = $2100 - $1400 = $700= or percentMargin $25,000$25,000Net Noninterest = $700 - $900 = -$200= .8 percentMargin $25,000 $25,000Net Operating =($2100 + $700) – ($1,400 + $900 + $100)= $400 = or percent Margin$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 Stock5,000Noninterest income$735Noninterest Expense$945Provision for Loan Losses$100ROE =$430ROA=$430$30,000 - $27,000$30,000or percent or percentEarnings=$430= $.086 per sharePer Share5000Net Interest =$2205 - $1470=$735= or percentMargin$25,000$25,000Net Noninterest =$735 - $945=-$210= or .84 percent Margin$25,000$25,000Net Operating =($2205 + $735) – ($1,470 + $945 + $100)=$425= or percent Margin$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 changeInterest Income$1995Interest Expense$1,330Total Assets$30,000Securities Gains (losses)$21Earning Assets$25,000Total Liabnilities$27,000Taxes Paid$16Shares of Common Stock5,000Noninterest income$665Noninterest Expense$855Provision for Loan Losses$100ROE =$380ROA=$380$30,000 - $27,000$30,000or percent or percentEarnings=$380= $.076 per sharePer Share5000Net Interest =$1995 - $1330=$665= or percentMargin$25,000$25,000Net Noninterest =$665 - $855=-$190= or .76 percentMargin$25,000$25,000Net Operating =($1995 + $665) – ($1,330 + $855 + $100)=$375= or percent Margin$30,000$30,0006-6. Blue and White National Bank holds total assets of $ billion and equity capital of $139 million and has just posted an ROA of percent. What is this bank’s ROE:ROE = ROA * Total AssetsEquity Capital = * $1,690$139= or %R0A increases by 50%, with no change in assets or equity capital.Therefore, the new ROA = * = or %.New ROE = % * = %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 = * = or %.New ROE = % * = %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 = or % (as in the original problem)Total assets double in size to $ billion and equity capital doubles in size to $278 million. Therefore, the equity multiplier . total assets/equity capital) remains the same . =$3,380/$278 = . As a result, there is no change in ROE from the original situation .),% * = %).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 ., the equity multiplier) remains constant. As a result, there is again no change in ROE.. = Total Assets/Equity Capital = $845/$ = .Therefore, ROE = % * = %.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 $ billion and total liabilities of $900 million and has just posed an ROA of percent. What is the bank’s ROENet Income after Taxes = $135 million -$121 million -$2 million = $12 millionEquity Capital = $ billion - $900 million = $100 millionROE = Net Income after Taxes= $12 million / $100 million = or 12%.Equity 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 * = $ millionTotal expenses = $121 million * = $ millionTax liability = $2 million * = $ millionNet Income after Taxes = $ - $ - $ = $ millionROE = $ million/$100 million = or %Change in ROE = %-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 changeTotal assets increase by 10% (Total assets = $ * = $ billion)Total liabilities increase by 10% (Total liabilities = $900 million * = $990Revenues and expenses (including taxes) remain unchanged.Solution: Equity Capital = $ billion - $990 million = $110 millionROE =$12=.1091$110 percentTherefore change in ROE =% - 12%=%= %12%12%(ROE decreases by %) 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 t otal assets and liabilities held constantTotal revenues decline by 10% (Total revenues = $135 million * = $ million)Total expenses decline by 10% (Total expenses = $121 million * = $ million)Tax liability declines by 10% (Tax liability = $2 * = $ million)Assets and liabilities remain unchanged (Therefore, equity remains unchanged)Solution: Net Income after Tax = $ million - million - $ million = $ROE = $ million = = %$100 millionTherefore change in ROE =% - 12%=%=12%12%(ROE decreases by 10%) Alternative Scenario 4: What does ROE become if Monarch State’s assets and liabilitiesdecrease by 10 percent, while its operating revenues, taxes and operating expenses do not changeTotal assets = $ billion * = $900 millionTotal liabilities = $900 million * =$810 millionEquity capital = $900 million - $810 million = $90 millionROE =$12=.1333$90 percent6-8. Suppose a stockholder owned thrift institution is projected to achieve a percent ROA during the coming year. What must its ratio of total assets to total equity capital be if it is to achieve its 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 ROEROE = ROA * (Total Assets/Equity Capital)Total Assets=ROE=12%= xEquity Capital ROA%If ROA unexpectedly falls to % and target ROE remains 12%:12%=.75%*Total AssetsEquity CapitalTotal Assets=12%=16 xEquity Capital.75%6-9. Saylor County National Bank presents us with these figures for the year just concluded. Please determine the net profit margin, equity multiplier, asset utilization ratio, and ROE: Net Income = $18Total Operating Revenues = $125Total Assets = $1,500Total Equity Capital Accounts = $155 Profit Margin=Net Income=$18 mill.= or %Total Operating Revenue$125 mill.b.Asset Utilization=Total Operating Revenues=$125 mill.= or %Total Assets$1500 mill.c.Equity Multiplier=Total Assets=$1500 mill.= timesTotal Equity Capital$155 mill.d.ROE=Net Income =$18 mill.= or %Total Equity Capital$155 mill.6-10. Lochiel Commonwealth Bank and Trust Company has experienced the following trends over the past five years (all figures in millions of dollars):Year Net Income TotalOperatingRevenuesTotalAssetsTotal EquityCapital129318 238220 347422 450825 559928。

商业银行管理彼得S.罗斯英文原书第8版-英语试题库Chap003

商业银行管理彼得S.罗斯英文原书第8版-英语试题库Chap003Chapter 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 whichallows depositors 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 onlyone location.Answer: unit bank4. A(n)________________________ is a corporation chartered for the express purpose ofholding the 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 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)Rose/Hudgins, Bank Management and Financial Services, 8/e289.The key problem in a large money center bankis . Managers may be knowledgeable 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 tobanking in which 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 corporationsoperate which analyzes the relationship between a firm’s owners and its managers.Answer: Agency theory13.Many experts believe that , therelationships 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 therewill be a lower cost of production per unit as the firm gets larger.Answer: Economies of scale15.is the idea that there willbe lower cost of producing multiple services 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 QuestionsRose/Hudgins, Bank Management and Financial Services, 8/e29T 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 threequarters 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 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.Rose/Hudgins, Bank Management and Financial Services, 8/e30Answer: 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 bankingorganizations have generally increased their market shares over their competitorswithin the same state and generally 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 mostprofitable 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: TrueRose/Hudgins, Bank Management and Financial Services, 8/e31T 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 byentering 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 manufacturing firm.Answer: TrueRose/Hudgins, Bank Management and Financial Services, 8/e32T 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 assessmentof the financial 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 insuch a way as to carry out the tasks and supply the services demanded of them. The termthat correctly fills in the blank in the sentence above is:A) Bank sizeB) Management's decisionC) FunctionD) RegulationE) LocationAnswer: CRose/Hudgins, Bank Management and Financial Services, 8/e3347.Which one of the following is charged with setting policy and overseeing a bank'sperformance?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 andmedium-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 andservicesD) 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 thelargest banks.Answer: E49.Before any financial services can be offered to anyone a bank in the United States musthave 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. Whichnumber shown below is closest to the actual total number of U.S. banks operating in theU.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 YorkRose/Hudgins, Bank Management and Financial Services, 8/e34B) OhioC) TexasD) MontanaE) None of the aboveAnswer: D52.The concentration of U.S. bank deposits in the hands of the largest banks has _________during the most 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 thefollowing?Rose/Hudgins, Bank Management and Financial Services, 8/e35A) 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 broadergeographic 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; IncreasedRose/Hudgins, Bank Management and Financial Services, 8/e36B) 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 cent er 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 tobe larger and hold more of the public’s deposits.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) T he bank holding company acquires 100% of the bank’s stockB) The bank holding company acquires 50% or more of the bank’s stockC) T he 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 the aboveAnswer: 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 boundariesdo not 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 borrowingmoney to 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 companythat may offer the broadest range of financial services such as securities andinsurance 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 ActAnswer: E。

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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 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 _________________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 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. 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 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 informationshared 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 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 other publicly 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 policy20. 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 oncea 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 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 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 thesechanges 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 2answer: 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 bybanks 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 thegrowth of bank deposits and loans to decrease.answer: falset f 39. when the federal reserve increases the discount rate it generally causes other interest ratesto 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 formfinancial 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: 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. 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 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.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. charteredbanks.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: 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 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 holdingcompanies.answer: truet f 27. bank holding companies hold more than 90 percent of the industry’s assets in the unitedstates.answer: truet f 28. research evidence suggests that banks taken over by interstate banking organizations haveanswer: false30 test bank, chapter 3t f 29. the concentration of bank deposits at the local level (that is in urban communities and ruralcounties) has displayed only moderate changes in recent years.answer: truett 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 orholding 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 maximizingthe return of the banks shareholders.answer: falset f 35. recent research suggests that the relationship between bank size and the cost of productionper unit is roughly u shaped.answer: truet f 36. bank holding companies that want to achieve the goal of risk reduction in earnings riskthrough 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 thosebusinesses 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 its cost-efficient frontier.answer: true tmultiple 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) 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 directors【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 thoseassets 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 purchases part 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.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 some significant factorchanges.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 standby letter of credit.answer: beneficiary11. a(n) _________________________ guarantees the swap parties a specific rate of return on theircredit 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 is requesting a standby letter of credit.answer: account party13. the __________________ is the bank or financial institution which guarantees the payment of theloan in a standby letter of credit.answer: issuer14. a(n) _________________________ is a loan sale where ownership of the loan is transferred to thebuyer 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 credit derivatives.answer: seller18. when default occurs on a loan or other debt instrument.answer: credit derivativerose/hudgins, bank management and financial services, 8/e 14719. 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 thesecuritization 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 securitiessold 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 paymentsfrom 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 theanswer: falset f 32. an account party will seek a banks standby credit guarantee if the banks fee for issuing theguarantee 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 requirementsfor 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 149t 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 banks interest rate risk andliquidity risk.answer: falset f 44. securitization of loans can easily be applied to business loans since these loans tend tohave 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 marketarea 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: truet150f 50. insurance companies are one of the principal sellers of credit derivatives. test bank, chapter 9。