Question 1

Banks offering ____ nontraditional services will incur ____ noninterest expenses and ____ noninterest income.

Accepted Answer

A)  fewer; higher; higher
B)  more; lower; higher
C)  more; higher; higher
D)  fewer; lower; higher
E)  none of the aboveF) A) and D)
G) D) and E)

Question 2

Net interest income is the difference between gross interest income and interest expenses and is measured as a percentage of

Accepted Answer

A)  liabilities.
B)  shareholder's equity.
C)  assets.
D)  revenues.E) A) and B)
F) None of the above

Question 3

A bank's ROA ____ account for taxes on earnings. A bank's ROE ____ account for taxes on earnings.

Accepted Answer

A)  does; does
B)  does; does not
C)  does not; does not
D)  does not; doesE) A) and B)
F) C) and D)

Question 4

A bank's net interest margin represents the proportion of its investments that are financed with borrowed funds.

Accepted Answer

A) True 
 B)False

Question 5

A bank's ROE ____ account for its financial leverage. A bank's ROA ____ account for its financial leverage.

Accepted Answer

A)  does; does
B)  does; does not
C)  does not; does not
D)  does not; doesE) C) and D)
F) A) and B)

Question 6

____ results from a bank's sale of securities.

Accepted Answer

A)  Noninterest income
B)  Loan loss provision
C)  Securities gains and losses
D)  Noninterest expenses
E)  none of the aboveF) C) and D)
G) A) and E)

Question 7

If a bank has short-term deposits and provides long-term fixed rate loans, and interest rates decline over time, its net interest margin should be:

Accepted Answer

A)  declining over time.
B)  rising over time.
C)  constant over time.
D)  consistently negative.E) None of the above
F) A) and B)

Question 8

Even if other external forces (such as interest rates) are unchanged, a commercial bank's expected cash flows can change in response to a change in its management skills.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following banks would likely have the highest return on equity?

Accepted Answer

A)  high return on assets, high capital ratio
B)  high return on assets, low capital ratio
C)  low return on assets, low capital ratio
D)  low return on assets, high capital ratioE) None of the above
F) A) and D)

Question 10

Fees charged by a bank on various services allow the bank to generate:

Accepted Answer

A)  noninterest income
B)  components of net interest margin
C)  components of net interest income
D)  components of gross interest incomeE) A) and B)
F) A) and C)

Exam 20: Bank Performance

A bank's net interest margin represents the proportion of its investments that are financed with borrowed funds.

Correct Answer
verified

Net interest income is the difference between gross interest income and interest expenses and is measured as a percentage of

Correct Answer
verified

____ results from a bank's sale of securities.

Correct Answer
verified

Which of the following banks would likely have the highest return on equity?

Correct Answer
verified

A bank's ROA account for taxes on earnings. A bank's ROE account for taxes on earnings.

Correct Answer
verified

Banks offering nontraditional services will incur noninterest expenses and noninterest income.

Correct Answer
verified

A bank's ROE account for its financial leverage. A bank's ROA account for its financial leverage.

Correct Answer
verified

If a bank has short-term deposits and provides long-term fixed rate loans, and interest rates decline over time, its net interest margin should be:

Correct Answer
verified

Even if other external forces (such as interest rates) are unchanged, a commercial bank's expected cash flows can change in response to a change in its management skills.

Correct Answer
verified

Fees charged by a bank on various services allow the bank to generate:

Correct Answer
verified

Exam 20: Bank Performance

A bank's net interest margin represents the proportion of its investments that are financed with borrowed funds.

Correct AnswerverifiedShow Answer

Net interest income is the difference between gross interest income and interest expenses and is measured as a percentage of

Correct AnswerverifiedShow Answer

____ results from a bank's sale of securities.

Correct AnswerverifiedShow Answer

Which of the following banks would likely have the highest return on equity?

Correct AnswerverifiedShow Answer

A bank's ROA ____ account for taxes on earnings. A bank's ROE ____ account for taxes on earnings.

Correct AnswerverifiedShow Answer

Banks offering ____ nontraditional services will incur ____ noninterest expenses and ____ noninterest income.

Correct AnswerverifiedShow Answer

A bank's ROE ____ account for its financial leverage. A bank's ROA ____ account for its financial leverage.

Correct AnswerverifiedShow Answer

If a bank has short-term deposits and provides long-term fixed rate loans, and interest rates decline over time, its net interest margin should be:

Correct AnswerverifiedShow Answer

Even if other external forces (such as interest rates) are unchanged, a commercial bank's expected cash flows can change in response to a change in its management skills.

Correct AnswerverifiedShow Answer

Fees charged by a bank on various services allow the bank to generate:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A bank's ROA account for taxes on earnings. A bank's ROE account for taxes on earnings.

Correct Answer
verified

Banks offering nontraditional services will incur noninterest expenses and noninterest income.

Correct Answer
verified

A bank's ROE account for its financial leverage. A bank's ROA account for its financial leverage.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified