Q&A Hero

Question

Checking account maintenance fees and overdraft fees are included in the noninterest income account under .

Answer: service charges on deposit accounts

T F 26. On a bank's income statement (Report of Income) deposit costs are financial inputs.

Answer: True

T F 27. Loans and leases are financial outputs on a financial institution's balance sheet or Report of Condition.

Answer: True

T F 28. Nondeposit borrowings are a financial input on a bank's balance sheet or Report of Condition.

Answer: True

T F 29. The cost of nondeposit borrowings is a financial input on a bank's income statement or Report of Income.

Answer: True

T F 30. Securities income is a financial output listed on a financial institution's Report of Condition.

Answer: False

T F 31. Net loans on a bank's balance sheet are derived by deducting the allowance for loan losses and unearned discounts from gross loans.

Answer: True

T F 32. When a loan is classified as nonperforming any accrued interest recorded on the bank's books, but not actually received, must be deducted from a bank's loan revenues.

Answer: True

T F 33. In U.S. banking, securities gains are treated as ordinary income.

Answer: True

T F 34. Most banks report securities gains as a component of their total noninterest income.

Answer: False

T F 35. A bank displaying trading account securities on its balance sheet is serving as a security dealer and plans to sell those securities before they reach maturity.

Answer: True

T F 36. Bad loans normally do not affect a bank's current income.

Answer: True

T F 37. The expensing of a worthless loan usually must occur in the year that loan become worthless.

Answer: True

T F 38. Recoveries on loans previously charged off are added to the Provision for Loan Losses (PLL) account on a bank's income statement.

Answer: False

T F 39. Loan-loss reserves set aside to cover a particular loan or loans expected to be a problem or present the bank with above-average risk are known as specific reserves.

Answer: True

T F 40. U.S. banks (especially those with $500 million or more in total assets) are required to file financial statements audited by an independent public accountant with their principal federal regulatory agency.

Answer: True

T F 41. Off-balance-sheet items for a bank are fee generating transactions which are not recorded on their balance sheet.

Answer: True

T F 42. The experience method of accounting for future loan loss reserves allows a bank to deduct from their income statement up to .6 percent of their eligible loans.

Answer: False

T F 43. After the Tax Reform Act of 1986, large banks (>$500 million in assets) were required to use the reserve method of accounting for future loan loss reserves.

Answer: False

T F 44. The number one source of revenue for a bank based on dollar volume is loan income.

Answer: True

T F 45. In looking at comparative balance sheets, it can be seen that large banks rely more heavily on nondeposit borrowings while small banks rely more heavily on deposits.

Answer: True

T F 46. The Pension Fund industry is now larger than the Mutual Fund industry.

Answer: False

T F 47. Off-balance-sheet items for banks have declined in recent years.

Answer: False

T F 48. Except for banks, Savings & Loans and Savings Banks hold the most deposits.

Answer: True

T F 49. "Painting the tape" refers to the practice whereby banks understate their nonperforming loans.

Answer: False

T F 50. Financial statements issued by banks and nonblank financial service firms are looking increasingly similar today.

Answer: True

Answer

This answer is hidden. It contains 0 characters.

Related questions

Q: One part of interest rate risk is . This part of interest rate risk reflects that as interest rates rise, prices of securities tend to fall.
Q: When a bank has a negative duration gap a parallel decrease in the interest rates on the assets and liabilities of the bank will lead to a(n)_________________________ in the bank's net worth.
Q: The __________________ refers to the periodic fluctuations in the scale of economic activity.
Q: A(n)__________________________ duration gap means that for a parallel increase in all interest rates the market value of net worth will tend to increase.
Q: The __________________________ component of interest rates is the risk premium due to the probability that the borrower will miss some payments or will not repay the loan.
Q: __________________________ is the difference between interest-sensitive assets and interest-sensitive liabilities.
Q: Maryellen Epplin notices that a particular T-Bill has a bankers discount rate of 9% in the Wall Street Journal. She knows that this T-Bill has 20 days to maturity and has a face value of $10,000. What is the yield to maturity on this T-Bill? A) 9% B) .5% C) 4.5% D) 9.17% E) None of the above
Q: The Harris State Bank has $2000 in total assets (all of which are earning assets), $500 of which will be repriced in the next 90 days. This bank also has $1600 in total liabilities, $1000 of which will be repriced in 90 days. The bank currently earns 9% on its assets and pays 4% on its liabilities. If interest rates on both assets and liabilities fall by 2% in the next 90 days, what would be this banks net interest margin? A) 3.8% B) 5.4% C) 5.8% D) 6.3% E) 7.8%
Q: The Harris State Bank has $2000 in total assets (all of which are earning assets), $500 of which will be repriced in the next 90 days. This bank also has $1600 in total liabilities, $1000 of which will be repriced in 90 days. The bank currently earns 9% on its assets and pays 4% on its liabilities. If interest rates on both assets and liabilities rise by 2% in the next 90 days, what should happen to this banks net interest margin? A) It should rise B) It should fall C) It should stay the same D) Cannot be determined from the information given
Q: Which of the following would be an example of a nonrepriceable liability? A) Money the bank has borrowed from the money market B) Cash in the vault C) Demand deposits that do not pay an interest rate D) Short term securities issued by the government about to mature owned by the bank E) All of the above are examples of repriceable assets
Q: Havoc State Bank has a loan that it fears will not be repaid because the company is going into bankruptcy. What type of risk would this be an example of? A) Default risk B) Inflation risk C) Liquidity risk D) Call risk E) Basis risk
Q: U.S. banks tend to fare best when the yield curve is: A) Flat B) Downward-sloping C) Vertical D) Upward-sloping E) Kinked
Q: A bond has a face value of $1000 and coupon payments of $80 annually. This bond matures in three years and is selling for $1000 in the market. Market interest rates are 8%. What is this bond's duration? A) 3 years B) 2.78 years C) 1.95 years D) 4.31 years E) None of the above
Q: Harrison Bank has the following financial information. ROE 16% Net Income $1000 Total Assets $62,500 Total Equity $6250 What is this banks asset utilization ratio? A) 1.6% B) 10% C) 12.8% D) 16% E) None of the above
Q: Net Profit Margin 5% Net Income $1000 Total Assets $62,500 Total Equity $6250 What is this banks ROE? A) 1.6% B) 10 % C) 12.8% D) 16% E) None of the above
Q: Castle State Bank has the following financial information. Balance Sheet Income Statement Cash $100 Interest Income $400 Securities Investments $600 Interest Expenses ($150) Net Loans $1200 Non-Interest Income $50 Net Premises and Equip. $300 Non-Interest Expenses ($100) Total Assets $2200 Provision for Loan Losses ($60) Deposits $1100 Pre Tax Net Operating Income $140 Non-Deposit Borrowings * $800 Securities Gains (Losses) ($40) Equity Capital $300 Taxes ($45) Total Liabilities and Equity $2200 Net Income $55 * All Purchased Funds Use this information to calculate Castle State Banks asset utilization ratio A) 20.45% B) 18.33% C) 12.22% D) 7.33% E) 2.5%
Q: Castle State Bank has the following financial information. Balance Sheet Income Statement Cash $100 Interest Income $400 Securities Investments $600 Interest Expenses ($150) Net Loans $1200 Non-Interest Income $50 Net Premises and Equip. $300 Non-Interest Expenses ($100) Total Assets $2200 Provision for Loan Losses ($60) Deposits $1100 Pre Tax Net Operating Income $140 Non-Deposit Borrowings * $800 Securities Gains (Losses) ($40) Equity Capital $300 Taxes ($45) Total Liabilities and Equity $2200 Net Income $55 * All Purchased Funds Use this information to calculate Castle State Banks net profit margin A) 20.45% B) 18.33% C) 12.22% D) 7.33% E) 2.5%
Q: Operational risk includes which of the following? A) Failure of banks computer system B) Closure of a bank for three months due to flooding from a major hurricane C) Embezzlement of funds of a bank by a teller of the bank D) Closure of a bank for two weeks due to a fire from a lightening strike E) All of the above are example of operational risk
Q: In recent years banks have been __________ profitable than (as) S&Ls and Savings Banks. A) More B) Less C) As D) Much more E) Much less
Q: The Smith-James Bank has an ROE of 17.5%, an asset utilization ratio of 13% and a net profit margin of 9%. What must this bank's equity multiplier be? A) 14.96 times B) 1.58 times C) 1.17 times D) 134.62 times E) None of the above
Q: Which of the following would be the best example of a ratio used to examine the cost of one of the bank's liabilities? A) Demand deposits/ total assets B) Interest on time deposits/ total time deposits C) Interest on real estate loans/ total real estate loans D) Interest sensitive assets/ interest sensitive liabilities
Q: A bank that has a high asset utilization (AU) ratio most likely: A) Is doing a poor job of controlling expenses B) Has a small amount of financial leverage C) Has a small amount of liquidity risk D) Is allocating assets to the most productive investments E) None of the above
Q: A bank that has a low profit margin most likely: A) Is doing a poor job of controlling expenses B) Has a small amount of financial leverage C) Has a small amount of liquidity risk D) Has assets that are not very productive E) None of the above
Q: A ratio that can be used to measure a bank's credit risk would be: A) Net loans/total assets B) Interest sensitive assets/interest sensitive liabilities C) Total assets/number of full time employees D) Nonperforming loans/total loans
Q: OE for a bank reflects: A) How well the assets of the bank are managed B) The bank's use of leverage C) How well the bank controls expenses D) All of the above E) None of the above
Q: The risk that a customer the bank has entered into a contract with will fail to pay or to perform, forcing the bank to find a replacement contract that may be less satisfactory is what form of risk listed below? A) Counterparty risk B) Interest-rate risk C) Operating risk D) Credit risk E) Liquidity risk
Q: Possible breakdowns in quality control, inefficiencies in producing and delivering financial services, weather damage, aging or faulty computer systems and simple errors in judgment by bank management illustrate what form of risk faced by banks? A) Credit risk B) Liquidity risk C) Interest-rate risk D) Operational risk E) None of the above
Q: The Internal Capital Growth Rate for a bank is a function of which of the following factors? A) Profit margin. B) Asset utilization. C) Equity multiplier. D) Earnings retention ratio. E) All of the above.
Q: is long-term debt capital whose claims legally follow claims of depositors.
Q: represents funds set aside for contingencies such as legal action against the institution as well as providing a reserve for dividends expected to be paid but not yet declared and a sinking fund to retire stock or debt in the future.

Subjects

Accounting Anthropology Archaeology Art History Banking Biology & Life Science Business Business Communication Business Development Business Ethics Business Law Chemistry Communication Computer Science Counseling Criminal Law Curriculum & Instruction Design Earth Science Economic Education Engineering Finance History & Theory Humanities Human Resource International Business Investments & Securities Journalism Law Management Marketing Medicine Medicine & Health Science Nursing Philosophy Physic Psychology Real Estate Science Social Science Sociology Special Education Speech Visual Arts