North ECONOMICS 303 – Primary bank reserves include
8. Primary bank reserves includeA) deposits at the Fed and short-term treasury securities.B) vault cash and short-term Treasury securities.C) deposits at other banks and deposits at the Fed.D) vault cash and bank deposits at the Fed.4. Credit risk management tools include:A) deductibles. B) compensating balances.C) interest rate swaps. D) duration analysis.10. Which of the following is not a source of funds for commercial banks?A) Borrowing from the Fed B) Treasury Securities C) Checkable Deposits D) Bank Capital (net worth)E) None of the above; they are all sources of funds for banks.13. With respect to the last several decades, which of the following statements is true?A) Bank net worth has been relatively stable, but the riskiness of bank activities has increased substantially.B) Bank net worth has declined substantially, but the riskiness of bank activities has remained relatively unchanged.C) Bank net worth has declined substantially, but the riskiness of bank activities has also declined substantially.D) Bank net worth and the riskiness of bank activities has remained relatively stable.16. In banking, the spread refers to the difference between theA) interest rate on long-term bonds and the interest rate on short-term bonds.B) interest rate on consumer loans and the interest rate on home mortgages.C) return earned from lending and the cost of the needed funds.D) the difference between asset value and liability value.18. An example of the time inconsistency problem in banking can be described asA) borrowing short term and lending long term. B) borrowing long term and lending short term.C) borrowing and lending only for the short term. D) borrowing and lending for the long term.17) Securitization is a process of asset transformation that involves a number of different financial institutions working together. These financial institutions are known collectively as theA) transformers. B) amalgamation. C) movers and shakers. D) shadow banking system.
