Test Bank: Chapter 9 Banking and
Management of Financial Institutions
Exam 2026 Questions and Answers
Graded A+
Which of the following statements are TRUE?
A) A bank's assets are its sources of funds.
B) A bank's liabilities are its uses of funds.
C) A bank's balance sheet shows that total assets equal total liabilities plus equity
capital.
D) A bank's balance sheet indicates whether or not the bank is profitable. - Correct
answer-C) A bank's balance sheet shows that total assets equal total liabilities plus
equity capital.
Which of the following statements is FALSE?
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,A) A bank's assets are its uses of funds.
B) A bank issues liabilities to acquire funds.
C) The bank's assets provide the bank with income.
D) Bank capital is recorded as an asset on the bank balance sheet. - Correct
answer-D) Bank capital is recorded as an asset on the bank balance sheet.
Which of the following are reported as liabilities on a bank's balance sheet?
A) reserves
B) checkable deposits
C) consumer loans
D) deposits with other banks - Correct answer-B) checkable deposits
Which of the following are reported as liabilities on a bank's balance sheet?
A) discount loans
B) reserves
C) U.S. Treasury securities
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,D) real estate loans - Correct answer-A) discount loans
The share of checkable deposits in total bank liabilities has
A) expanded moderately over time.
B) expanded dramatically over time.
C) shrunk over time.
D) remained virtually unchanged since 1960. - Correct answer-C) shrunk over
time.
Which of the following statements is FALSE?
A) Checkable deposits are usually the lowest cost source of bank funds.
B) Checkable deposits are the primary source of bank funds.
C) Checkable deposits are payable on demand.
D) Checkable deposits include NOW accounts. - Correct answer-B) Checkable
deposits are the primary source of bank funds.
In recent years the interest paid on checkable and nontransaction deposits has
accounted for around ________ of total bank operating expenses, while the costs
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, involved in servicing accounts have been approximately ________ of operating
expenses.
A) 45 percent; 55 percent
B) 55 percent; 4 percent
C) 25 percent; 50 percent
D) 50 percent; 30 percent - Correct answer-C) 25 percent; 50 percent
Which of the following statements are TRUE?
A) Checkable deposits are payable on demand.
B) Checkable deposits do not include NOW accounts.
C) Checkable deposits are the primary source of bank funds.
D) Checkable deposits are assets for the bank. - Correct answer-A) Checkable
deposits are payable on demand.
Because checking accounts are ________ liquid for the depositor than savings
accounts, they earn ________ interest rates.
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Management of Financial Institutions
Exam 2026 Questions and Answers
Graded A+
Which of the following statements are TRUE?
A) A bank's assets are its sources of funds.
B) A bank's liabilities are its uses of funds.
C) A bank's balance sheet shows that total assets equal total liabilities plus equity
capital.
D) A bank's balance sheet indicates whether or not the bank is profitable. - Correct
answer-C) A bank's balance sheet shows that total assets equal total liabilities plus
equity capital.
Which of the following statements is FALSE?
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,A) A bank's assets are its uses of funds.
B) A bank issues liabilities to acquire funds.
C) The bank's assets provide the bank with income.
D) Bank capital is recorded as an asset on the bank balance sheet. - Correct
answer-D) Bank capital is recorded as an asset on the bank balance sheet.
Which of the following are reported as liabilities on a bank's balance sheet?
A) reserves
B) checkable deposits
C) consumer loans
D) deposits with other banks - Correct answer-B) checkable deposits
Which of the following are reported as liabilities on a bank's balance sheet?
A) discount loans
B) reserves
C) U.S. Treasury securities
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,D) real estate loans - Correct answer-A) discount loans
The share of checkable deposits in total bank liabilities has
A) expanded moderately over time.
B) expanded dramatically over time.
C) shrunk over time.
D) remained virtually unchanged since 1960. - Correct answer-C) shrunk over
time.
Which of the following statements is FALSE?
A) Checkable deposits are usually the lowest cost source of bank funds.
B) Checkable deposits are the primary source of bank funds.
C) Checkable deposits are payable on demand.
D) Checkable deposits include NOW accounts. - Correct answer-B) Checkable
deposits are the primary source of bank funds.
In recent years the interest paid on checkable and nontransaction deposits has
accounted for around ________ of total bank operating expenses, while the costs
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, involved in servicing accounts have been approximately ________ of operating
expenses.
A) 45 percent; 55 percent
B) 55 percent; 4 percent
C) 25 percent; 50 percent
D) 50 percent; 30 percent - Correct answer-C) 25 percent; 50 percent
Which of the following statements are TRUE?
A) Checkable deposits are payable on demand.
B) Checkable deposits do not include NOW accounts.
C) Checkable deposits are the primary source of bank funds.
D) Checkable deposits are assets for the bank. - Correct answer-A) Checkable
deposits are payable on demand.
Because checking accounts are ________ liquid for the depositor than savings
accounts, they earn ________ interest rates.
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