412 exam 3 hw 7 hw 8 practice exam
Questions And Answers
A
R
U
LA
C
O
D
,Which of the following is false about off-balance-sheet activities?
They are an important source of income for some large FIs.
They never have any value reflected on the balance sheet.
A
They have to be reported in detail in the FFIEC quarterly call report.
They have caused billions of dollars of losses in the past few decades. - ANS They never
R
have any value reflected on the balance sheet
Letters of credit are agreements to pay money if an event occurs. They should be considered
A)
U
off-balance-sheet liabilities
LA
B)
off-balance-sheet assets
C)
on-balance-sheet assets
C
D)
on-balance-sheet liabilities - ANS off-balance-sheet liabilities
For a loan commitment, which of the following is not a source of income for the FI?
O
A)
Bank-end fee
D
B)
Loan interest
C)
Upfront fee
D)
Aggregate funding risk - ANS Aggregate funding risk
, Which of the following OBS activity is least concerned with default risk of the counterparty?
A)
commercial letters of credit
B)
loan commitments
C)
forwards
A
D)
futures
R
E)
swaps - ANS futures
If a local bank wants to minimize its risk when selling a loan, which terms would it choose?
A)
U
With recourse
LA
B)
Without recourse - ANS Without recourse
Bank runs can have positive effects by
C
A)
bringing down safe banks through sheer panic.
B)
O
reducing the wealth of depositors who exceed the FDIC limits.
C)
D
giving the FDIC something to do. Intervening in bank failures is their only job.
D)
encouraging depositors to scrutinize their bank's activities. - ANS encouraging depositors
to scrutinize their bank's activities
Bank runs can have positive effects by
A)
bringing down safe banks through sheer panic.
Questions And Answers
A
R
U
LA
C
O
D
,Which of the following is false about off-balance-sheet activities?
They are an important source of income for some large FIs.
They never have any value reflected on the balance sheet.
A
They have to be reported in detail in the FFIEC quarterly call report.
They have caused billions of dollars of losses in the past few decades. - ANS They never
R
have any value reflected on the balance sheet
Letters of credit are agreements to pay money if an event occurs. They should be considered
A)
U
off-balance-sheet liabilities
LA
B)
off-balance-sheet assets
C)
on-balance-sheet assets
C
D)
on-balance-sheet liabilities - ANS off-balance-sheet liabilities
For a loan commitment, which of the following is not a source of income for the FI?
O
A)
Bank-end fee
D
B)
Loan interest
C)
Upfront fee
D)
Aggregate funding risk - ANS Aggregate funding risk
, Which of the following OBS activity is least concerned with default risk of the counterparty?
A)
commercial letters of credit
B)
loan commitments
C)
forwards
A
D)
futures
R
E)
swaps - ANS futures
If a local bank wants to minimize its risk when selling a loan, which terms would it choose?
A)
U
With recourse
LA
B)
Without recourse - ANS Without recourse
Bank runs can have positive effects by
C
A)
bringing down safe banks through sheer panic.
B)
O
reducing the wealth of depositors who exceed the FDIC limits.
C)
D
giving the FDIC something to do. Intervening in bank failures is their only job.
D)
encouraging depositors to scrutinize their bank's activities. - ANS encouraging depositors
to scrutinize their bank's activities
Bank runs can have positive effects by
A)
bringing down safe banks through sheer panic.
