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FINA 465: EXAM #1 2026 ACTUAL
QUESTIONS WITH VERIFIED
ANSWERS.
Which of the following is NOT an example of noninterest
income? - correct answer-interest earned on loans
PNC is a large depository institution. What balance sheet
accounts for PNC would be affected (and how) if the bank hires
an investment banker to sell shares of stock to the public and
plans to use the proceeds to finance additional commercial
loans? - correct answer-Increase equity (common stock) &
increase asset (commercial loans)
Which of the following would be the least sensitive to changes
in interest rates? - correct answer-Demand deposits
Return on equity can be decomposed into: - correct answer-the
product of return on assets and the equity multiplier.
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In the CAMELS ratings, which reflects the bank's off-balance
sheet activities? - correct answer-Sensitivity to market risk
The efficiency ratio measures: - correct answer-a bank's
operating leverage.
Which of the following is NOT part of the CAMELS acronym? -
correct answer-efficiency
Which of the following is not a techniques that banks use to
"manage earnings"? - correct answer-All of the above are
techniques that banks use to "manage earnings"
The goal of a bank manager should be: - correct answer-to
maximize shareholder wealth.
Which of the following is not one of the risks identified by the
Federal Reserve Board? - correct answer-Ownership risk
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Net interest income is the difference between: - correct answer-
gross interest income and gross interest expense.
Net income is calculated as: - correct answer-total revenue -
total operating expenses - taxes.
The largest component of "non- interest cash and due from
banks" is: - correct answer-cash items in process of collection.
Which of the following is NOT an example of noninterest
expense? - correct answer-interest paid on noncore liabilities
Which of the following would not be considered an earning
asset? - correct answer-Cash due from banks
Which of the following bank assets is the most liquid? - correct
answer-Short-term investments
Typically, "call loans" are: - correct answer-payable on demand.
FINA 465: EXAM #1 2026 ACTUAL
QUESTIONS WITH VERIFIED
ANSWERS.
Which of the following is NOT an example of noninterest
income? - correct answer-interest earned on loans
PNC is a large depository institution. What balance sheet
accounts for PNC would be affected (and how) if the bank hires
an investment banker to sell shares of stock to the public and
plans to use the proceeds to finance additional commercial
loans? - correct answer-Increase equity (common stock) &
increase asset (commercial loans)
Which of the following would be the least sensitive to changes
in interest rates? - correct answer-Demand deposits
Return on equity can be decomposed into: - correct answer-the
product of return on assets and the equity multiplier.
, Page | 2
In the CAMELS ratings, which reflects the bank's off-balance
sheet activities? - correct answer-Sensitivity to market risk
The efficiency ratio measures: - correct answer-a bank's
operating leverage.
Which of the following is NOT part of the CAMELS acronym? -
correct answer-efficiency
Which of the following is not a techniques that banks use to
"manage earnings"? - correct answer-All of the above are
techniques that banks use to "manage earnings"
The goal of a bank manager should be: - correct answer-to
maximize shareholder wealth.
Which of the following is not one of the risks identified by the
Federal Reserve Board? - correct answer-Ownership risk
, Page | 3
Net interest income is the difference between: - correct answer-
gross interest income and gross interest expense.
Net income is calculated as: - correct answer-total revenue -
total operating expenses - taxes.
The largest component of "non- interest cash and due from
banks" is: - correct answer-cash items in process of collection.
Which of the following is NOT an example of noninterest
expense? - correct answer-interest paid on noncore liabilities
Which of the following would not be considered an earning
asset? - correct answer-Cash due from banks
Which of the following bank assets is the most liquid? - correct
answer-Short-term investments
Typically, "call loans" are: - correct answer-payable on demand.
