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1、1、 Fill in the Blank Questions(1 point for each)(1) _consumer loans/_ consumer lending _ is a newer service provided by banks where the bank lends money to individuals for the purchase of durable and other goods. (2) The loosening of government regulation and control of financial institutions is cal
2、led _ deregulation _ . (3) A bank which now offers all of the available financial services is known as a _ universal_bank. (4) A(n) security broker buys and sells securities on behalf of their customers and for their own accounts. Examples of this type of financial service provider include Merrill L
3、ynch and Charles Schwab.(5) One tool that the Federal Reserve uses to control the money supply is _ open market operations _. (6) The Federal Reserve will buy and sell T-bills when they are using this tool of monetary policy. The federal bank regulatory agency which examines the most banks is the _
4、FDIC _. (7) The short term securities of the bank, including T-Bills and commercial paper, are often called _ secondary reserves _ because they are the second line of defense to meet demands for cash. Answer: (8) A(n)_ money market deposit account _ is a deposit account which pays an interest rate c
5、ompetitive with money market mutual funds and which generally has limited check writing ability. (9) _ Now accounts_ can be held by individuals and nonprofit institutions, bear interest and permit drafts from being written against the account to pay third parties. (10) The equity multiplier for a ba
6、nk measures the amount of _ leverage(debt)_ of the bank and is one part of the evaluation of the banks ROE. (11) _ liquidity risk _ is the risk that the financial institution may not be able to meet the needs of depositors for cash. (12) A traditional measure of earnings efficiency is the _ earnings
7、 spread _ or total interest income over total earnings assets less total interest expenses over total interest bearing bank liabilities. It measures the effectiveness of a firms intermediation function in the borrowing and lending of money. (13) The_ yield to maturity (YTM)_ is the interest rate tha
8、t equalizes the current market price of a bond with the present value of the future cash flows. (14) _ dollar interest-sensitive gap _ is the difference between interest-sensitive assets and interest-sensitive liabilities. (15) A(n)_ option _ allows the holder the right to either sell securities to
9、another investor (put) or buy securities from another investor (call) for a set price before the expiration date. A(n)_ interest rate swap _ is a contract where two parties exchange interest payments in order to save money and hedge against interest rate risk. (16) A(n)_ interest rate collar _ is wh
10、ere there is both a minimum and a maximum interest rate set on a loan. (17) A(n) _ standby credit agreement _ is a contingent claim of the bank that issues it. The issuing bank, in return for a fee, guarantees the repayment of a loan received by its customer or the fulfillment of a contract made by
11、its customer to a third party. (18) A relatively new type of credit derivative is a CDO which stands for collateralized debt obligation _. Answer: collateralized debt obligation (19) Lenders can set aside a group of loans on their balance sheet, issue bonds and pledge the loans as collateral against
12、 the bonds in _securitization. These usually stay on the banks balance sheet as liabilities.(20) Lenders can set aside a group of loans on their balance sheet, issue bonds and pledge the loans as collateral against the bonds in loan backed bonds _ . These usually stay on the banks balance sheet as l
13、iabilities. (21) Debt instruments issued by cities, states and other political entities and which are exempt from federal taxes are collectively known as _municipal securities . (22) _ call risk _ is the risk that the company whose bonds the financial institution owns may retire the entire issue of
14、corporate bonds in advance of their maturity leaving the bank with the risk of earnings losses resulting from reinvesting the cash at lower interest rates. (23) The _ liquidity gap _ is the total difference between its sources and uses of funds. (24) The oldest approach to meeting liquidity needs wh
15、ich relies on the sale of liquid assets to meet liquidity demands is called _ asset liquidity management_. (25) _ core deposits _ are the stable base of deposited funds that are not highly sensitive to movements in market interest rates and tend to remain with a depository institution. ()When financ
16、ial institutions tempt customers by paying postage both ways in bank-by-mail services or by offering free gifts such as teddy bears, they are practicing (26) _ nonprice competition _. (27) When a customer is charged based on the number and kinds of services used, with the customers that use a number of services bein