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Level 62

Analyzing Bank Performance


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Ignore?
all of the above
a & c only
demand deposits
Bank assets fall into each of the following categories except
municipal
Loans typically fall into each of the following categories except:
A and b
Which of the following adjustments are made to gross loans and leases to obtain net loans and leases?
the loan and lease loss allowance
An example of a contra-asset account is
Short-term investments
Which of the following bank assets is the most liquid?
have lower risk than less liquid securities
All other things constant, securities that are extremely liquid
Securities that are "held to maturity" are:
recorded on the balance sheet at amortized cost
available for sale securities
Securities that require unrealized gains or losses to be recorded as a change in stockholder's equity are called
trading account securities
Securities that require unrealized gains or losses to be recorded on the income are called
Businesses
_______ owns the bulk of demand deposit accounts.
brokered deposits
Jumbo CDs that a bank obtains from a third party broker are called
federal funds purchased
Unsecured liabilities created from the exchange of immediately available funds are known as
A bank's core deposits are
stable deposits that are not typically withdrawn over short periods of time
Federal funds sold
Which of the following is not considered a volatile liability?
The provision for loan and lease losses
represents management's estimate of potential lost revenue from bad loans
A bank's burden is defined as
non interest expense minus non interest income
Interest income includes
a and b only
10.83%
A bank currently owns a municipal bond paying a tax exempt rate of 6.5%. If the bank's marginal tax rate is 40%, what is the taxable equivalent yield?
13.11%
A bank currently owns a municipal bond paying a tax exempt rate of 8%. If the banks marginal tax rate is 39%, what is the taxable equivalent yield?
Net interest income is the difference between:
gross interest income and gross interest expense
insufficient funds service charges
Non interest expenses includes all of the following except:
Net income is defined as
net interest income- burden-provision for loan loss+ securities gains or losses-taxes
financial leverage
A bank's equity multiplier measures the bank's"
Return on equity can be decomposed into
the product of return on assets and equity multiplier
Return on assets can be calculated as
asset utilization minus the expense ratio and the tax ratio
Net income is calculated as
total revenue-total operating expenses- taxes
The efficiency ratio measures:
a bank's ability to control non interest expense
Cash due from banks
Which of the following would not be considered an earning asset
to maximize shareholder wealth
The goal of a bank manager should be:
Ownership Risk
Which of the following is not one of the risks identified by the Federal Reserve Board?
Legal risk
Which type of risk is the most difficult to quantify
reducing their credit risk
A savings and loan that sold off their junk bond holdings and issued consumer auto loans with the proceed would most likely be:
Recoveries refer to
the dollar amount of loans that were previously charged off but now collected.
Classified loans:
are loans in which regulators have forced management to set aside reserves
Liabilities Quality
sensitivity to market risk