Davidson; Management - 3rd Australasian Edition



1.
Banks capital refers to long-term, subordinated notes and debentures.
   
A. True
B. False


2.
Banks usually pay low explicit interest rates on demand deposit accounts.
A. True
B. False


3.
Savings deposits are a larger percent of funding for small banks, compared to large banks.
A. True
B. False


4.
A line of credit is an agreement between a bank and a customer under which a bank guarantees a customer a fixed dollar amount of loan.
A. True
B. False


5.
The principal source of funds for most banks is deposit accounts: demand, savings and term deposits.
A. True
B. False


6.
The prime rate is the lowest loan rate offered by banks.
A. True
B. False


7.
Demand deposits represent the largest deposit source of funds for commercial banks.
A. True
B. False


8.
A bank's investment account provides liquidity and income.
A. True
B. False


9.
A negotiable CDs is similar to inter bank loans.
A. True
B. False


10.
Loan pricing must attempt a competitive rate of return on bank shareholder's equity.
A. True
B. False


11.
Credit analysis determines credit worthiness of a borrower.
A. True
B. False


12.
The most common way of monitoring and managing bank loan portfolios is by using concentration ratios.
A. True
B. False


13.
Securitisation of loans reduces reserve requirements.
A. True
B. False


14.
Revolving credit is a formal legal agreement under which a bank agrees to roll over a loan upon maturity.
A. True
B. False


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