Question

Question 1.1. The risk that increased market interest rates will cause a decline in the value of an investment bank's holdings of long-term securities is known as (Points: 1)

credit risk.
interest-rate risk.
currency risk.
security risk.

Question 2.2. The difference between a savings deposit and a time deposit is (Points: 1)

time deposits pay no interest.
savings deposits pay no interest.
time deposits have specified maturities.
savings deposits have specified maturities.

Question 3.3. In banking, the spread refers to the difference between the (Points: 1)

the interest rate on long-term bonds and the interest rate on short-term bonds.
the interest rate on car loans and the interest rate on home mortgages.
the average interest rate earned on assets and the average interest rate paid on liabilities.
bid and asked prices on a bond.

Question 4.4. If you have a checking account at First National Bank, the account is (Points: 1)

an asset to both you and First National.
a liability to both you and First National.
an asset to First National and a liability to you.
an asset to you and a liability to First National.

Question 5.5. When investment banks buy or sell securities on their own account, it's called (Points: 1)

financial engineering.
proprietary trading.
underwriting.
factoring.

Question 6.6. An most important service provided by underwriters is (Points: 1)

lowering of information costs.
dealing with problems of moral hazard.
insuring firms against loss from fire.
insuring firms against loss from employee theft.

Question 7.7. The due diligence process is (Points: 1)

the process by which a firm chooses an investment bank.
when an investment bank researches a firm's value.
how an investment bank underwrites large issues.
the review of a prospectus by the SEC.

Question 8.8. Excess reserves equal (Points: 1)

total reserves less required reserves.
required reserves less total reserves.
total reserves plus required reserves.
required reserves divided by total reserves.

Question 9.9. To reduce the likelihood of excessive leverage in the banking system, governments have traditionally (Points: 1)

imposed capital requirements on commercial banks.
imposed capital requirements on investment banks.
imposed capital requirements on both commercial and investment banks.
imposed asset requirements on all banks.

Question 10.10. Any reserves beyond what is required are called (Points: 1)

required reserves.
excess reserves.
secondary reserves.
bank capital.