Thursday, July 30, 2009
MGT411- Money & Banking 2009
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Question No: 13 ( Marks: 1 ) - Please choose one
__________ measures how efficiently a bank uses its assets.
► Return on Assets
► Return on Equity
► Bank Capital
► Bank Profitability
Question No: 14 ( Marks: 1 ) - Please choose one
The procedure that estimates the interest rate sensitivity of a bank's assets and liabilities is called ___________.
► Managing credit risk
► Gap analysis
► Trading risk minimization
► Managing liquidity risk
Question No: 15 ( Marks: 1 ) - Please choose one
An insurance company provides liability insurance to a bakery protecting the owner against claims from customers. One area of coverage is protection against food poisoning claims. The insurance company may periodically send an employee into the bakery to observe food preparation and food storage processes. The insurance company is trying to avoid which of the following?
► Paying claims
► Adverse selection
► Moral hazard
► Transaction cost
Question No: 16 ( Marks: 1 ) - Please choose one
Which of the following is not a function of Investment banks?
► Research and advice for investors
► Immediate sale of assets
► Access to payment system
► Access to spectrum of assets allowed diversification
Question No: 17 ( Marks: 1 ) - Please choose one
Funds of depository institution are primarily used in which of the following?
► Corporate bonds, Government bonds, Stocks, Mortgage
► Cash, Loan, Securities
► Stocks, Government bonds, corporate bonds, commercial papers
► Commercial papers, Bonds
Question No: 18 ( Marks: 1 ) - Please choose one
All of the following are the primary sources of funds for depository institutions EXCEPT?
► Checkable deposits
► Savings and time deposits
► Short term loans
► Borrowings from other banks
Question No: 19 ( Marks: 1 ) - Please choose one
Which one of the following refers to the risk assessment and loss reimbursement guarantee by the individual risk experts of the relevant field?
► Underwriting process
► Insurance process
► Research process
► None of the given options
Question No: 20 ( Marks: 1 ) - Please choose one
The "trade off" which can impact bank's likelihood of faliure is described as:
► The larger the bank in asset size the more likely it will fail
► The more competitive the banking environment, the more likely the bank will fail
► The more profitable the bank, the less liquid the bank will be and the more likely it will fail
► The greater the regulation from government the more likely the bank will fail
Question No: 21 ( Marks: 1 ) - Please choose one
On which of the following success of monetary policy depends upon?
► It may be on the chance or by luck
► The institutional environment
► Competent people in responsible positions
► Both the institutional environment and Competent people in responsible positions
Question No: 22 ( Marks: 1 ) - Please choose one
A central bank's balance sheet would categorize each of the following as liabilities EXCEPT:
► Accounts of the commercial banks
Question No: 23 ( Marks: 1 ) - Please choose one
If the required reserve rate is ten percent and banks do not hold any excess reserves and there are no changes in currency holdings, a $2 million open market purchase by the Fed will result in deposit creation of:
► $20 million
► $18 million
► $2 million
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