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Chapter 9 Eco4223 Questions And Answers With Verified Solutions Already Passed!!!
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Chapter 9 Eco4223 Questions And Answers With Verified Solutions Already Passed!!!
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Chapter 9 Eco4223 Questions And Answers With Verified Solutions Already Passed!!! The Bank Balance Sheet consists of 2 things which include - ANSWER✔✔ Liabilities and Assets Liabilities consists of - ANSWER✔✔ *Checkable deposits *Non transaction deposits *Borrowings *Bank capital Assets consists of - ANSWER✔✔ *Reserves *Cash items in process of collection *Deposits at other banks *Securities *Loans *Other assets Opening of a checking account leads to an increase in the bank's reserves equal to the increase in checkable deposits. True of False - ANSWER✔✔ True Check Deposit: When a bank receives additional deposits, it gains an equal amount of reserves; when it loses deposits, it loses an equal amount of reserves. True or False - ANSWER✔✔ True Asset transformation: selling liabili ties with one set of characteristics and using the proceeds to buy assets with a different set of characteristics is called ___________ - ANSWER✔✔ Making a profit The bank borrows short and lends long to __________ - ANSWER✔✔ Make a profit General Princi ples of Bank Management - ANSWER✔✔ *Liquidity Management *Asset Management *Liability Management *Capital Adequacy Management *Credit Risk *Interest -rate Risk Liquidity Management and the Role of Reserves Excess reserves: *Suppose a bank's required reserv es are 10%. If a bank has ample excess reserves, a deposit outflow does not necessitate changes in other parts of its balance sheet. True or False - ANSWER✔✔ True Liquidity Management and the Role of Reserves Shortfall: *Reserves are a legal requirement a nd the shortfall must be eliminated *Excess reserves are insurance against the costs associated with deposit outflows - Are both of these statements true? - ANSWER✔✔ yes they are trueThe benefits of buying summaries with Stuvia:
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