金融市场与机构Madura第九版题库ch20.doc

Bank Performance v 9Chapter 20Bank Performance1. A(n) _ in interest rates could reduce a commercial banks expected cash flows because the interest paid on deposits may _ than the interest earned on loans and investments.A) increase; increase to a greater degreeB) increase; increase to a lesser degreeC) decrease; increase to a greater degreeD) decrease; increase to a lesser degreeANSWER:A2. Even if other external forces (such as interest rates) are unchanged, a commercial banks expected cash flows can change in response to a change in its management skills.A) TrueB) FalseANSWER:A3. The risk premium on a commercial bank is _ related to economic growth and _ related to management skills.A) positively; negativelyB) positively; positivelyC) negatively; negativelyD) negatively; positivelyANSWER:A4.Interest income generated from all assets is calledA)net interest margin.B)the spread.C)gross interest income.D)net interest income.ANSWER: C 5.Interest paid on deposits and borrowed funds is calledA)net interest expense.B)net interest margin.C)gross interest expense.D)net spread expense.ANSWER: C 6. Net interest income is the difference between gross interest income and interest expenses and is measured as a percentage ofA) liabilities.B) shareholders equity.C) assets.D) revenues.ANSWER: C7.Fees charged by a bank on various services allow the bank to generate: A)noninterest incomeB)components of net interest marginC)components of net interest incomeD)components of gross interest incomeANSWER: A 8. The loan loss provision should increase during periods of high economic growth.A) TrueB) FalseANSWER: B9. Noninterest income as a percentage of assets has been consistently lowest for banks thatA) focus on providing loans.B) offer substantial insurance services.C) offer substantial securities-related services.D) offer substantial advisory services.ANSWER: A10. If a bank has short-term deposits and provides long-term fixed rate loans, and interest rates decline over time, its net interest margin should be:A) declining over time.B) rising over time.C) constant over time.D) consistently negative.ANSWER: B11. For a given level of return on assets, a bank with a higher level of capital will have a lowerA) return on equity. B) leverage measure.C) noninterest income.D) liquidity.ANSWER: A12. Net income measured as a percentage of assets isA) return on equity (ROE).B) return on liabilities (ROL).C) return on investment (ROI).D) return on assets (ROA).ANSWER: D13. The net interest margin .A) money center; highB) money center; lowC) small; lowD) A and CANSWER: B14.When only equity counts as capital, the leverage measure isA)equal to the capital ratio.B)equal to return on assets.C)the inverse of return on assets.D)assets divided by equity.ANSWER: D 15.When only equity counts as capital, the higher the capital ratio, theA)lower the leverage measure.B)lower the degree of financial leverage.C)higher the leverage measure.D)A and BE)B and CANSWER: D 16.Gross interest income is affected byA)market interest rates.B)the composition of assets held by banks.C)interest expenses.D)noninterest expenses.E)A and BANSWER: E 17. If a bank increases its provisions for loan losses, its interest income is _, and its noninterest income is _.A) reduced; not affectedB) reduced; reducedC) not affected; reducedD) not affected; not affectedANSWER: D18. Return on assets (ROA) will usually reveal when a banks performance is not up to par, but it does not indicate the reason for poor performance.A) TrueB) FalseANSWER: A19.Gross interest expense is affected byA)market interest rates.B)the composition of assets held by the bank.C)fee services provided by the bank.D)A and BANSWER: A 20.If a bank had long-term fixed-rate assets and short-term liabilities, and interest rates increased over time, its net interest margin shouldA)decrease.B)increase.C)stay the same.D)either A or B, depending on whether the asset maturities exceed 10 years ANSWER: A 21.The sum of net interest income, noninterest income, and securities gains, minus provision for loan losses and noninterest expenses equalsA)net interest margin.B)gross interest margin.C)net income.D)income before taxes.ANSWER: D 22.Which of the following banks would likely have the highest return on equity?A)high return on assets, high capital ratioB)high return on assets, low capital ratioC)low return on assets, low capital ratioD)low return on assets, high capital ratioANSWER: B 23.Banks A and B have the same net income. Bank A has a higher capital ratio and more assets than B. Bank As return on assets is _ than Bank Bs. Bank As return on equity is _ than Bank Bs.A)higher; higherB)higher; lowerC)lower; higherD)lower; lowerANSWER: D 24.Banks G and H are the same size and have similar operations. Bank G holds the minimum level of capital and Bank H holds a higher level of capital. Bank Gs return on equity is probably _ volatile than that of Bank H. Bank Gs beta is probably _ than that of Bank H. A)less; lowerB)less; higherC)more; higherD)more; lowerANSWER: C 25.Bank K is conservatively managed. It benefits slightly when general economic conditions are very favorable and is hurt slightly when general economic conditions are very unfavorable. Its beta would likely beA)less than zero.B)zero.C)between zero and 1.00.D)greater than 1.00.ANSWER: C 26. _ results from a banks sale of securities.A) Noninterest incomeB) Loan loss provisionC) Securities gains and lossesD) Noninterest expensesE) none of the aboveANSWER: C27.Bank X obtains most of its funds from NCDs, while Bank Y obtains much of its funds from passbook savings and from demand deposit accounts. Given this information, the net interest margin of Bank X would likely be _ than that of Bank Y, and noninterest expenses would likely be _ than that of Bank Y.A)greater; greaterB)greater; lessC)less; lessD)less; greaterANSWER: C 28.A banks ROE _ account for its financial leverage. A banks ROA _ account for its financial leverage.A)does; doesB)does; does notC)does not; does notD)does not; doesANSWER: B 29.A banks ROA _ account for taxes on earnings. A banks ROE _ account for taxes on earnings.A)does; doesB)does; does notC)does not; does notD)does not; doesANSWER: A 30.A banks ROA _ account for loan losses. A banks ROE _ account for loan losses.A)does; doesB)does; does notC)does not; does notD)does not; doesANSWER: A 31.A banks net interest margin includesA)noninterest expenses.B)noninterest income.C)loan losses.D)none of the aboveANSWER: D 32. Banks with relatively _ ROAs often incur _ noninterest expenses.A) low; very lowB) low; very highC) high; very highD) none of the aboveANSWER:B33.Bank T generally obtains a high percentage of its funds from wholesale CDs. Bank V which obtains most of its funds from retail CDs. Bank Z obtains its funds from checking accounts. The bank that will incur the highest interest expenses is _.A)Bank TB)Bank VC)Bank ZD)all banks are the sameANSWER: A 34. Which of the following is not a factor that affects cash flows of a commercial bank?A) changes in economic growthB) changes in the risk-free interest rateC) changes in industry conditionsD) changes in management abilitiesE) all of the above are factors that affect cash flows of a commercial bankANSWER: E35. The value of a commercial bank can be modeled as the present vale of its future cash flows.A) TrueB) FalseANSWER:A36. The level of competition is an industry characteristic that will favorably affect cash flows, because ahigh level of competition may increase a banks volume of business or increase the prices it can charge for its services.A) TrueB) FalseANSWER:B37. If the risk premium on a commercial bank rises, so will the required rate of return by investors whoinvest in the bank.A) TrueB) FalseANSWER:A38. Gross interest expenses of banks are normally higher in periods when market interest rates are higherA) TrueB) FalseANSWER:A39. As banks continue to offer new services (such as insurance or securities services), noninterest incomewill decrease over time.A) TrueB) FalseANSWER:B40. The loan loss provision should increase during periods when loan losses are more likely, such asduring a recessionary period.A) TrueB) FalseANSWER:A41. Any individual banks ROA depends on the banks policy decisions, but not on uncontrollable factors relating to the economy and government regulations.A) TrueB) FalseANSWER:B42. ROA reveals when a banks performance is not up to par and the reasons for its poor performance.A) TrueB) FalseANSWER:B43. Which of the following is not a reason for bank failures?A) fraudB) a low loan default percentageC) liquidity crisisD) increased competitionE) All of the above are reasons for bank failures.ANSWER:B44. During periods of _ economic growth, loan demand tends to be _, allowing banks to provide _ loans.A) strong; higher; moreB) weak; higher; moreC) we