商业银行管理彼得S.罗斯英文原书第8版-英语试题库Chap015

1、Chapter 15The Management of CapitalFill in the Blank Questions1.The risk that has to do with banks trading in foreign currencies is called _. Answer: exchange risk 2.The risk that has to do with fraud, embezzlement and bank robberies is called _. Answer: crime risk 3._ is measured by the par value o

2、f the shares of common equity outstanding. Answer: Common stock 4._ is the amount in excess of par value paid by the bank's shareholders. Answer: Surplus 5._ are the net earnings of the bank which have been kept by the bank rather than distributed as dividends to stockholders. Answer: Undivided

3、Profits (or retained earnings) 6.Core capital such as common stock, surplus, undivided profits, qualifying noncumulative preferred stock, etc. is referred to as _ capital as defined by the Basel agreement. Answer: Tier 1 7.The international treaty involving the U.S. and 11 other leading industrializ

4、ed countries to impose common capital requirements on all banks is known as the _. Answer: Basel Agreement 8.Supplemental capital such as the allowance for loan losses, subordinated debt, mandatory convertible debt, intermediate-term preferred stock, cumulative preferred perpetual stock and equity n

5、otes is more commonly known as _. Answer: Tier 2 capital 9.When items on a bank's balance sheet are multiplied by the appropriate risk-weighting factor they are often called _. Answer: risk-weighted assets 10.The fact that a bank may suffer deficiencies in quality control, inefficiencies in prod

6、ucing and delivering of services, weather damage, aging or faulty computer systems, errors in judgment by management and fluctuations in economy that could adversely affect the bank's performance is known as _ risk. Answer: operational 11.One defense against risk for the bank is to spread out a

7、bank's credit accounts and deposits among a wide variety of customers, including large and small accounts different industries, etc. This defense is known as _. Answer: portfolio diversification 12.One defense against risk is for the bank to seek out customers located in different communities or

8、 in different countries. This defense is known as _. Answer: geographic diversification 13.When all else fails, the ultimate defense against risk in banking is _. Answer: owners' capital (net worth) 14.The largest component of capital among thrift institutions is _. Answer: retained earnings 15.

9、The largest component of capital among banks is _. Answer: surplus 16._ models attempt to measure price or market risk of a portfolio of assets and attempt to determine the maximum loss they might sustain over a designated period of time. Answer: Value at risk (VaR) 17.The latest revision to the Bas

10、el accord is known as _ and will affect only about 20 of the largest U.S. banks and a handful of leading foreign banks.Answer: Basel II 18._ models measure lender exposure to defaults or credit downgrades. Answer: Credit Risk 19.Credit risk models will be _ widely used when Basel II takes effect. An

11、swer: more 20. At the center of the debate of the Basel Agreement is the , headquartered in Basel Switzerland , which assists central banks in their transactions with each other and serves as a forum for international financial issues.Answer: Bank for International Settlements (BIS)21. represents fu

12、nds set aside for contingencies such as legal action against the institution as well as providing a reserve for dividends expected to be paid but not yet declared and a sinking fund to retire stock or debt in the future.Answer: Equity reserves22. are debt securities repayable from the sale of stock.

13、Answer: Equity commitment notes23. is a hybrid form of equity capital issued to investors through a trust company, The funds raise are loaned to the financial firm. Dividends paid to stockholders on this time of capital are tax deductible.Answer: Trust preferred stock24. is long-term debt capital wh

14、ose claims legally follow claims of depositors.Answer: Subordinated notes and debentures25. for banks include mortgage servicing rights and purchased credit card relationships and can be counted as part of bank capital.Answer: Identifiable intangible assetsTrue/False QuestionsTF26.In the field of ba

15、nking, capital refers principally to those funds contributed by a bank's owners.Answer: True TF27.According to the textbook capital and risk are intimately related to each other. Answer: True TF28.One fundamental purpose for regulating capital is to limit losses to the federal government arising

16、 from deposit insurance claims. Answer: True TF29.Deposit insurance subsidized by government encourages banks to increase their ratios of capital to deposits. Answer: False TF30.Tier 2 includes undivided profits. Answer: False TF31.Core capital includes the surplus account for stock. Answer: True TF

17、32.Under the international capital (Basel) agreement Tier 2 capital must be raised to a minimum of 4 percent of risk-weighted assets. Answer: False TF33.Off-balance-sheet commitments of banks carry capital requirements under the international (Basel) capital requirements. Answer: True TF34.Portfolio

18、 diversification refers to seeking out customers located in different communities or countries, which presumably will experience different economic conditions. Answer: False TF35.Geographic diversification refers to the spreading out credit accounts and deposits among a wide variety of customers, in

19、cluding large and small business accounts, different industries, and households with a variety of sources of income and collateral. Answer: False TF36.The last line of defense against bank failure is owner's capital, according to the textbook. Answer: True TF37.Under the FDIC Improvement Act of

20、1991 a U.S. bank possessing a leverage ratio greater than 4 percent would be considered well capitalized. Answer: False TF38.Under the FDIC Improvement Act of 1991 a bank whose leverage ratio drops to 2 percent or less is considered to be critically undercapitalized. Answer: True TF39.Recent researc

21、h suggests that interest-rate contracts display considerably less risk exposure than do foreign-currency contracts. Answer: True TF40.The Basel Agreement on capital as drafted in the 1980s failed to deal with market risk. Answer: True TF41.If a bank benefits when the value of a foreign currency rise

22、s, the bank is said to be in a short position.Answer: False TF42.If a bank benefits when a foreign currency declines in value, then the bank is in a long position.Answer: False TF43.If the ratio of tangible equity capital to total assets is 2 percent or less it is subject to being placed in conserva

23、torship or receivership if its capital ratios are not increased within a prescribed period of time even if its net worth is still positive. Answer: True TF44.According to recent research, bank stock prices usually drop within a week after a dividend cut is announced. Answer: True TF45.Equity notes a

24、re considered to be part of Tier 1 capital. Answer: False TF46.The most important source of thrift capital in terms of dollar volume is common stock (par value). Answer: False TF47.The daily rate at which robberies have occurred in the U.S. has continued to climb in the 1990s. Answer: False TF48.One

25、 of the reasons to regulate the capital position of banks is to limit the risk of bank failures, especially large bank failures. Answer: True TF49.Deposits with the Federal Reserve banks are considered to have moderate credit risk and are therefore placed in the 50 percent risk weight category. Answ

26、er: False TF50.The largest component of capital among banks is retained earnings. Answer: False TF51.VaR models provide a single number which indicates the potential for losses on a portfolio of assets. Answer: True TF52.VaR models are most successful in assessing potential risk when the assets are

27、non-traded. Answer: False TF53.Credit risk models will probably not be needed when Basel II takes effect. Answer: False TF54.One of the key innovations which have been proposed in Basel II is to require banks to hold capital against operational risk. Answer: True TF55.Basel II will require each bank

28、 to determine its own capital requirements based on its own calculated risk exposure. Answer: True TF56.It is anticipated that Basel II may lower capital requirements for the largest banks. Answer: True TF57.The global financial crisis of 2007-2009 highlighted the importance of taking into considera

29、tion a banks exposure to market risk that arise from changes in interest rates, security prices, and currency. Answer: True TF58.Smaller banks rely more heavily on internally generated capital than larger banks. Answer: True TF59.A well-capitalized institution has a ratio of capital to risk-weighted

30、 assets of at least 10 percent and faces no significant regulatory restrictions on its expansion. Answer: True TF60.Regulatory capital focus on the market value of equity. Answer: FalseMultiple Choice Questions61. According to the textbook the role of capital is to: A)Provide a cushion against failu

31、re risk. B)Provide funds needed to organize, open, and operate a bank. C)Promote public confidence D)Support growth and the development of new services E)All of the above. Answer: E 62. The textbook discusses several alternative defenses banks have against risk. These defenses include: A)Quality man

32、agement B)Portfolio diversification C)Geographic diversification D)Deposit insurance E)All of the above. Answer: E 63. Measured by dollar volume the largest category of capital at U.S. banks is: A)Par value of common stock B)Subordinated notes and debentures C)Surplus D)Undivided profits and capital

33、 reserves E)None of the above. Answer: C 64. The fundamental purposes of regulating bank capital cited in the textbook include which of the following? A)To limit the risk of bank failures. B)To preserve public confidence in banks. C)To limit losses to the federal government arising from insurance cl

34、aims. D)All of the above. E)A and B only. Answer: D 65. The Internal Capital Growth Rate for a bank is a function of which of the following factors? A)Profit margin. B)Asset utilization. C)Equity multiplier. D)Earnings retention ratio. E)All of the above. Answer: E 66. Second National Bank is foreca

35、sting a return on equity of 15 percent for this year. The board of directors wants to maintain its current policy of paying the bank's stockholders 40 percent of any net earnings the bank will earn. How fast can the bank's assets grow this year without jeopardizing its ratio of capital to as

36、sets? A)15 percent. B)9 percent. C)8 percent. D)6 percent. E)None of the above Answer: B 67. Possible breakdowns in quality control, inefficiencies in producing and delivering financial services, weather damage, aging or faulty computer systems and simple errors in judgment by bank management illust

37、rate what form of risk faced by banks? A)Credit risk B)Liquidity risk C)Interest-rate risk D)Operational risk E)None of the above Answer: D 68. The ratio of core capital to average assets is called the: A)Supplemental Capital ratio B)Leverage ratio C)Long-term capital ratio D)GAAP capital ratio E)No

38、ne of the above. Answer: B 69. The risk that a customer the bank has entered into a contract with will fail to pay or to perform, forcing the bank to find a replacement contract that may be less satisfactory is what form of risk listed below? A)Counterparty risk B)Interest-rate risk C)Operating risk

39、 D)Credit risk E)Liquidity risk Answer: A 70. If a bank benefits when a foreign currency declines in value, then the bank must be in a _ position. The term below that correctly fills in the blank in the preceding sentence is: A)Long B)Short C)Negative D)Credit risk E)None of the above Answer: B 71.

40、In the United States a 'well capitalized' bank must have a ratio of capital to risk-weighted assets of at least: A)6 percent B)8 percent C)10 percent. D)5 percent. E)None of the above Answer: C 72. In the United States a bank to be considered 'adequately capitalized' must have a rati

41、o of Tier 1 (or core) capital to risk-weighted assets of at least: A)8 percent B)6 percent C)10 percent D)4 percent E)None of the above Answer: D 73. A "well capitalized" bank in the United States must have a leverage ratio of at least: A)5 percent B)4 percent C)6 percent D)8 percent E)Non

42、e of the above Answer: B 74. A bank has $100 million in assets in the 0 percent risk weight category, $200 million in assets in the 20 percent risk weight category, $500 million in assets in the 50 percent risk weight category and $750 million in assets in the 100 percent risk weight category. This

43、bank has $57 million in core (Tier 1) capital. What is this bank's ratio of Tier 1 capital to risk-weighted assets? A)3.68 percent B)7.6 percent C)18.25 percent D)5.48 percent E)None of the above Answer: D 75. A bank has a profit margin of 5 percent, an asset utilization ratio of 11 percent , an

44、 equity multiplier of 12 and a retention ratio of 60 percent. What is this bank's ICGR? A)6.6 percent B)3.96 percent C)7.2 percent D).33 percent E)None of the above Answer: B 76. Which of the following would be an example of Tier 1 capital? A)Subordinated debt capital instruments with an origina

45、l maturity of at least 5 years B)Allowance for loan and lease losses C)Minority interest in the equity accounts of consolidated subsidiaries D)Intermediate term preferred stock E)All of the above Answer: C 77. Which of the following would be an example of Tier 2 capital? A)Subordinated debt capital

46、instruments with an original maturity of at least 5 years B)Undivided profits C)Minority interest in the equity accounts of consolidated subsidiaries D)Qualifying noncumulative preferred stock E)All of the above Answer: A 78. Which of the following would be an example of crime risk? A)A bank manager

47、 that embezzles $1,000,000 from the bank B)A bank that loses $500,000 from trading in foreign currencies C)A $1,000,000 loan to a business on which no interest and principal has been collected in 2 years D)A bank manager predicts that interest rates will rise. However interest rates fall causing the

48、 bank 's net income to fall by $250,000 E)All of the above are examples of crime risk Answer: A 79. Which of the following assets fits into the 0 percent risk weight category? A)Cash B)Deposits at the Federal Reserve C)Treasury Bills D)GNMA mortgage-backed securities E)All of the above fit into

49、the 0 percent risk weight category Answer: E 80. A bank that is 'well-capitalized': A)Faces no significant regulatory restrictions B)Cannot accept broker placed deposits without regulatory approval C)Has limits on dividends and management fees it is allowed to pay and limits on the maximum a

50、sset growth rate among other restrictions D)Will be placed into conservatorship or receivership if it its capital level is not increased within a certain time limit. E)None of the above Answer: A 81. A bank that is 'critically undercapitalized': A)Faces no significant regulatory restrictions

51、 B)Cannot accept broker-placed deposits without regulatory approval C)Has limits on dividends and management fees it is allowed to pay and limits on the maximum asset growth rate among other restrictions D)Will be placed into conservatorship or receivership if it its capital level is not increased w

52、ithin a certain time limit. E)None of the above Answer: D 82. A bank that is adequately capitalized: A)Faces no significant regulatory restrictions B)Cannot accept broker-placed deposits without regulatory approval C)Has limits on dividends and management fees it is allowed to pay and limits on the

53、maximum asset growth rate among other restrictions D)Will be placed into conservatorship or receivership if it its capital level is not increased within a certain time limit. E)None of the above Answer: B 83. Which of the following is in the 100 percent risk-weight category? A)Cash B)General obligation municipal bonds C)Residential mortgage loans D)Credit c