Question

QUESTION 16

1. The uncertainty in earnings due to misconduct by employees, computer errors, flooding, lightning strikes and other similar events is referred to as:

		A) Capital risk
		B) Liquidity risk
		C) Operational risk
		D) Interest rate risk

5 points   

QUESTION 17

1. The following are reasons that bank mergers do not work, except?

		A) Ill-prepared management
		B) A good match of corporate cultures
		C) Excessive prices paid by the acquirer for the acquired bank
		D) A failure to take into account customers' feelings and concerns

5 points   

QUESTION 18

1. The First State Bank of Summerville knows that, if they issue commercial paper through a
   subsidiary, money is very tight and the interest rate on the commercial paper may very high. What factor that affects a bank’s use of non-deposit sources of funds is the bank concerned about?

		A) The relative cost of raising the funds
		B) The length of time the funds will be required
		C) The risk associated with each source of funds
		D) The size of the bank

5 points   

QUESTION 19

1. ROE for a bank is calculated by:

		A) Dividing net after-tax income by total equity capital.
		B) Dividing total operating revenue less operating expenses by total assets.
		C) Deducting total interest expenses from total interest income and dividing by total equity capital.
		D) Noninterest income less noninterest expenses divided by total earning assets.

5 points   

QUESTION 20

1. Credit is extended to a company up to one year to purchase raw materials and cover a seasonal peak need for cash. What type of loan is this?

		A) Self-liquidating inventory loan
		B) Revolving line of credit
		C) Security dealer financing
		D) Working capital loan

Answer 1

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