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Exam (elaborations)

Test Questions Banking

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Which of the following is NOT a source of income for a bank? A. the interest earned by depositors B. investments C. loan income from interest D. fees for services - ANS A The difference between what a bank pays in interest and what it receives in interest is called - ANS Spread True or F...

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  • February 13, 2024
  • 15
  • 2023/2024
  • Exam (elaborations)
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Test Questions Banking
Which of the following is NOT a source of income for a bank?

A.

the interest earned by depositors

B.

investments

C.

loan income from interest

D.

fees for services - ANS A



The difference between what a bank pays in interest and what it receives in interest is called - ANS
Spread



True or False:

A Financial intermediary will not take a deposit for a consumer. - ANS False



Total assets minus total liabilities equals - ANS Equity



The loosening of government control is called __________ - ANS Deregulation



True or False:

Return on equity is the ratio of net income to total assets. - ANS False

, About 60 percent of the deposit and loan business in the United States is done by - ANS Commercial
Banks



People who put money into banks are called ________________ - ANS Depositor



True or False:

State Farm Insurance company is an example of a depository institution. - ANS False



True or False:

A bank is a not-for-profit organization. - ANS False



A bank evaluates the ____________ of all customers who apply for loans. - ANS Creditworthiness



Assume that a bank receives a $5,000 deposit from a customer and lends it to another to start a small
business. The bank pays a straight 5% per year interest to the customer and charges 10% per year for
the loan. Calculate the spread for one year. - ANS $250



Banks move money between

Answers:

A. other banks

B.banks and individual customers

C. governments

D. all of the above - ANS D



True or False:

General speaking, banks offer customers fewer services today than they did 20 years ago. - ANS False

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