Commercial Banking

  1. What does the EM for a bank measure?
  2. This risk has to do with the quality of the bank's assets?
    Credit Risk
  3. This risk is when a financial institution may not be able to meet the needs of depositors?
    Liquidity Risk
  4. Loans that are past due by 90 days or more are called?
    nonperforming loans
  5. This reflects the bank's portfolio management policies and the mix and yield on the bank's securities and is one part of the evaluation of ROE.
    Asset Utilization
  6. This reflects the effectiveness of the expense management of the bank and is one part of the evaluation of ROE.
    Net Profit Margin
  7. This measures the return to stockholders on their investment in the bank.
  8. This act restricts combined auditing and consulting relationship in order to promote auditor independence and objectivity.
  9. This type of risk is the uncertainty associated with public opinion.
    Reputation Risk
  10. This type of risk includes violations of rules and regulations
    Compliance Risk
  11. The ratio of a bank's interest income from its loans and security investments less interest expenses on debt issued divided by total earning assets measures a bank's:
    Net Interest Margin
  12. ROE for a bank is calculated by:
    Dividing net after-tax income by total equity capital
  13. The difference between such sources of bank income as service charges on deposits and trust-service fees and such sources of bank expenses as salaries and wages and overhead expenses divided by total assets or total earning assets is called the:
    Net Noninterest Margin
  14. A bank's ROE equals its ROA times it:
    Total assets divided by total equity capital
  15. The most profitable banks in the US in 2007 fell in the asset size range of:
    Over $10 billion in total assets
  16. What do loans and security investments represent for a bank?
    Earning Assets
  17. What represents how well the assets of the bank are managed, the bank's use of leverage, and how well the bank controls expenses?
  18. A ratio that can be used to measure a bank's credit risk would be:
    Nonperforming Loans/Total Loans
  19. A bank that has a high asset utilization ratio most likely.....
    is allocating assets to the most productive investments
  20. Interest on time deposits/Total time deposits is an example of a ratio used to examine the cost of:
    bank liabilities
  21. Interest sensitive assets/Interest sensitive liabilities would be the best example of a ratio used to examine the bank's :
    Interest rate risk
  22. NI/Total Assets =
  23. NI/Total Equity Capital
  24. Asset Utilization = Total Asset Turnover; what is the equation for total asset turnover?
    Total Operating Revenue/Total Assets
  25. ROE =
    ROA x EM
  26. ROA =
    NPM x AU
  27. TE/TA
  28. Jarod has declared bankruptcy and Norman Bank has just learned that the judge in the case has ruled that Jarod doesn't have to pay any loan back or forfeit any of his assets. Which type of risk is this?
    Legal Risk
  29. Nonperforming Loans/Total Loans or PLL/Total Loans measures what type of risk?
  30. Cash Government Security/Total Assets or Purchased Funds/Total Assets is a form of which type of risk?
    Liquidity Risk
  31. RSA/RSL or Uninsured Deposits/Total Deposits all measure which type of risk?
    Interest Rate Risk
  32. NI/Operating Revenue =
  33. True/False: EM has risen in response to regulatory pressure to raise more capital.
  34. This is a traditional service which permits a depositor to write a draft in payment for goods and services.
    Demand Deposit (Checking Account)
  35. Companies such as Sears and Wal Mart offered some but not all banking servies.......where were they called?
    Nonbank Banks
  36. This is a landmark act which allows financial service providers to offer an expanded menu of financial services for the customer is?
    Gramm Leach Bliley or Financial Services Modernization Act
  37. This is defined as any institution that can qualify for deposit insurance administered by FDIC.
  38. A bank which spans regions, nations, and continents which offers the widest menu of financial services is known as:
    Money Center Bank
  39. Banks which serve primarily households and small firms are known as ____________ banks.
  40. This refers to the movement of business across industry lines in order to broaden its base.
  41. Banks that sell deposits and make loans to businesses and individuals are known as ________ banks.
  42. Banks which function under a federal charter through the Comptroller of the Currency in the US are known as ___________ banks.
  43. Banks which supply both debt and equity capital to businesses are known as ____________ banks.
  44. The role performed by banks in the economy in which they transform savings into credit is known as this role:
  45. The role performed by banks in which they stand behind their customers when those customers are unable to pay a debt obligation is known as this role:
  46. The Current Theory suggests that banks exist because of imperfections in our financial system (True or False)
  47. Is traditional banking on the decline?
  48. Commercial Bank qualifies as a "bank" under federal law if it offers:
    Checking Accounts and Commercial Loans
  49. Intermediating between surplus-spending individuals or institutions and deficit-spending individuals or institutions is?
  50. A bank that wires funds for the purchase of a beach house in South Carolina for a customer in Ohio is carrying out the ____________ of banks.
    Payment Role
  51. A bank which manages the investment portfolio and pays the bills of an elderly customer who is unable to do it for him or herself is carrying out the ____________ of the banks.
    The agency role
  52. Which type of bank would most likely offer the largest number of financial services?
    Universal Bank
  53. These banks serve corporations and government.
    Wholesale Banks
  54. The phenomenon of this refers to firms expanding into other product lines:
  55. Payday Lenders are considered this type of bank:
    Fringe Bank
  56. US government wants to prevent money laundering by drug cartels. To promote this goal, they have asked banks to report any deposits greater than $10,000 to the government. Which role is this?
    Policy Role
  57. Alexander goes to his bank and gets an insurance policy that protects him against loss in case he is in a car accident. Which role is this?
    Risk Management Role
  58. Chris gets a cashier's check from Wachovia Bank to make his down payment on a new home, which role is this?
    Payment Role
  59. Banks with less than $1 billion in assets are generally called:
    Community Banks
  60. Are Savings and Loan Associations considered a depository financial institution?
  61. The FDIC was created as part of this act?
    Glass Steagall Act
  62. One tool that the federal reserves use to control money supply is this.
    Open Market Operations
  63. This act prevented banks from crossing state lines and made national banks subject to the branching laws of their state. It was later repealed by the Riegle Neal Interestate Banking Law.
    McFadden Pepper Act
  64. FDIC levies fixed insurance premium regardless or risk which lead to a problem called:
    Moreal Hazard
  65. This act lifted government ceilings on deposit interest rates in favor of free market interst rates:
  66. The first major federal banking in the US was the ____________ Act. This was passed during the Civil War and set up a system for chartering national banks and created the O.C.C..
    National Banking Act
  67. This act was passed during the Great Depression. It separated investment and commercial banks and created the FDIC.
    Glass-Steagall Act
  68. This act brought bank holding companies under the jurisdiction of the Federal Reserve:
    Bank Holding Company Act
  69. This act allows bank holding companies to acquire banks anywhere in the United States. However, no one bank can control more than 30% of the deposits in any one state or more than 10% of the deposits across the country.
    Riegle-Neal Interestate Banking Act
  70. This act allows banks to affiliate with insurance companies and securities firms either through a holding ompany or as a subsidiary?
    Gramm-Leach-Bliley Act (Financial Services Modernization Act)
  71. Federal Bank regulatory agency which examines the most banks is:
  72. This act requires financial service companies to report suspicious activity in customer accounts to the Treasury Department:
    US Patriot Act
  73. This Act prohibits banks and other publicly owned firms from publishing false or misleading performance information:
  74. This act makes it easier for victims of identity theft to file fraud alerts and allows the public to apply for a free credit report once a year:
    FACT Act
  75. THis was created by the National Banking Act and is part of the Treasury Department. It is the primary regulator of National Banks:
    Comptroller of the Currency
  76. This act allowed bank holding companies to acquire nonblank depository institutions and if desired convert them into branch offices:
    FIRREA of 1989
  77. Which act repeals the Glass-Steagall Act?
    Gramm-Leach-Bliley Act
  78. An institutional arrangement in which federal and state authorities both have significant bank regulatory powers is referred to as:
    Dual Banking System
Card Set
Commercial Banking
Commercial Banking