Topic 1 DQ 1 ENT

1-B

15. In making loans to a single customer, commercial banks are not restricted to a maximum percentage of their capital, i.e. there is not a limit on how a bank to lend to a single customer. a. True b. False 16. The opening of a commercial bank in the United States a. requires a charter from the city in which they plan to operate requires a charter from a state or the federal government. b. c. None of these is correct d. always requires a charter from the federal government. 17. Current bank regulations: a. set requirements for the maximum amount of equity that banks can hold. b. None of the other answers are correct. c. impose standards for how liquid the bank is. d. involve a trade-off between the safety of the bank and the efficiency of bank operations. 18. The Basel framework recommends that banks maintain capital in proportion to their: a. None of the other answers is correct. b. total assets c. risk-weighted liabilities d. risk-weighted assets 19. The potential risk that financial…

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Question one: True or False (Correct the wrong answer)1) Deposits are considered as assets in the bank’s balance sheet2) Credit risk in banks could occur duo to Inadequate income of lenders3) Interest rate on cash credit is higher than interest rate on bank overdraft4) Trading securities is one of the agency functions offered by commercial banks5) Banks accept deposits in order to lend money to the borrowers6) When banks accept deposits, it basically means they are lending money to the depositors7) Cash and treasury management are services provided by commercial banks8) Online banks could face risks linked to rapid technological changes9) Bank regulation’s only objective is to protect the consumer10) International banks have higher transaction costs than regular banks11) Large commercial banks focus on earning fee income on nontraditional activities12) Deposits are considered as liabilities in the bank’s balance sheet13) Banks underwriting loans with the expectation that another party…

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QUESTION 1 Which if the following is not true of the 5Cs in evaluating credit quality     Character refers to the integrity and honesty of the borrower and applies to both individuals and companies     Capital refers to the savings or wealth of the borrower as an additional source of income to repay the loan     Collateral refers to assets that are pledged to lender     Capacity refer to external factors including the state of economy  that can impact the borrower’s source of income.     QUESTION 2 Which of the following is not true?                                   Firm A                                      Firm B                          Industry Benchmark   2018 2019 2020 2018 2019 2020 2018 2019 2020 ROA 9.14% 9.50% 9.90% 8.11% 8.16% 8.19% 8.11% 8.14% 8.15% ROE 22.45% 22.95% 23.45% 19.65% 19.88% 20.12% 19.95% 20.55% 21.00% TIE 1.75 1.65 1.55 2.75 2.90 3.05 2.25 2.30 2.50 CR 3.25 3.66 3.75 2.55 2.65 2.75 2.40 1.45 2.50 EPS…

19 A bank will only continue a credit line for one of its small business customers if the small business can keep an acid-test greater than 1. The company's reported current accounts are as follows: . Cash: $6,000 • Accounts receivable (net): $19,000 • Inventory: $8,000 • Short-term investment: $4,500 • Current liabilities: $17,000 Which decision should the bank make? Maintain the credit line because the acid-test ratio is 2.21. O Close the credit line because the acid-test ratio is 0.45. O Close the credit line because the acid-test ratio is 0.58. Maintain the credit line because the acid-test ratio is 1.74. NEXT > BOOKMARK

1b) Banks offer overdraft facilities and term loans, among other services, to their corporate clients. Explain the nature and use of overdrafts and term loans and give examples where a companymight wish to use overdraft or a term loan.

Balance sheet ($ million) Cash $10 50 Loans Securities 15 Deposit Equity $68 7 The bank is expecting a $15 net deposit drain. Show the bank's balance sheet if: a. The bank purchases liability to offset this expected drain. b. The bank uses the asset side liquidity to finance this expected drain.

Sub : accounting 2

3. Uses of commercial bank funds Which of the following are ways that commercial banks use the funds they receive? Check all that apply. Provide working capital loans to support business that don't want to add debt to their balance sheet but still need large amounts of capital for major purchases. Provide term loans to support business that don't want to add debt to their balance sheet but still need large amounts of capital for major purchases. Provide working capital loans to support business' ongoing operations. Engage in repurchase agreements. True or False: The major use for bank funds is real estate loans. True False

Bank overdrafts are generally reported as:   Question 9 options:   a non-current asset.   a current liability.   a contra-asset account.   a current asset. Which of the following is not a common reconciling item in the preparation of a company's bank reconciliation?   Question 8 options:   deposits in transit   bank charges   outstanding cheques   accounts payable