lesson 1

Question 0

place on which checks can be written

Answer 0

bank

Question 1

place for safe keeping of money

Answer 1

bank

Question 2

channels funds to borrowers (providing for return to savers)

Answer 2

bank

Question 3

financial intermediary is _____________ finance

Answer 3

indirect finance (bank)

Question 4

financial markets

Answer 4

direct finance

Question 5

liabilities + bank capital =

Answer 5

assets

Question 6

a bank is basically a

Answer 6

T-account

Question 7

bank building and furniture

Answer 7

bank assets

Question 8

treasury bills and bonds

Answer 8

securities

Question 9

cash in vault

Answer 9

bank asset

Question 10

deposits at other banks (like the Fed)

Answer 10

bank asset

Question 11

securities and loans

Answer 11

bank assets

Question 12

demand deposits

Answer 12

checking account

Question 13

demand deposits (checking account)

Answer 13

bank liability

Question 14

various savings account forms

Answer 14

bank liability

Question 15

large certificate of deposits (CD)

Answer 15

bank liability

Question 16

borrowed money

Answer 16

bank liability

Question 17

chartered by the Federal Gov, must be member of Federal Reserve

Answer 17

national bank

Question 18

chartered by individual states, Fed Reserve members optional

Answer 18

state banks

Question 19

thrifts (savings institutions)

Answer 19

financial intermediary (another T-account)

Question 20

mutual funds and money market mutual funds

Answer 20

financial intermediary (another T-account)

Question 21

investment banks and hedge funds

Answer 21

financial intermediary (another T-account)

Question 22

insurance companies

Answer 22

financial intermediary (another T-account)

Question 23

structured investment companies (SIVs)

Answer 23

financial intermediary (another T-account)

Question 24

how do banks make money?

Answer 24

assets > liabilities

Question 25

get state / national charter

Answer 25

start a bank step 1

Question 26

inject capital to buy building, vault, and to have cash on hand

Answer 26

start a bank step 2

Question 27

take in deposits

Answer 27

start a bank step 3

Question 28

make loans

Answer 28

start a bank step 4

Question 29

stock of Federal Reserve is _________

Answer 29

more costly

Question 30

regulators set ______________ &______________

Answer 30

Required Reserve Ratios and Capital Adequacy Ratios

Question 31

criteria for getting a national / state charter

Answer 31

promotes competition, improves banking services for community etc.

Question 32

decision on national/state charter is baed on cost of character and ….

Answer 32

whether the OCC/Fed and/or State Banking authorities will be primary regulator

Question 33

member banks hold ___________ balances, ___________ house

Answer 33

clearing

Question 34

reduces the account of payer bank

Answer 34

clearinghouse “debits”

Question 35

increases the account of the payee bank

Answer 35

clearinghouse “credits”

Question 36

must set aside % of their deposits as reserves to be held as either cash on hand or reserve account

Answer 36

reserve requirements

Question 37

bank regulators require that banks maintain adequate capital to serve as buffer against losses

Answer 37

capital requirements

Question 38

allows bank to make money (bank gets $100 deposit, bank holds 10% and lends $90)

Answer 38

fractional reserve

Question 39

serves as cushion for unexpected withdrawals

Answer 39

fractional reserve