Quiz chapter 14 Commercial Bank Operation Flashcards Preview

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Flashcards in Quiz chapter 14 Commercial Bank Operation Deck (15):
1

1. Credit analysis determines credit worthiness of a borrower.
a. True
b. False

F

2

2. Securitisation of loans reduces reserve requirements.
a. True
b. False

T

3

3. A line of credit is an agreement between a bank and a customer under which a bank guarantees a customer a fixed dollar amount of loan.
a. True
b. False

F

4

4. Commercial papers are long-term bond instruments where security is held over the assets of the issuer.
a. True
b. False

F

5

5. The Australian government ban on mergers and takeovers between the four major banks (National Australia Bank, Commonwealth Bank, ANZ, Westpac) aimed at preventing monopoly by one of the major banks within the sector.
a. True
b. False

T

6

6. The bank capital account (or net worth) is a residual that can be calculated by subtracting liabilities owed to creditors from the total assets owned by the organisation.
a. True
b. False

T

7

7. The principal source of funds for most banks is loans.
a. True
b. False

F

8

8. Borrowed funds are an important source for small and medium-sized banks.
a. True
b. False

F

9

9. A transaction account is a demand deposit account in which the owner is entitled to receive his or her funds on demand, which transfers legal ownership of funds to others.
a. True
b. False

T

10

10. Savings accounts are interest-bearing accounts for individuals and partnerships with limited withdrawal of funds.
a. True
b. False

F

11

11. Borrowed funds are typically short-term borrowings by commercial banks from the capital markets.
a. True
b. False

F

12

Loan capital refers to long-term, subordinated notes and debentures, some of which may be convertible into common stock
a. True
b. False

T

13

13. Share capital the accumulated portion of the bank's profit that has not been paid out to shareholders as dividends.
a. True
b. False

F

14

14. A bridge loan is a loan that finances the acquisition of an asset or assets.
a. True
b. False

F

15

15. Loan pricing must attempt a competitive rate of return on a bank shareholder's equity.
a. True
b. False

T