Econ 2035 Ch. 10

If you deposit a $50 check in the bank, the immediate impact on your bank's balance sheet will be a A) $50 increase in reserves and a $50 increase in checkable deposits. B) $50 decrease in reserves and a $50 increase in checkable deposits. C) $50 increase in reserves and a $50 decrease in checkable deposits. D) $50 decrease in liabilities and a $50 increase in checkable deposits

A) $50 increase in reserves and a $50 increase in checkable deposits.

How does the use of adjustable-rate mortgages affect interest-rate risk? A) It reduces the interest-rate risk of lenders. B) It reduces the interest-rte risk of borrowers. C) It reduces the interest-rate risk of both lenders and borrowers. D) It increases the interest-rate risk of both lenders and borrowers

A) It reduces the interest-rate risk of lenders.

National banks are chartered by the A) Office of the Comptroller of the Currency. B) Office of Bank Supervision. C) Securities and Exchange Commission. D) Office of Management and the Budget.

A) Office of the Comptroller of the Currency.

Which of the following is NOT considered a cash item by banks? A) U.S. Treasury bills B) deposits at other banks C) deposits at the Federal Reserve D) vault cash

A) U.S. Treasury bills

Which of the following is a checkable deposit? A) a NOW account B) a money market deposit account C) a certificate of deposit D) a savings account

A) a NOW account

When a bank issues a checkable deposit and loans the funds out to a business, it has transformed A) a financial asset for a saver into a liability for a borrower. B) a financial liability for a saver into a financial asset for a borrower. C) a short-term liability to a borrower into a long-term asset to a saver. D) one liability into another liability.

A) a financial asset for a saver into a liability for a borrower. loans= liability for a borrower because theyll owe the money to the bank. savers are giving money for the bank so is an asset to them

Which of the following is NOT an example of off-balance-sheet lending? A) a swap B) a standby letter of credit C) a loan commitment D) a loan sale

A) a swap

When bank loan officers screen loan applicants to eliminate potentially bad risks, they are attempting to mitigate the problem of A) adverse selection. B) moral hazard. C) interest rate risk. D) illiquidity.

A) adverse selection

A checkable deposit that pays no interest is known as a A) demand deposit. B) certificate of deposit. C) NOW account. D) time deposit.

A) demand deposit.

Banks use "credit-risk analysis" to A) determine the appropriate interest rate to charge borrowers. B) determine whether to invest in the stock of a corporation. C) determine the appropriate interest rate to pay depositors. D) determine the likelihood of an audit by bank regulators.

A) determine the appropriate interest rate to charge borrowers --> if theyre worried someone wont completely pay them back then they will charge higher interest so they can get as much money from then as possible

Short-term loans between banks are called A) federal funds. B) repurchase agreements. C) repos. D) discount loans.

A) federal funds.

Bank capital will decline following an increase in interest rates if the value of its A) fixed-rate assets is greater than the value of its fixed-rate liabilities. B) fixed-rate assets is less than the value of its fixed-rate liabilities. C) fixed-rate assets is greater than the value of its variable-rate assets. D) fixed-rate liabilities is greater than the value of its variable-rate liabilities.

A) fixed-rate assets is greater than the value of its fixed-rate liabilities.

Bank capital can best be described as A) funds contributed by shareholder purchasers of a bank's stock plus the accumulated retained earnings. B) the accumulated amount of reserves held by a bank. C) the location of most of the major banks of a country. D) another name for bank assets.

A) funds contributed by shareholder purchasers of a bank's stock plus the accumulated retained earnings.

Moral hazard can contribute to high bank leverage in all of the following ways EXCEPT A) having high capital requirements. B) bank managers are compensated in part on providing shareholders with high returns on equity. C) high bank leverage provides shareholders with a potential for a higher return on equity. D) federal deposit insurance has reduced the incentive of depositors to monitor the behavior of bank managers.

A) having high capital requirements.

In order to reduce the likelihood of excessive leverage in the banking system, governments have traditionally A) imposed capital requirements on commercial banks. B) imposed capital requirement on investment banks. C) imposed capital requirements on both commercial and investment banks. D) imposed asset requirements on all banks.

A) imposed capital requirements on commercial banks.

A bank's revenue comes from all of the following EXCEPT A) interest earned on vault cash. B) fees for services provided. C) interest on loans. D) interest on securities.

A) interest earned on vault cash.

Banks are exposed to interest rate risk primarily because A) interest rates are very difficult to forecast. B) the maturities of banks' assets and liabilities differ. C) borrowers from banks are prone to default. D) depositors are always searching for a slightly higher interest rate.

A) interest rates are very difficult to forecast.

A balance sheet A) is a statement showing an individual's or a firm's financial position at a particular point in time. B) is a statement showing an individual's or a firm's income over a period of time. C) is a statement listing the tax liabilities incurred by an individual or a firm. D) can be constructed for any nonfinancial firm, but cannot be constructed for a financial firm.

A) is a statement showing an individual's or a firm's financial position at a particular point in time.

The ratio of bank capital to bank assets is known as the bank's A) leverage ratio. B) net interest margin. C) return on equity. D) return on capital.

A) leverage ratio.

A financial contract in which a bank agrees to sell the expected future returns from an underlying bank loan to a third party is referred to as A) loan sale. B) loan commitment. C) credit rationing. D) microlending.

A) loan sale.

What is the largest category of bank assets? A) loans B) reserves C) securities D) cash items in the process of collection

A) loans -- largest category of bank assets

Given that most banks have positive gap and negative durations, banks prefer A) lower market interest rates. B) higher market interest rates. C) higher market fixed rates but lower market floating rates. D) either higher or lower market interest rates since interest rates have little effect on bank profits.

A) lower market interest rates.

The very low interest rates following the financial crisis of 2007-2009 resulted in A) many people moving their funds from CDs and money market accounts to checking accounts in order to have more liquidity without sacrificing much interest. B) funds being transferred from checking accounts to time deposits. C) further declines in checking accounts that began in the early 1970s. D) people switching their funds from checking deposits to CDs in the pursuit of higher interest rates.

A) many people moving their funds from CDs and money market accounts to checking accounts

Small business loans are ________ to securitize than are mortgage loans and are ________ to securitize than are balances on credit cards. A) more difficult; more difficult B) more difficult; easier C) easier; more difficult D) easier; easier

A) more difficult; more difficult

Banks use credit rationing rather than simply raising the interest rate charged to borrowers with higher default risks because A) of fear of adverse selection problems. B) of interest rate ceilings in many states. C) of fear of offending the loan applicants. D) use of credit rationing is encouraged by the Federal Reserve.

A) of fear of adverse selection problems.

Geographic restrictions on banks A) reduce their ability to take advantage of economies of scale. B) raise the costs of their providing risk-sharing, liquidity, and information services. C) reduce their exposure to credit risk. D) reduce the amount of local lending they undertake.

A) reduce their ability to take advantage of economies of scale

Required reserves are A) the portion of demand deposits and NOW accounts banks must hold. B) zero on demand deposits. C) zero on NOW accounts. D) imposed on all deposits at commercial banks.

A) the portion of demand deposits and NOW accounts banks must hold. --> liquid cash a bank must have on site

On a bank's balance sheet, assets are A) the uses of acquired funds. B) the sources of acquired funds. C) those items owed by the bank to depositors and others. D) by definition equal to the bank's liabilities.

A) the uses of acquired funds --> how you are using money

Excess reserves equal A) total reserves less required reserves. B) required reserves less total reserves. C) total reserves plus required reserves. D) required reserves divided by total reserves.

A) total reserves less required reserves

A bank that expects interest rates to fall will A) want the duration of its assets to be greater than the duration of its liabilities—a positive duration gap. B) want the duration of its assets to be less than the duration of its liabilities—a positive duration gap. C) want the duration of its assets to be greater than the duration of its liabilities—a negative duration gap. D) want the duration of its assets to be less than the duration of its liabilities—a negative duration gap.

A) want the duration of its assets to be greater than the duration of its liabilities—a positive duration gap.

The most important factor in determining your FICO score is A) your history of making payments. B) how long you have been using credit. C) the amount you owe on loans and credit cards. D) how many different types of credit you have.

A) your history of making payments.

hat is the current limit on balances that are covered by federal deposit insurance? A) $100,000 B) $250,000 C) $500,000 D) $1,000,000

B) $250,000

FICO scores range from A) 1 to 100. B) 300 to 850. C) Aaa to F. D) A+ to D-.

B) 300 to 850.

Which of the following helps explain why depositors sometimes put their funds in demand deposits rather than NOW accounts? A) Demand deposits pay interest, whereas NOW accounts do not pay interest. B) Businesses may not hold NOW accounts. C) Checks may be written against demand deposits, but not against NOW accounts. D) Demand deposits are more liquid than NOW accounts.

B) Businesses may not hold NOW accounts.

Where do the FDIC's funds come from? A) Congress appropriates money for the FDIC, just as it does for other federal agencies. B) The FDIC earns income through the insurance premiums paid by insured banks and from investment earnings. C) The FDIC sells bonds in the financial markets. D) The FDIC relies on voluntary contributions from the banking community.

B) The FDIC earns income through the insurance premiums paid by insured banks and from investment earnings.

Why are U.S. government securities referred to as a bank's secondary reserves? A) Their current market value may count toward meeting a bank's legal reserve requirements. B) They are very liquid. C) Banks are legally required to hold a certain minimum amount of these securities. D) They are the same thing as vault cash.

B) They are very liquid.

Which asset is sometimes referred to as a bank's secondary reserves? A) vault cash B) U.S. government securities C) repurchase agreements D) federal funds

B) U.S. government securities--> they are the most liquid after reserves

On a bank's balance sheet, bank capital is considered A) an asset. B) a liability. C) the difference between a firm's assets and it's shareholder's equity. D) the total amount of funds banks have available to make loans.

B) a liability --> bc is a source of funds

In managing its liabilities to deal with liquidity problems, banks trade off A) credit risk against interest rate risk. B) adverse selection against moral hazard. C) the need for available funds to meet deposit outflows against the desire for greater profit. D) present tax liabilities against future tax liabilities.

B) adverse selection against moral hazard.

Standby letters of credit A) are a form of swaps. B) are a promise by a bank to lend the borrower funds to pay off its maturing commercial paper. C) are a promise by a large depositor to provide additional funds to a bank should the bank face an unexpectedly large deposit outflow. D) represent the unused balance on a bank credit card.

B) are a promise by a bank to lend the borrower funds to pay off its maturing commercial paper

Collateral is A) the interest rate that banks charge high-quality borrowers. B) assets pledged to the bank in the event the borrower defaults. C) the difference between the value of a bank's assets and the value of a bank's liabilities. D) required reserves minus excess reserves.

B) assets pledged to the bank in the event the borrower defaults.

Banks use repurchase agreements to A) ensure that payments on consumer loans are made on time. B) borrow funds from business firms or other banks. C) guard against price fluctuations on long-term bonds. D) ensure that they always have enough funds on hand to meet their federal tax liabilities.

B) borrow funds from business firms or other banks --> that way they can always have enough cash on hand

Limits on the value of the assets that commercial banks can acquire relative to their capital is known as A) equity requirements. B) capital requirements. C) required reserves. D) asset requirements.

B) capital requirements.

In which of the following assets are commercial banks in the United States NOT allowed to invest checkable deposits? A) home mortgages B) corporate bonds C) municipal bonds D) U.S. Treasury bonds

B) corporate bonds

The difference between a demand deposit and a NOW account is that A) checks may not be written against NOW account balances. B) demand deposits pay no interest. C) NOW accounts pay no interest. D) checks may not be written against demand deposit balances

B) demand deposits pay no interest.

Bank borrowing from the Fed is referred to as A) federal funds. B) discount loans. C) repurchase agreements. D) reverse repurchase agreements.

B) discount loans.

The sensitivity of bank capital to market interest rates is measured by A) gap analysis. B) duration analysis. C) leverage ratio. D) capital analysis.

B) duration analysis.

Any reserves beyond what is required are called A) required reserves. B) excess reserves. C) secondary reserves. D) bank capital.

B) excess reserves.

The interest rate on interbank loans is called the A) discount rate. B) federal funds rate. C) repo rate. D) prime rate.

B) federal funds rate.

Community banks often charge ________ interest rates on business loans than do large banks, and the interest rates charged by community banks are usually ________ than the interest rates on credit cards. A) higher; higher B) higher; lower C) lower; higher D) lower; lower

B) higher; lower

A bank run involves A) a failure by a bank to get the maximum return on its investments. B) large numbers of depositors withdrawing their deposits within a short period of time. C) a bank being forced out of business. D) fraud on the part of a bank's managers.

B) large numbers of depositors withdrawing their deposits within a short period of time.

A key difference between small-denomination and large-denomination time deposits is that A) small-denomination time deposits pay no interest. B) large-denomination time deposits may be bought and sold on secondary markets. C) large-denomination time deposits carry a significant penalty for early withdrawal. D) small-denomination time deposits carry a significant penalty for early withdrawal.

B) large-denomination time deposits may be bought and sold on secondary markets.

What is the primary reason for the differences between the U.S. banking system and those in other major industrial countries? A) Economies of scale are greater in banking in the United States than in banking in other countries. B) legislation that led to the development of state and national banks C) the Federal Reserve System D) the National Bank

B) legislation that led to the development of state and national banks

During a banking panic, a lender of last resort will A) purchase banks which are having difficulty but appear sound. B) make loans to solvent but temporality illiquid banks. C) make loans to insolvent but liquid banks. D) make loans to any banks which request them.

B) make loans to solvent but temporality illiquid banks.

Banks make use of the federal funds market in part to A) pay their tax liabilities. B) manage liquidity risk. C) deal with moral hazard. D) deal with adverse selection.

B) manage liquidity risk remember: federal funds market is the short term loans from bank to bank, usually in the form of cash

A person takes out a car loan at a bank, but actually uses the money to play the lottery. This situation is an example of which problem banks face in lending? A) adverse selection B) moral hazard C) interest rate risk D) illiquidity

B) moral hazard

The difference between the interest a bank earns on loans and securities and the interest paid on deposits and debt divided by the total value of its assets is called A) interest spread. B) net interest margin. C) return on assets. D) return on equity.

B) net interest margin.

Which of the following involves banks borrowing funds from firms or other banks using the value of underlying securities as collateral? A) federal funds B) repurchase agreement C) counterparty lending D) money market account

B) repurchase agreement

Explicit provisions in a loan agreement that prohibit the borrower from engaging in certain activities is called A) credit rationing. B) restrictive covenants. C) credit-risk analysis. D) adverse selection.

B) restrictive covenants.

For a bank, the ratio of after-tax profit to assets is its A) net interest margin. B) return on assets. C) return on equity.

B) return on assets.

The ratio of a bank's after-tax profit to bank capital is known as A) net interest margin. B) return on equity. C) return on capital. D) spread.

B) return on equity.

Which of the following can be described as when a bank buys securities owned by a business while agreeing to sell them back at a later date? A) repurchase agreement B) reverse repurchase agreement C) federal funds D) discount loans

B) reverse repurchase agreement

Securitization refers to A) changing the mix in a financial portfolio away from stocks and toward bonds. B) selling directly to investors loans or securities that were formerly held by financial intermediaries. C) banks insisting that collateral be supplied on previously unsecured loans. D) reducing the exposure of a bank's portfolio to interest rate risk

B) selling directly to investors loans or securities that were formerly held by financial intermediaries.

Congress introduced deposit insurance in response to A) the savings-and-loan crisis of the 1980s. B) the banking crisis of the 1930s. C) the demise of the Second Bank of the United States in 1836. D) the demise of the First Bank of the United States in 1811.

B) the banking crisis of the 1930s.

On a bank's balance sheet, liabilities are A) the uses of acquired assets. B) the sources of acquired funds. C) all those items of value owned by the bank. D) by definition equal to the bank's assets.

B) the sources of acquired funds --> where you got borrowed money from

Currently, the FDIC insures deposits up to a limit of A) $1,000. B) $100,000. C) $250,000. D) $1,000,000.

C) $250,000.

Which of the following statements about a checking deposit is TRUE? A) It is a liability for both households and banks. B) It is an asset for both households and banks. C) It is an asset for households but a liability for a bank. D) It is a liability for households but an asset for a bank.

C) It is an asset for households but a liability for a bank --> you have your money in there so is an asset, bank is holding it but it can be owed to you at any time so is a liability to them

If the value of bank's loans declines, what is the corresponding reduction in a liability entry that the bank makes? A) Deposits are reduced by the amount of the decline in the value of the loan. B) Borrowings are reduced by the amount of the decline in the value of the loan. C) Net worth is reduced by the amount of the decline in the value of the loan. D) Cash items in the process of collection are reduced by the amount of the decline in the value of the loan.

C) Net worth is reduced by the amount of the decline in the value of the loan.

In the current U.S. economy, who plays the role of lender of last resort? A) The Securities and Exchange Commission B) The Federal Deposit Insurance Corporation C) The Federal Reserve System D) The Social Security Administration

C) The Federal Reserve System

A cash item in the process of collection is A) a U.S. Treasury bill that has matured, but for which the bank has not yet received payment. B) a car loan payment that is due but not yet received by the bank. C) a check drawn against another bank, from whom the funds have not yet been collected. D) currency that has been deposited in the bank, but not yet formally counted and entered into the bank's balance sheet.

C) a check drawn against another bank, from whom the funds have not yet been collected --> because has not been collected yet but in the process duh

In banking, the spread refers to the difference between the A) interest rate on long-term bonds and the interest rate on short-term bonds. B) interest rate on car loans and the interest rate on home mortgages. C) average interest rate earned on assets and the average interest rate paid on liabilities. D) bid and asked prices on a bond.

C) average interest rate earned on assets and the average interest rate paid on liabilities

A bank's remaining value after it has met all its liabilities is known as A) a bank's assets. B) a bank's liabilities. C) bank capital. D) a bank's income.

C) bank capital.

The United States has a dual banking system in the sense that A) the public may deposit money in either commercial banks or savings-and-loan associations. B) banks offer both demand deposits and time deposits to savers. C) banks are chartered by the federal government and by state governments. D) banks both take in deposits and make loans.

C) banks are chartered by the federal government and by state governments.

The Bank of Bird-in-Hand is a(n) ________ bank which concentrates on making loans to ________. A) commercial; large businesses B) investment; large business C) community; small businesses D) community; individual households for mortgages

C) community; small businesses

The process by which banks screen potential applicants by eliminating bad risks and to obtain a pool of creditworthy borrowers is called A) gap analysis. B) duration analysis. C) credit-risk analysis. D) liquidity analysis.

C) credit-risk analysis.

From the peak before the financial crisis, lending to small businesses by the largest banks has A) increased by about 25%. B) remained unchanged. C) declined by about 40%. D) virtually stopped.

C) declined by about 40%.

Loans by the Federal Reserve to banks are known as A) repurchase agreements. B) federal funds. C) discount loans. D) cash items in the process of collection.

C) discount loans --> from the Fed Res bc they do not charge interest which is why they are discounted

Which of the following is the source of funds for bank loans? A) marketable securities B) required reserves C) excess reserves D) bank capital

C) excess reserves

Which of the following things do banks do with the funds they acquire from savers? A) invest in corporate stock B) invest in corporate bonds C) make loans to individuals D) all of the above

C) make loans to individuals --> banks make loans so people can buy stocks and bonds

Which of the following is NOT a bank liability? A) checkable deposits B) CDs C) mortgage loans D) borrowings from the Federal Reserve

C) mortgage loans

What are federally chartered banks called? A) federal banks B) Federal Reserve banks C) national banks D) central banks

C) national banks

On a bank's balance sheet, "borrowings" are A) loans to households. B) loans to businesses. C) nondeposit liabilities. D) U.S. Treasury securities.

C) nondeposit liabilities

Which of the following is a bank liability? A) reserves B) consumer loans C) nontransaction deposits D) securities

C) nontransaction deposits

Which of the following represented the largest liability on the balance sheet of U.S. commercial banks in 2016? A) checkable deposits B) loans C) nontransaction deposits D) borrowings

C) nontransaction deposits

Customers who have long-term relationships with banks A) pose particular problems with respect to adverse selection. B) pose particular problems with respect to moral hazard. C) often obtain credit at a lower rate or with fewer restrictions. D) are more likely to default or violate restrictive covenants.

C) often obtain credit at a lower rate or with fewer restrictions.

A loan officer uses a credit scoring system to A) compare the interest rate on a loan to interest rates on other assets with comparable risk. B) keep track of the fraction of a bank's assets tied up in loans to a single individual or business. C) predict statistically whether an individual is likely to default on a loan. D) match any particular loan with the deposits being used to fund it.

C) predict statistically whether an individual is likely to default on a loan.

Securities that banks sell and agree to repurchase are known as A) federal funds. B) discount loans. C) repurchase agreements. D) NOW accounts.

C) repurchase agreements.

The Federal Reserve System was created in response to A) the stock market crash of 1929. B) the ending of the Civil War. C) the banking panic of 1907. D) difficulties of the free-banking era.

C) the banking panic of 1907.

Bank capital is A) the current market value of the bank's physical assets. B) the historical or original value of the bank's physical assets. C) the capital contributed by the bank's shareholders plus accumulated retained profits. D) the sum of the value of the bank's assets plus the value of the bank's liabilities.

C) the capital contributed by the bank's shareholders plus accumulated retained profits.

Bank capital is equal to A) the value of the capital originally invested in the bank by its owners. B) the value of everything the bank owns. C) the difference between the value of the bank's assets and the value of its liabilities. D) the value of the buildings and other physical assets the bank owns.

C) the difference between the value of the bank's assets and the value of its liabilities assets-liabilities = capital

The difference between a savings deposit and a time deposit is A) time deposits pay no interest. B) savings deposits pay no interest. C) time deposits have specified maturities. D) savings deposits have specified maturities.

C) time deposits have specified maturities.

On a bank's balance sheet, total assets are equal to A) total liabilities. B) bank capital. C) total liabilities plus bank capital. D) total liabilities minus bank capital.

C) total liabilities plus bank capital

States that restrict banks to having a single branch are said to require A) mono banking. B) nonbank banking. C) unit banking. D) semi-banking.

C) unit banking.

Using statistical models to estimate the maximum losses a portfolio's value is likely to sustain over a particular time period is called A) gap analysis. B) duration analysis. C) value-at-risk approach. D) credit-risk analysis.

C) value-at-risk approach.

FICO scores are based on information gathered from the three major credit reporting agencies. Which of the following is NOT one of those agencies? A) Equifax B) Experian C) TransUnion D) FDIC

D) FDIC

Which of the following is NOT a nontransaction deposit? A) a money market deposit account B) a certificate of deposit C) a savings account D) a NOW account

D) a NOW account

Which of the following is a type of risk faced by commercial banks? A) liquidity risk B) interest-rate risk C) credit risk D) all of the above

D) all of the above

If you have a checking account at First National Bank, the account is A) an asset to both you and First National. B) a liability to both you and First National. C) an asset to First National and a liability to you. D) an asset to you and a liability to First National.

D) an asset to you and a liability to First National.

If you deposit $300 in your bank and the required reserve ratio is 10%, your bank will have A) an increase in required reserves of $300. B) an increase in required reserves of $270. C) an increase in required reserves of $3,000. D) an increase in required reserves of $30 and an increase in excess reserves of $270.

D) an increase in required reserves of $30 and an increase in excess reserves of $270.

Credit risk is the risk that A) an insufficient number of borrowers will apply for loans or credit. B) interest rates will rise after a loan has been granted. C) interest rates will fall after a loan has been granted. D) borrowers might default on their loans.

D) borrowers might default on their loans.

hich of the following is a bank asset? A) checkable deposits B) savings deposits C) borrowings in the federal funds market D) cash items in the process of collection

D) cash items in the process of collection

All of the following are examples of borrowings by a bank EXCEPT A) federal funds. B) repurchase agreements. C) discount loans. D) commercial loans.

D) commercial loans.

Since most banks have positive gaps and negative duration gaps, an increase in market interest rates will A) increase bank profits and increase bank capital. B) increase bank profits and decrease bank capital. C) decrease bank profits and increase bank capital. D) decrease bank profits and decrease bank capital.

D) decrease bank profits and decrease bank capital.

The interest rate on unsecured loans between banks is called the A) discount rate. B) repurchase rate. C) T-bill rate. D) federal funds rate.

D) federal funds rate. unsececured loans between banks are federal funds-- their interest rates are the federal funds rate

Banks experience interest rate risk A) if adverse selection problems are particularly severe. B) if moral hazard problems are particularly severe. C) on any investment that has high information costs. D) if changes in interest rates cause bank profits to fluctuate.

D) if changes in interest rates cause bank profits to fluctuate.

The prime interest rate is the A) interest rate on six-month U.S. Treasury bills. B) discount rate. C) federal funds rate. D) interest rate that banks charge high-quality borrowers.

D) interest rate that banks charge high-quality borrowers.

Which of the following is NOT covered by federal deposit insurance? A) savings account B) money market mutual fund C) checking account D) money market deposit account

D) money market deposit account

Which of the following is a hybrid of a checking and savings account? A) CD B) negotiable CD C) passbook account D) money market deposit account

D) money market deposit account --> bc of this it is not covered by federal deposit insurance

Businesses hold substantial balances in demand deposits for all of the following reasons EXCEPT A) they cannot hold NOW accounts. B) the existence of low transactions costs. C) to maintain liquidity. D) relatively high interest rates.

D) relatively high interest rates --> demand accounts do not have interest rate

As a result of the financial crisis, checkable deposits A) became a smaller portion of overall liabilities. B) experienced little change. C) hit a new record high in terms of the percent of liabilities. D) roughly doubled in terms of the percent of liabilities.

D) roughly doubled in terms of the percent of liabilities.

Federal funds are A) the tax revenues of the federal government. B) loans by the Federal Reserve to banks. C) loans by banks to the Federal Reserve. D) short-term loans between banks.

D) short-term loans between banks --> overnight funds between banks

A bank's costs include all of the following EXCEPT A) the interest it pays to depositors. B) the interest it pays on its loans or debt. C) the cost of providing services. D) the fees paid to maintain its reserves at the Federal Reserve.

D) the fees paid to maintain its reserves at the Federal Reserve.

Banks sell securities, such as Treasury bills, and agree to repurchase them, typically the next day is a _________ __________.

repurchase agreement