Title Practice MCQ.pdf ✅

Practice MCQS 1 1. Banks perform the indispensable task of: A) Creating money without making loan. B) Absorbing the excess liquidity created by other financial institutions C) Intermediating between surplus-spending individuals or institutions and deficit- spending individuals or institutions D) Issuing risky deposits E) None of the above 2. Smaller, locally focused commercial and savings banks that offer narrower but more personalized menu of financial services are known as: A) Money center banks B) Community banks C) Mutual Funds D) State banks E) Fringe banks. 3. A bank that wires funds for the purchase of a beach house in South Carolina for a customer in Oklahoma is carrying out the __________ of banks. A) The intermediation role B) The payment role C) The guarantor role D) The agency role E) The policy role 4. Which of the following is not a current trend in the banking industry? A) The number of banks is declining B) The number of bank branches is declining C) The number of bank services is increasing D) The number of bank competitors is increasing E) Bank industry convergence
Practice MCQS 2 5. Wholesale banks are those banks that: A) Sell at a discount relative to all commercial banks B) Only make loans to the wholesale industry C) Lend almost exclusively to farmers D) Are large banks which serve corporations and government E) Have only retail customers 6. Jonathan Robbins has an account in a bank that does not have a physical branch. Jonathan does all of his banking business over the internet. What type of bank does Jonathan have his account at? A) Virtual Bank B) Mortgage Bank C) Community Bank D) Affiliated Bank E) None of the above 7. Banks generate their largest portion of income from: A) Loans. B) Short-term investment. C) Demand deposits. D) Long-term investments. E) Certificates of deposit. 8. The noncash expense item on a bank's Report of Income designed to shelter a bank's current earnings from taxes and to help prepare for bad loans is called: A) Short-term debt interest B) Noninterest expense C) Provision for taxes D) Provision for possible loan losses E) None of the above.
Practice MCQS 3 9. The difference between noninterest income and noninterest expenses on a bank's Report of Income is called: A) Net Profit Margin B) Net Interest Income C) Net Income After Provision for Possible Loan Losses D) Income or Loss Before Income Taxes E) Net Noninterest Income 10.The Edmond National Bank serves only the City of Edmond, Oklahoma and concentrates on providing the best possible service to this city. What type of bank is this most likely to be? A) Virtual Bank B) Mortgage Bank C) Community Bank D) Affiliated Bank E) None of the above 11.The U.S. government wants to prevent money laundering by drug cartels. To promote this goal, they have asked banks to report any cash deposits greater than $10,000 to the government. Which of the following roles is the bank performing? A) The intermediation role B) The payment role C) The risk management role D) The guarantor role E) The policy role 12.The Bank, N.A. accepts deposits from thousands of individuals and lends that money to (among others) the Stillwater Body Shop to expand their work bays. Which of the following roles is the bank performing? A) The intermediation role B) The payment role
Practice MCQS 4 C) The risk management role D) The guarantor role E) The policy role 13.Which of the following is not a purpose of bank regulation: A) Guarantee minimal profitability of the banking system B) Provide monetary stability C) Ensure safety and soundness of banks D) Provide competitive financial system E) Protect consumers from abuses by banks 14.Banks depend heavily upon borrowed funds supplied by customers with little owners' capital invested. This means that banks make heavy use of: A) Financial leverage B) Capital restructuring C) Operating Leverage D) Margin borrowing E) None of the above. 15.A financial institution's bad-debt reserve, as reported on its balance sheet, is called: A) Unearned income or discount B) Allowance for possible loan losses C) Intangible assets D) Customer liability on acceptances E) None of the above 16.A bank's temporary lending of excess reserves to other banks is labeled on the balance sheet as: A) Fed Funds Purchased B) Fed Funds Sold