Banks differ from other types of depository institutions in that: I. banks have more diversified asset portfolios. II. banks obtain funds from more different types of sources. III. the average size bank is larger than other depository institutions. a. I only b. I and II only c. I and III only d. II and III only e. I, II, and III Clear my choice

Banks differ from other types of depository institutions in that: I. banks have more diversified asset portfolios. II. banks obtain funds from more different types of sources. III. the average size bank is larger than other depository institutions. a. I only b. I and II only c. I and III only d. II and III only e. I, II, and III Clear my choice

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter13: Other Financing Alternatives

Section: Chapter Questions

Problem 6DQ

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Banks differ from other types of depository institutions in that: I. banks have more diversified asset portfolios. II. banks obtain funds from more different types of sources. III. the average size bank is larger than other depository institutions. a. I only b. I and II only c. I and III only d. II and III only e. I, II, and III
Which of the following statements is NOT true? O Small banks typically focus on the retail side O Large banks usually engage in both retail and wholesale bankingO Large banks tend to hold more equity than do small banksO Large banks tend to diversify their operations more than small banks
Which of the following statements are true?I. Money markets are used to facilitate the transfer of short-term funds from individuals, corporations, or governments with excess funds to those with deficient funds. Even investors who focus on long-term securities tend to hold some money market securities because this enables them to maintain liquidity.II. Financial institutions manage their liquidity by participating in money markets. They may issue moneymarket securities when they experience cash shortages and need to boost liquidity. They can also sell holdings of money market securities to obtain cash.III. The value of a money market security represents the future value of the present cash flows generated by that security. Since money market securities represent debt, their expected cash flows are typically known.IV. The pricing of money market securities changes in response to a shift in the required rate of return by investors. The required rate of return changes in response to…
The term ‘loanable funds' refers to: a. only those funds loaned by one bank to another bank. b. only those funds loaned to banks by the public. c. only those funds loaned to banks by the central bank. d. all those funds changing hands between the lenders and borrowers in the financial markets.
If the deposits/loans ratio is relatively high for a bank, this implies an emphasis on:a. securities to finance loansb. deposit sources of funds to finance loansc. decreasing the quantity of loans outstandingd. high deposit to equity
What are some of the ways that banks can borrow short-term funds when they need "liquidity"?(Select all that apply; three of the answers below are correct.) Reference: Chapters 11 & 12 They can borrow directly from the Securities & Exchange Commission through the "regulatory" market. They can borrow from the Department of Treasury through the "Treasury" window. They can borrow another bank's reserves through the "fed funds" market. The can engage in a "sale & repurchase agreement" (or "repo") by selling some of their securities to another financial insitution and promising to buy them back the next day. They can borrow directly from the Federal Reserve through the "discount window".
Which of the following is NOT an advantage of depositing funds into a bank account (compared to directly purchasing corporate bonds and shares): Options 1. Higher transactions costs 2. Monitoring performed by the bank on behalf of the depositor 3. Better liquidity if funds are needed quickly 4. Efficient payment services 5.Reduced price risk if funds are needed immediately
Minimum capital requirement is a popular tool for bank regulation around the world. Some commented argue for differential capital requirements with the size and the systemic importance of financial institutions as the key discriminating factor. What are the basic arguments for increasing capital requirements at large commercial banks? In what ways will depositors, stockholders, and society in general benefit? How might each group be disadvantaged? As commercial banks enter new lines of business such as brokerage, how much additional capital should be required? Should these new lines of business be insured under a depository insurance scheme? Why or why not? Give examples from today's financial marketplace.
Secondary Intermediaries are called as such because they depend heavily on other financial intermediaries like commercial banks to loanable funds. Included in this category are finance companies, mortgage banks, and real estate investment trusts. It is true or false?
Banks improves the liquidity of the bank by a. Purchasing more assets of the bank b. Increasing the profit rates on saving accounts c. Generating additional income from investment d. By reducing the interest rates on loan
What is the difference between Investment Banks and regular Banks? explain one small paragraph.
If the deposits/loans ratio is relatively high for a bank, this implies an emphasis on:a. securities to finance loansb. deposit sources of funds to finance loansc. decreasing the quantity of loans outstandingd. high deposit to equity Volatile liabilities in the Bank’s performance report include all of the following EXCEPT:a. checking accountsb. large CDsc. purchased depositsd. deposit sources of funds