Net income measured as a percentage of assets is Answer return on equity (ROE).

Question

Net income measured as a percentage of assets is
Answer







return on equity (ROE).








return on liabilities (ROL).








return on investment (ROI).








return on assets (ROA).

.

4 points


Question 2




Changes in ____ are a factor affecting the value of a commercial bank over which the bank has some control.
Answer







economic growth








the risk-free interest rate








industry conditions








management abilities

.

4 points


Question 3




For a given level of return on assets, a bank with a higher level of capital will have a lower
Answer







return on equity.








leverage measure.








noninterest income.








liquidity.

.

4 points


Question 4




Interest income generated from all assets is called
Answer







net interest margin.








the spread.








gross interest income.








net interest income.

.

4 points


Question 5




If a bank increases its provisions for loan losses, its interest income is ____, and its noninterest income is ____.
Answer







reduced; not affected








reduced; reduced








not affected; reduced








not affected; not affected

.

4 points


Question 6




Gross interest expense is affected by
Answer







market interest rates.








the composition of assets held by the bank.








fee services provided by the bank.








capital ratio of the bank

.

4 points


Question 7




If a bank is too ____ in attempting to avoid loan losses, its net interest margin will be ____.
Answer







conservative; high








conservative; low








aggressive; high








aggressive; low

.

4 points


Question 8




A(n) ____ in interest rates could reduce a commercial bank's expected cash flows because the interest paid on deposits may ____ than the interest earned on loans and investments.
Answer







increase; increase to a greater degree








increase; increase to a lesser degree








decrease; increase to a greater degree








decrease; increase to a lesser degree

.

4 points


Question 9




Banks A and B have the same net income. Bank A has a higher capital ratio and more assets than B. Bank A's return on assets is ____ than Bank B's. Bank A's return on equity is ____ than Bank B's.
Answer







higher; higher








higher; lower








lower; higher








lower; lower

.

4 points


Question 10




Noninterest income as a percentage of assets has been consistently lowest for banks that
Answer







focus on providing loans.








offer substantial insurance services.








offer substantial securities-related services.








offer substantial advisory services.

.

4 points


Question 11




Credit unions obtain most of their funds from
Answer







issuing common stock.








retained earnings.








share deposits by members.








issuing long-term bonds.

.

4 points


Question 12




The ____ savings institutions hold the most assets in aggregate.
Answer







stock owned








mutual








closely-held








privatized

.

4 points


Question 13




The National Credit Union Share Insurance Fund (NCUSIF) requires all
Answer







federal-chartered credit unions to obtain insurance from the NCUSIF.








state-chartered credit unions to obtain insurance from the NCUSIF.








credit unions to pay an annual supplemental insurance premium each year.








depository institutions to pay a supplemental insurance premium each year.

.

4 points


Question 14




Checkable accounts offered by credit unions are called
Answer







NOW accounts.








money market deposit accounts.








share certificates.








share drafts.

.

4 points


Question 15




The sensitivity of cost of funds to interest rate movements has been
Answer







greater for credit unions than savings institutions.








greater for credit unions than commercial banks.








lower for credit unions than for savings institutions or commercial banks.








similar for credit unions as savings institutions and commercial banks.

.

4 points


Question 16




Credit unions are technically owned by the
Answer







shareholders.








bondholders.








government.








depositors.

.

4 points


Question 17




Federally-chartered savings institutions are regulated by the
Answer







Securities and Exchange Commission (SEC).








Federal Reserve.








Office of Thrift Supervision (OTS).








Comptroller of the Currency.

.

4 points


Question 18




____ are non-profit organizations composed of members with a common bond.
Answer







Credit unions








Savings banks








Savings and loan associations








Commercial banks

.

4 points


Question 19




A contract that allows for the purchase of a specified debt security for a specified price at a future point in time is known as a(n)
Answer







interest rate futures contract.








interest rate swap contract.








interest cap contract.








security swap contract.

.

4 points


Question 20




The primary use of credit union funds is
Answer







loans to credit union members.








the purchase of government securities.








the purchase of agency securities.








the purchase of corporate bonds.

Explanation / Answer

return on equity (ROE)

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