MGT411 Quiz 3 by VU Sparky

Q1. Zero inflation is bad because

1. Both option A(1) & B (2)
2. None of given options
3. It increase risk of deflation
4. It increase the default of loans

Q2. Which of the following is included in bank’s liabilities?

1. Deposits of customers
2. Deposits at the central bank
3. Balances with other banks
4. Treasury bills

Q3. Return on Assets indicates:

1. Ratio of profit with assets
2. Profitability and net worth
3. Required rate of return
4. Ratio of revenue with assets

Q4. There are _________ type/s of life insurance.

1. 2
2. 4
3. 1

5. d.3

Q6. One thing that is true about economic policy in the U.S. is:

1. Monetary and Fiscal policy often times conflict
2. Monetary policy ultimately controls fiscal policy since the Fed controls the money supply
3. Fiscal and monetary policy never conflict
4. Fiscal policy ultimately controls monetary policy since Congress can control the Fed's budget

Q7. We can calculate -------------------- of a bank by taking difference between bank’s assets and bank’s liabilities

1. Net Worth
2. Net borrower
3. Vault cash
4. Net investment

Q8. Which of the following is included in the government-sponsored enterprise?

1. Small and Medium Enterprise (SME)
2. House Building Finance Corporation (HBFC)
3. Khushhali Bank
4. All of the given options

Q9. Inflation creates which kind of risk specifically?

1. Optional risk
2. Non systematic risk
3. Systematic risk
4. None of above

Q10. In "gap analysis," the gap is the difference between a banks’s:

1. Assets and liabilities
2. Long-term securities and short-term securities
3. Deposits and loans
4. Rate-sensitive assets and rate-sensitive liabilities

Q11. Banks clearly specify the amount of risk that any individual trader may take, to manage -------------------

1. Sovereign risk
2. Trading risk
3. Operational risk
4. Liquidity risk

Q12. Banks can also borrow by using a repurchase agreement or repo, which is a short-term _____________.

1. Personal loan
2. Corporate loan
3. Collateralized loan
4. Discount loan

Q13. Which one of the following method is not included in credit risk analysis?

1. Check borrower’s credit history
2. Demand of collateral
3. Screen loan application
4. Use interest rate swaps

Q14. Which of the following is NOT included in the assets of commercial banks?

1. Bills payable
2. Cash Items
3. Securities
4. Reserves

Q15. Which one of the following is NOT non depository institution?

1. Finance Companies
2. Insurance Companies
3. Securities Firms
4. Credit unions

Q16. Profitability of one bank may vary from the profitability of other banks due to following factor/s:

1. Size of the bank
2. All of the given options
3. Level of professional activities
4. Efficient cost management

Q17. If a bank earns $22,000 net profit after taxes and has $412,000 in assets, what is its return on assets ratio?

1. 2.8%