Question 1

In which of the following ways can a bank acquire liquidity?

Accepted Answer

A)   Selling Fed funds
B)   Investing in repurchase agreements
C)   Increasing the number of loans outstanding
D)   Selling Treasury securities
E)   Buying back outstanding bank stock

Question 2

Which of the following is a discretionary factor that will decrease a bank's daily reserves held at the Federal Reserve?

Accepted Answer

A)   Remittances charged
B)   Federal funds purchased
C)   Yesterday's immediate cash letter
D)   Currency received from Federal Reserve
E)   Deficit in local clearinghouse

Question 3

Vault cash generally satisfies a bank's liquidity needs.

Accepted Answer

A) True 
 B)False

Question 4

Respondent banks buy services from correspondent banks.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not an advantage of larger cash balances for a bank?

Accepted Answer

A)   Larger cash balances reduce the need to borrow at the discount window.
B)   Larger cash balances reduce the risk of bank runs.
C)   Larger cash balances reduce the risk of paying penalties to the Federal Reserve.
D)   Larger cash balances increase reserve balances.
E)   Larger cash balances reduce a bank's interest expense.

Question 6

What is a "bankers' bank"?

Accepted Answer

A "bankers' bank" refers to a specific t...

Question 7

How can pledging requirements make bank assets less liquid?

Accepted Answer

Pledging requirements can make bank asse...

Question 8

More liquid assets tend to earn lower returns, everything else the same.

Accepted Answer

A) True 
 B)False  True

Question 9

A bank is currently exactly meeting its reserve requirements of 10%. If the bank has a deposit inflow of $10,000,000, what is the impact on its required reserve position?

Accepted Answer

A)   It now has excess reserves in the amount of $9,000,000.
B)   It now has excess reserves in the amount of $10,000,000.
C)   It is now deficient $1,000,000 in required reserves.
D)   It is now deficient $9,000,000 in required reserves.
E)   There would be no impact on the bank's required reserves.

Question 10

Which of the following is a non-discretionary factor that will increase a bank's daily reserves held at the Federal Reserve?

Accepted Answer

A)   Federal funds sold
B)   Receiving a discount window loan
C)   Remittances charged
D)   Security sales
E)   Deposits from the U.S. Treasury

Question 11

The two-week period during which a bank must hold sufficient legal reserves is called the:

Accepted Answer

A)   deposit computation period.
B)   deposit maintenance period.
C)   vault cash computation period.
D)   base computation period.
E)   maintenance period.

Question 12

Which of the following is not considered a viable long-term source of bank liquidity?

Accepted Answer

A)   Federal funds sold
B)   Short-term Treasury securities
C)   Cash
D)   High quality short-term municipal securities
E)   Reverse repurchase agreements

Question 13

The ease of converting an asset to cash with a minimum of loss is known as:

Accepted Answer

A)   asset liquidity.
B)   volatile liquidity.
C)   core liquidity.
D)   liability liquidity.
E)   non-core liquidity.

Question 14

Core deposits tend to be more interest elastic than volatile liabilities.

Accepted Answer

A) True 
 B)False

Question 15

In determining reserves, the banks and the Federal Reserve currently use:

Accepted Answer

A)   a leading reserve accounting system.
B)   a contemporaneous reserve accounting system.
C)   a lagged reserve accounting system.
D)   an actual reserve accounting system.
E)   a holding reserve accounting system.

Question 16

Which of the following is not a measure of liability liquidity?

Accepted Answer

A)   Total equity to total assets
B)   Core deposits to total assets
C)   Total deposits to total assets
D)   Federal funds sold to total assets
E)   Loan losses to deposits.

Question 17

Collateral is required against each of the following liabilities except ________.

Accepted Answer

A)   securities sold under agreement to repurchase
B)   borrowings from the Federal Reserve discount window
C)   U.S. Treasury securities
D)   public deposits owned by the U.S. Treasury
E)   Federal Home Loan Bank advances C

Question 18

Discuss the advantages and disadvantages of a bank holding less cash.

Accepted Answer

There are several advantages and disadva...

Question 19

Which of the following is not a measure of liability liquidity?

Accepted Answer

A)   Total loans to total assets
B)   Total deposits to total assets
C)   Total equity to total assets
D)   Loan losses to net loans
E)   Core deposits to total assets A

Question 20

Why do banks prefer a lagged reserve accounting system to a contemporaneous reserve accounting system?

Accepted Answer

Banks generally prefer a lagged reserve ...

Exam 11: Managing Liquidity

In which of the following ways can a bank acquire liquidity?

Correct AnswerverifiedShow Answer

Which of the following is a discretionary factor that will decrease a bank's daily reserves held at the Federal Reserve?

Correct AnswerverifiedShow Answer

Vault cash generally satisfies a bank's liquidity needs.

Correct AnswerverifiedShow Answer

Respondent banks buy services from correspondent banks.

Correct AnswerverifiedShow Answer

Which of the following is not an advantage of larger cash balances for a bank?

Correct AnswerverifiedShow Answer

What is a "bankers' bank"?

Correct AnswerAnswered by ExamLex AIA "bankers' bank" refers to a specific t...View AnswerShow Answer

How can pledging requirements make bank assets less liquid?

Correct AnswerAnswered by ExamLex AIPledging requirements can make bank asse...View AnswerShow Answer

More liquid assets tend to earn lower returns, everything else the same.

Correct AnswerverifiedTrue

A bank is currently exactly meeting its reserve requirements of 10%. If the bank has a deposit inflow of $10,000,000, what is the impact on its required reserve position?

Correct AnswerverifiedShow Answer

Which of the following is a non-discretionary factor that will increase a bank's daily reserves held at the Federal Reserve?

Correct AnswerverifiedShow Answer

The two-week period during which a bank must hold sufficient legal reserves is called the:

Correct AnswerverifiedShow Answer

Which of the following is not considered a viable long-term source of bank liquidity?

Correct AnswerverifiedShow Answer

The ease of converting an asset to cash with a minimum of loss is known as:

Correct AnswerverifiedShow Answer

Core deposits tend to be more interest elastic than volatile liabilities.

Correct AnswerverifiedShow Answer

In determining reserves, the banks and the Federal Reserve currently use:

Correct AnswerverifiedShow Answer

Which of the following is not a measure of liability liquidity?

Correct AnswerverifiedShow Answer

Collateral is required against each of the following liabilities except ________.

Correct AnswerverifiedC

Discuss the advantages and disadvantages of a bank holding less cash.

Correct AnswerAnswered by ExamLex AIThere are several advantages and disadva...View AnswerShow Answer

Which of the following is not a measure of liability liquidity?

Correct AnswerverifiedA

Why do banks prefer a lagged reserve accounting system to a contemporaneous reserve accounting system?

Correct AnswerAnswered by ExamLex AIBanks generally prefer a lagged reserve ...View AnswerShow Answer

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Answered by ExamLex AI
A "bankers' bank" refers to a specific t...
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Answered by ExamLex AI
Pledging requirements can make bank asse...
View Answer

Correct Answer
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True

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C

Correct Answer
Answered by ExamLex AI
There are several advantages and disadva...
View Answer

Correct Answer
verified
A

Correct Answer
Answered by ExamLex AI
Banks generally prefer a lagged reserve ...
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