Exam 6: Measuring and Evaluating the Performance of Banks and Their Principal Competitors

__________________________ risk is one that deals with the quality of the bank's assets and,in particular,the bank's loans.

________________________ refers to the uncertainty regarding a financial firm's earnings due to failures in computer systems,errors,misconduct by employees,lightning strikes,and similar events.

If a bank adds more full-time employees and posts the same net operating income,its employee productivity ratio,as defined in the text,must fall.

Which of the following statements is true regarding Subchapter S firms?

Following is the information listed below for Carter State Bank.What is the bank's ROA? Net income \ 55 million Total operating revenue \ 650 million Total assets \ 4,055 million Total equity capital \ 350 million

__________________________ measures the amount of debt or leverage a bank has and is one part of the evaluation of the bank's ROE.It is generally a number larger than one.

Which of the following ratios can be used to measure a bank's credit risk?

Which of the following would be the best example of a ratio used to examine the cost of one of a bank's liabilities?

The FDIC is a private credit rating company which provides credit ratings on the short term and long term securities issued by banks.

Everett Bank has just learned that there is a disgruntled former employee who has created a blog that is telling everyone that Everett Bank has halved their customer service representatives and therefore customers have great difficulty getting through to a relationship officer when there is a problem with their account.Everett is worried that it may lose customers as a result of such a write-up.Which type of risk would this be an example of?

The Garic State Bank of New Orleans has been under water for three weeks since hurricane Katrina hit the state.The lobby is full of mud and other debris.Many of the valuables stored in the bank's safety deposit boxes have been ruined.John Garic,the President and CEO of the bank,has been working night and day to reopen the bank.What type of risk has John been dealing with?

The __________________________ is a standardized report provided by federal regulators which reports the balance sheet,income statement,and other data for all federally supervised banks.It also contains information on peer institutions.

Loans past due for 90 days or more are classified as nonperforming assets.

Gerald Wilkens is planning to invest in the stock of Tallahassee State Bank.He is examining the ratios of cash assets and government securities to total assets and purchased funds to total assets.What type of risk is Gerald attempting to measure with these ratios?

A financial institution with a low ROA can achieve a relatively high ROE through:

The ratio of uninsured deposits to total deposits is considered to be a measure of credit risk in banking.

The risk that a financial institution may be forced to borrow emergency funds excessive cost to cover its immediate cash needs is known as:

During the 1980s,the Comptroller of the Currency,the Federal Reserve and the FDIC created a new tool called the Uniform Bank Performance Report to help them analyze the financial condition of banks.