Question 1

Discuss the TARP Capital Purchase Program.

Accepted Answer

The TARP Capital Purchase Program, also

Question 2

Use the following information for questions 
 $\begin{array}{l|r|l|lr}
\text { Bank Assets }&&\text { Bank Liabilities }\
\hline\text { Cash and Treasury Securities } & \$ 2,500 & \text { Deposits } & \$ & 13,800 \
\hline \text { Repurchase Agreements } & \$ 1,000 & \text { Subordinated Debt } & \$ & 250\
\hline \text { Municipal Bonds } & \$ 1,500 & \text { Cumulative Preferred Stock } & \$ & 200 \
\hline \text { Single Family Home Mortgages } & \$ 2,700 & \text { Common Stock } & \$ & 100 \
\hline \text { Commercial Loans } & \$ 4,000 & \text { Common Stock Surplus } & \$ & 300\
\hline\text { Agricultural Loans } & \$ 1,500 & \text { Retained Earnings } & \$ & 350 \
\hline \text { Allowance for Loan Loss } & \$(350) & & &\
\hline \text { Bank Buildings } & \$ 2,000 \
\hline \text { Goodwill } & \$ 150 \
\hline \text { Total } & \$ 15,000&&\$15,000\
\end{array}$
-How much Tier 1 capital does the bank have?

Accepted Answer

A)  $100 
B)  $400 
C)  $450 
D)  $750 
E)  $950 
A)  $100 
B)  $400 
C)  $450 
D)  $750 
E)  $950

Question 3

Which of the following is a hybrid form of equity that effectively pays dividends that are tax deductible and is considered Tier 1 capital?

Accepted Answer

A)  Common stock 
B)  Preferred stock 
C)  Trust preferred stock 
D)  Leases 
E)  Trust subordinated debt 
A)  Common stock 
B)  Preferred stock 
C)  Trust preferred stock 
D)  Leases 
E)  Trust subordinated debt

Question 4

Approximately what percentage of commercial banks were currently considered well capitalized at the end of 2007?

Accepted Answer

A)  94% 
B)  84% 
C)  74% 
D)  64% 
E)  54% 
A)  94% 
B)  84% 
C)  74% 
D)  64% 
E)  54%

Question 5

Use the following information for questions 
 $\begin{array}{l|r|l|lr}
\text { Bank Assets }&&\text { Bank Liabilities }\
\hline\text { Cash and Treasury Securities } & \$ 2,500 & \text { Deposits } & \$ & 13,800 \
\hline \text { Repurchase Agreements } & \$ 1,000 & \text { Subordinated Debt } & \$ & 250\
\hline \text { Municipal Bonds } & \$ 1,500 & \text { Cumulative Preferred Stock } & \$ & 200 \
\hline \text { Single Family Home Mortgages } & \$ 2,700 & \text { Common Stock } & \$ & 100 \
\hline \text { Commercial Loans } & \$ 4,000 & \text { Common Stock Surplus } & \$ & 300\
\hline\text { Agricultural Loans } & \$ 1,500 & \text { Retained Earnings } & \$ & 350 \
\hline \text { Allowance for Loan Loss } & \$(350) & & &\
\hline \text { Bank Buildings } & \$ 2,000 \
\hline \text { Goodwill } & \$ 150 \
\hline \text { Total } & \$ 15,000&&\$15,000\
\end{array}$
-How much Tier 2 capital does the bank have?

Accepted Answer

A)  $200 
B)  $450 
C)  $550 
D)  $800 
E)  $1100 
A)  $200 
B)  $450 
C)  $550 
D)  $800 
E)  $1100

Question 6

Which of the following is not a Category 1 (Risk Rate = 0%) balance sheet asset?

Accepted Answer

A)  Currency in transit. 
B)  U.S. Treasury securities. 
C)  Cash items in the process of collection. 
D)  Claims unconditionally guaranteed by the U.S. government. 
E)  All of the above are Category 1 (Risk Rate = 0%) assets. 
A)  Currency in transit. 
B)  U.S. Treasury securities. 
C)  Cash items in the process of collection. 
D)  Claims unconditionally guaranteed by the U.S. government. 
E)  All of the above are Category 1 (Risk Rate = 0%) assets.

Question 7

What constitutes Tier 2 capital varies substantially between countries.

Accepted Answer

A) True 
 B)False

Question 8

Under the current capital requirements, assets in Category 3, such as 1-4 family real estate loans, have an effective total capital-to-total-assets ratio of:

Accepted Answer

A)  1.6%. 
B)  2.0%. 
C)  4.0%. 
D)  8.0%. 
E)  8.6%. 
A)  1.6%. 
B)  2.0%. 
C)  4.0%. 
D)  8.0%. 
E)  8.6%.

Question 9

Prior to the Basel Agreement, capital requirements were established without regard to:

Accepted Answer

A)  the bank's liquidity risk. 
B)  the bank's asset quality. 
C)  the size of the bank's assets. 
D)  the bank's operational risk. 
E)  the bank's interest rate risk. 
A)  the bank's liquidity risk. 
B)  the bank's asset quality. 
C)  the size of the bank's assets. 
D)  the bank's operational risk. 
E)  the bank's interest rate risk.

Discuss the TARP Capital Purchase Program.

Which of the following is a hybrid form of equity that effectively pays dividends that are tax deductible and is considered Tier 1 capital?

Approximately what percentage of commercial banks were currently considered well capitalized at the end of 2007?

Which of the following is not a Category 1 (Risk Rate = 0%) balance sheet asset?

What constitutes Tier 2 capital varies substantially between countries.

Under the current capital requirements, assets in Category 3, such as 1-4 family real estate loans, have an effective total capital-to-total-assets ratio of:

Prior to the Basel Agreement, capital requirements were established without regard to:

Banking and the Financial Services Industry

Government Policies and Regulation

Analyzing Bank Performance

Managing Noninterest Income and Noninterest Expense

The Performance of Nontraditional Banking Companies

Pricing Fixed-Income Securities

Managing Interest Rate Risk: Gap and Earnings Sensitivity

Managing Interest Rate Risk: Duration Gap and Economic Value of Equity

Using Derivatives to Manage Interest Rate Risk

Funding the Bank

Managing Liquidity

Overview of Credit Policy and Loan Characteristics

Evaluating Commercial Loan Requests and Managing Credit Risk

Evaluating Consumer Loans

Managing the Investment Portfolio

Global Banking Activities

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Exam 12: The Effective Use of Capital

Discuss the TARP Capital Purchase Program.

Which of the following is a hybrid form of equity that effectively pays dividends that are tax deductible and is considered Tier 1 capital?

Approximately what percentage of commercial banks were currently considered well capitalized at the end of 2007?

Which of the following is not a Category 1 (Risk Rate = 0%) balance sheet asset?

What constitutes Tier 2 capital varies substantially between countries.

Under the current capital requirements, assets in Category 3, such as 1-4 family real estate loans, have an effective total capital-to-total-assets ratio of:

Prior to the Basel Agreement, capital requirements were established without regard to:

Banking and the Financial Services Industry

Government Policies and Regulation

Analyzing Bank Performance

Managing Noninterest Income and Noninterest Expense

The Performance of Nontraditional Banking Companies

Pricing Fixed-Income Securities

Managing Interest Rate Risk: Gap and Earnings Sensitivity

Managing Interest Rate Risk: Duration Gap and Economic Value of Equity

Using Derivatives to Manage Interest Rate Risk

Funding the Bank

Managing Liquidity

Overview of Credit Policy and Loan Characteristics

Evaluating Commercial Loan Requests and Managing Credit Risk

Evaluating Consumer Loans

Managing the Investment Portfolio

Global Banking Activities

Filters