Answer Key
Question 1 of 15 | 1.0 Points |
If borrowers with the most risky investment projects are more likely to seek bank loans than borrowers with the safest investment projects, banks face the problem of ________. |
| | | A. adverse credit risk | | | | | B. adverse selection | | | | | C. moral hazard | | | | | D. conflict of interest | |
Answer Key: B Question 2 of 15 | 1.0 Points |
Banks' attempts to solve adverse selection and moral hazard problems help explain loan management principles such as |
| | | A. screening and monitoring of loan applicants. | | | | | B. collateral and compensating balances. | | | | | C. credit rationing. | | | | | D. only A and B of the above. | |
Answer Key: D Question 3 of 15 | 1.0 Points |
Banks attempt to screen good credit risks from bad to reduce the incidence of loan defaults. To do this, banks |
| | | A. specialize in lending to certain industries or regions. | | | | | B. write restrictive covenants into loan contracts. | | | | | C. expend resources to acquire accurate credit histories of their potential loan customers. | | | | | D. do all of the above. | |
Answer Key: D Question 4 of 15 | 1.0 Points |
Which of the following are not generally rate-sensitive assets? |
| | | A. securities with a maturity of less than one year | | | | | B. variable-rate mortgages | | | | | C. fixed-rate mortgages | | | | | D. all of the above are rate-sensitive assets | | | | | E. none of the above are rate-sensitive assets | |
Answer Key: C Question 5 of 15 | 1.0 Points |
Liabilities that are partially, but not fully, rate-sensitive include ________. |
| | | A. checkable deposits | | | | | B. federal funds | | | | | C. non-negotiable CDs | | | | | D. fixed-rate mortgages | | | | | E. money market deposit accounts | |
Answer Key:
If borrowers with the most risky investment projects are more likely to seek bank loans than borrowers with the safest investment projects, banks face the problem of ________. |
| | | A. adverse credit risk | | | | | B. adverse selection | | | | | C. moral hazard | | | | | D. conflict of interest | |
Answer Key: B Question 2 of 15 | 1.0 Points |
Banks' attempts to solve adverse selection and moral hazard problems help explain loan management principles such as |
| | | A. screening and monitoring of loan applicants. | | | | | B. collateral and compensating balances. | | | | | C. credit rationing. | | | | | D. only A and B of the above. | |
Answer Key: D Question 3 of 15 | 1.0 Points |
Banks attempt to screen good credit risks from bad to reduce the incidence of loan defaults. To do this, banks |
| | | A. specialize in lending to certain industries or regions. | | | | | B. write restrictive covenants into loan contracts. | | | | | C. expend resources to acquire accurate credit histories of their potential loan customers. | | | | | D. do all of the above. | |
Answer Key: D Question 4 of 15 | 1.0 Points |
Which of the following are not generally rate-sensitive assets? |
| | | A. securities with a maturity of less than one year | | | | | B. variable-rate mortgages | | | | | C. fixed-rate mortgages | | | | | D. all of the above are rate-sensitive assets | | | | | E. none of the above are rate-sensitive assets | |
Answer Key: C Question 5 of 15 | 1.0 Points |
Liabilities that are partially, but not fully, rate-sensitive include ________. |
| | | A. checkable deposits | | | | | B. federal funds | | | | | C. non-negotiable CDs | | | | | D. fixed-rate mortgages | | | | | E. money market deposit accounts | |
Answer Key: