Commercial Banks' Financial Statements and Analysis Questions with Answers
Chapter 12 Commercial Banks’ Financial Statements and Analysis
True/False Questions
1.A wholesale bank is one that focuses its business activities on commercial bankingrelationships.Answer: True Page: 351 Level: Easy
2.In 2004 Bank of America, headquartered in Charleston, West Virginia, was thenation 's sixth largest bank.Answer: False Page: 351-352 Level: Medium
3.Banks have higher leverage than most manufacturing firms.Answer: True Page: 352,355 Level: Easy
4.Loans to consumers and to individuals are jointly termed C&I loans on a bank balancesheet.Answer: False Page: 355 Level: Easy
5.Currency in the process of collection is checks that the bank owes to other banks buthas not yet paid.Answer: True Page: 352 Level: Medium
6.C&I loans are loans to businesses used to finance capital needs, equipment purchasesand plant expansions.Answer: True Page: 355 Level: Easy
7.The provision for loan loss account is actual loan losses less loan recoveries in a giventime period.Answer: False Page: 356, 366 Level: Medium
8.The allowance for loan and lease losses is bank management 's estimate of the amountof gross loans and leases that will not be repaid to the bank.Answer: True Page: 355-356 Level: Medium
9.In ratio analysis, the profit margin times the asset utilization ratio equals return onassets.Answer: True Page: 371 Level: Medium
10.Loans are the major item on a bank 's balance sheet, and they generate the largestamount of revenue.Answer: True Page: 354 Level: Easy
11.Unearned income on a loan is the amount of income that the bank has received on aloan from a customer but has not yet recorded on the income statement.Answer: True Page: 355-356 Level: Easy
12.Banks generally pay higher interest rates on NOW accounts than on MMDAs.Answer: False Page: 356 Level: Easy
13.Wholesale CDs obtained from an investment house rather than directly from acustomer are referred to as brokered deposits.Answer: True Page: 357 Level: Easy
14.Financial standby letters of
True/False Questions
1.A wholesale bank is one that focuses its business activities on commercial bankingrelationships.Answer: True Page: 351 Level: Easy
2.In 2004 Bank of America, headquartered in Charleston, West Virginia, was thenation 's sixth largest bank.Answer: False Page: 351-352 Level: Medium
3.Banks have higher leverage than most manufacturing firms.Answer: True Page: 352,355 Level: Easy
4.Loans to consumers and to individuals are jointly termed C&I loans on a bank balancesheet.Answer: False Page: 355 Level: Easy
5.Currency in the process of collection is checks that the bank owes to other banks buthas not yet paid.Answer: True Page: 352 Level: Medium
6.C&I loans are loans to businesses used to finance capital needs, equipment purchasesand plant expansions.Answer: True Page: 355 Level: Easy
7.The provision for loan loss account is actual loan losses less loan recoveries in a giventime period.Answer: False Page: 356, 366 Level: Medium
8.The allowance for loan and lease losses is bank management 's estimate of the amountof gross loans and leases that will not be repaid to the bank.Answer: True Page: 355-356 Level: Medium
9.In ratio analysis, the profit margin times the asset utilization ratio equals return onassets.Answer: True Page: 371 Level: Medium
10.Loans are the major item on a bank 's balance sheet, and they generate the largestamount of revenue.Answer: True Page: 354 Level: Easy
11.Unearned income on a loan is the amount of income that the bank has received on aloan from a customer but has not yet recorded on the income statement.Answer: True Page: 355-356 Level: Easy
12.Banks generally pay higher interest rates on NOW accounts than on MMDAs.Answer: False Page: 356 Level: Easy
13.Wholesale CDs obtained from an investment house rather than directly from acustomer are referred to as brokered deposits.Answer: True Page: 357 Level: Easy
14.Financial standby letters of