Specialization

Why are loans such a high percentage of total assets at the typical bank? What four broad classes of loans do banks engage in?

Explain three types of good financial analysis that must be conducted by the credit officer in the bank while performing their periodic review against their business customer.

Banking

Banking may be subdivided into at least three categories of banks. Match the definitions with the appropriate name. 1. I. A bank that specializes in retail or consumer banking in a local market 2. II. A bank that engages in a complete array of wholesale commercial banking activities and usually also provides retail banking services 3. III. A bank that is located in a financial center and relies on nondeposit or borrowed sources of funds for a significant portion of its liabilities O Money center bank, super-regional bank; community bank O Super-regional bank, money center bank, community bank O Community bank; super-regional bank; money center bank Community bank; money center bank; super-regional bank Money center bank; community bank; super-regional bank

4. A study of history shows that one of the first services offered by banks was Equipment Leasing O Sale of Real Estate O Security Brokerage and Underwriting O Currency Exchange

The following is true of deposit insurance, except   a Depositor no longer has incentives to monitor the activities of the bank         b Moral hazard dissuades the bank manager from taking risky projects        c In theory, regulators have replaced depositors in the monitoring of banks       d Moral hazard encourages the bank manager to take on risky projects

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