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____ may antagonize customers and thus can be a very costly way of acquiring funds to
meet an unexpected deposit outflow.
A) Selling securities
B) Selling loans
C) Calling in loans
D) Selling negotiable CDs
Answer: C
Diff: 1 Type: MC Page Ref: 302 - 303
Skill: Recall
Objective List: 13.2 Specify how banks make profits by accepting deposits and making loans
Banks hold excess and secondary reserves to ____.
A) reduce the interest-rate risk problem
B) provide for deposit outflows
C) satisfy margin requirements
D) achieve higher earnings than they can with loans
Answer: B
Diff: 1 Type: MC Page Ref: 303
Skill: Recall
Objective List: 13.2 Specify how banks make profits by accepting deposits and making loans
Which of the following statements most accurately describes the task of bank asset
management?
A) Banks seek the highest returns possible subject to minimizing risk and making adequate
provisions for liquidity
B) Banks seek to have the highest liquidity possible subject to earning a positive rate of return on
their operations
C) Banks seek to prevent bank failure at all cost; since a failed bank earns no profit, liquidity
needs supersede the desire for profits
D) Banks seek to acquire funds in the least costly way
Answer: A
Diff: 2 Type: MC Page Ref: 303
Skill: Recall
Objective List: 13.2 Specify how banks make profits by accepting deposits and making loans
The goals of bank asset management include ____.
A) maximizing risk
B) minimizing liquidity
C) lending at high interest rates regardless of risk
D) purchasing securities with high returns and low risk
Answer: D
Diff: 1 Type: MC Page Ref: 303
Skill: Recall
Objective List: 13.2 Specify how banks make profits by accepting deposits and making loans