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Bank Financial Concepts Quiz

The document contains exercises related to banking concepts, including fill-in-the-blank questions about financial terms and definitions. It also includes true or false statements regarding bank income reports and loan loss provisions. Additionally, there are calculations required to determine the Allowance for Loan Losses and various income metrics for a bank.

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Thanh Mai
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10 views1 page

Bank Financial Concepts Quiz

The document contains exercises related to banking concepts, including fill-in-the-blank questions about financial terms and definitions. It also includes true or false statements regarding bank income reports and loan loss provisions. Additionally, there are calculations required to determine the Allowance for Loan Losses and various income metrics for a bank.

Uploaded by

Thanh Mai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Minitest chapter 2

Part 1: Fill in the blank. (3 marks)


1. The short-term securities of the bank, including T-Bills and commercial paper, are often
called __________________________ because they are the second line of defense to meet
demands for cash.
2. __________________________ is a noncash expense on the bank's income statement
which allows the bank to account for future bad loans.
3. __________________________ is the difference between interest income and interest
expenses for a financial institution.
4. A financial institution often records the value of its assets and liabilities at
_______________ which is the original or historical cost of the asset.
5. _____________________ is the sum of all outstanding IOU's owed to the bank in the
form of consumer, real estate, commercial and agriculture loans as well as other types of
credit extensions.
6. ____________________is direct and indirect investment in real estate. These are
properties obtained for compensations for nonperforming loans.

Part 2: True or False, Explain shortly (no longer than 500 words) (3 marks)
1. On a bank's Report of Income deposit on current tracsaction accounts are financial inputs.
2. Nonperforming loan balances are derived by deducting the allowance for loan losses and
unearned discounts from gross loans.
3. Recoveries on loans previously charged off are added to the Provision for Loan Losses
(PLL) account on a bank's income statement.

Part 3: Exercise (4 marks)


1. A bank which starts with ALL of $1.48 million at the beginning of the year, charges off
worthless loans of $.94 million during the year, recovers $.12 million on loans previously
charged off and charges current income for a $1.02 million provision for loan losses will have
an ALL at the end of the year of?
2. A bank that has total interest income of $67 million and total noninterest income of $14
million. This bank has total interest expenses of $35 million and total noninterest expenses
(excluding PLL) of $28 million. Its provision for loan losses is $6 million and its taxes are
$5. What is this bank's net interest income? net noninterest income? net income?

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