(write only the letter a/ your answer page), (6 points) 1. What are the general implications...

 

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(write only the letter a/ your answer page), (6 points) 1. What are the general implications for banks providing more loans and investing less in government securities, other things being the same? a. Increase in return on assets and increase in liquidity b. Increase in return on assets and decrease in liquidity c. Decrease in return on assets and increase in liquidity d. Decrease in return on assets and decrease in liquidity For 2. Which of the following is (are) correct? a. In general, banks will invest more in government securities during weak economic conditions b. In general, banks will extend more loans during weak economic conditions c. Both of the above d. Neither a or b 3. In general, what are the implications for banks undertaking more off-balance sheet activities? a. Increase in fee income, increase in risk b. Increase in fee income, decrease in risk c. Decrease in fee income, increase in risk d. Decrease in fee income, decrease in risk (write only the letter a/ your answer page), (6 points) 1. What are the general implications for banks providing more loans and investing less in government securities, other things being the same? a. Increase in return on assets and increase in liquidity b. Increase in return on assets and decrease in liquidity c. Decrease in return on assets and increase in liquidity d. Decrease in return on assets and decrease in liquidity For 2. Which of the following is (are) correct? a. In general, banks will invest more in government securities during weak economic conditions b. In general, banks will extend more loans during weak economic conditions c. Both of the above d. Neither a or b 3. In general, what are the implications for banks undertaking more off-balance sheet activities? a. Increase in fee income, increase in risk b. Increase in fee income, decrease in risk c. Decrease in fee income, increase in risk d. Decrease in fee income, decrease in risk

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Q1 Loans are more remunerative than government securities but less liquid Hence for a bank pr... View the full answer