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True or False
1. One of the company's sources of funds is its own
2. In a debt equity, there exists a debtor and creditor relationship.
3. Supplier's credit as a source of fund is advantageous both to the debtor and the creditor.
4. One can open a deposit account with a lending institution.
5.
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Solved in 4 steps
- In the case of a loan, the bank is the debtor and the customer is the creditor. Select one: i. True ii. Falsewhich of the following source of finance allows the holders to withdraw more than their balance ? a. Commercial Paper b. Bank Overdraft c. Credit card d. cash creditSelect TWO true statements about money.a. Base money is equal to cash plus commercial bank reserves with the central bankb. Cash is a liability of the central bankc. If a commercial bank makes a loan and credits the borrower's current account, then base money increasesd. Commercial bank reserves with the central bank appear as a liability in their balance sheets
- The financial system serves as the main venue to invest excess funds by savers. This is made through the means of accepting deposits and loan agreements with the use of financial instruments. It is true or false?Which one of the following statements is false?a. Consumer loans are loans banks advance to individuals.b. Loans are classed as liabilities on a bank’s balance sheet.c. Loans are classed as assets on a bank’s balance sheet.d. Deposits are classed as liabilities on a bank’s balance sheet.Customer loans are classified on a Depository Institution (DI)'s balance sheet as Select one: A. liabilities, because the customer may default on the loan. B. assets, because the DI earns servicing fees on the loan. C. assets, because the DI's major asset is its client base. D. assets, because DIs originate and monitor loan portfolios. E. liabilities, because the DI must transfer funds to the borrower at the initiation of the loan.
- If a company is worried about having enough cash to pay interest to their bondholders, rent to their landlords and wages to their employees. they are having:a. Solvency issuesb. Liquidity issuesc. Duration matching issuesIf the deposits/loans ratio is relatively high for a bank, this implies an emphasis on:a. securities to finance loansb. deposit sources of funds to finance loansc. decreasing the quantity of loans outstandingd. high deposit to equityThe debtor-creditor relationship is one where the customer instructs the bank to act on its behalf in a specified transaction (e.g. to buy or sell shares, Bonds or Treasury Bills) Select one: i. True ii. False
- 28. A financial institution that obtains most of its funds from deposits is a/an: A. investment bank B. commercial bank C. unit trust D. general insurerAll of the following are common ratio measures of bank liquidity EXCEPT:a. loans/depositsb. loans/nondeposit liabilitiesc. unencumbered liquid assets/nondeposit liabilitiesd fixed assets/loans Choose one correct answer please.(AACSB) AnalysisIdentify the categories used on a classified balance sheet to report assets and liabilities. How do youdetermine what goes into each category? Why would a banker considering a loan to your company want toknow whether an asset or liability is current or long-term?