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(1) In the United States, banks are allowed to hold corporate stocks and junk bonds: T...

(1) In the United States, banks are allowed to hold corporate stocks and junk bonds: T or F? (2) Bank reserves consist of deposits and vault cash: T or F? (3) Treasury securities held by banks are sometimes called secondary reserves: T or F? (4) Banks’ interest earnings from fixed-rate loans and interest payments on fixed-rate deposits are directly affected by changes in interest rates: T or F? (5) The market value of interest-earning assets and interest-paying liabilities is affected by changes in market interest rates regardless of whether they have variable interest rates or fixed interest rates: T or F?

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Answer #1

1. In the United States, banks are allowed to hold corporate stocks and junk bonds: True

2. Bank reserves consist of deposits and vault cash: True

3.  Treasury securities held by banks are sometimes called secondary reserves: True

4.  Banks’ interest earnings from fixed-rate loans and interest payments on fixed-rate deposits are directly affected by changes in interest rates False

5.   The market value of interest-earning assets and interest-paying liabilities is affected by changes in market interest rates regardless of whether they have variable interest rates or fixed interest rates: False

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