Question

1. Bank runs are unlikely when:

		A. the bank deposits are insured.
		B. bank capital standards are implemented

2. Which one the following is true?

		A. Tier I capital consists of claims senior to Tier II capital.
		B. Tier II capital consists of claims senior to Tier I capital.

3. The term “bank funding” refers to:

		A. The sources of financing for the bank’s assets.
		B. The types of loans a bank is allowed to make.

4. The risk weight for general obligation bonds is smaller than the risk weight for revenue bonds. This should imply that:

		A. General obligation bonds are riskier than revenue bonds.
		B. Revenue bonds are riskier than general obligation bonds .

Answer 1

Question 1 : A. the bank deposits are insured.

when the bank deposits are insured there is only less chance for a group withdrawel of money from the bank account

Question 2 : A. Tier I capital consists of claims senior to Tier II capital.

Tier 1 capital consists of shareholders' equity and retained earnings. and it is the banks heighest quality capital.

Question 3:  A. The sources of financing for the bank’s assets

bank make funds from the depositors , interest income, and fees

Question 4 : B. Revenue bonds are riskier than general obligation bonds

  All other things being equal, general obligation municipal bonds are safer than revenue bonds.