1. Which of the following describes the primary function of commercial banks?

A) Offering financial advice to individuals

B) Providing loans and collecting deposits

C) Issuing government bonds

D) Selling insurance policies

2. What is the key difference between a commercial bank and a savings bank?

A) Commercial banks are owned by depositors, while savings banks are

owned by shareholders.

B) Commercial banks focus on large corporations, while savings banks focus

on small businesses and individuals.

C) Commercial banks only offer short-term loans.

D) Savings banks provide investment banking services.

3. Which of the following best describes the maturity transformation role of banks?

A) Converting long-term deposits to short-term loans

B) Converting short-term deposits to long-term loans

C) Converting low-risk investments to high-risk loans

D) Converting small deposits to large investments

4. Which type of bank is known for prioritizing community development and social
responsibility?

A) Investment banks

B) Cooperative banks

C) Commercial banks

D) Insurance companies

5. Which banking product is commonly used to provide short-term, high-risk but

high-return financing for startups?

A) Mortgage loans
 B) Consumer loans

C) Venture capital loans

D) Personal loans

Calculation-Based Questions

6. A bank reports $200 million in total assets and $15 million in net income. What
is its Return on Assets (ROA)?

A) 7.5%

B) 0.75%

C) 1.5%

D) 0.15%

7. Bank X has total interest income of $120 million and total interest expenses of
$80 million, with total earning assets valued at $2 billion. What is the Net
Interest Margin?

A) 2%

B) 1%

C) 4%

D) 5%

8. If a bank has $300 million in assets, $250 million in liabilities, and $50 million in
equity, what is its Equity Multiplier?

A) 3

B) 4

C) 5

D) 6

9. A bank’s net income is $20 million, and its total operating revenue is $200
million. What is its Net Profit Margin?

A) 5%
 B) 10%

C) 15%

D) 20%

10. Bank Y's assets total $1,000 million with an equity of $100 million, while its net
income is $20 million. What is Bank Y’s Return on Equity (ROE)?

A) 5%

B) 10%

C) 20%

D) 25%

Real-Case Scenarios

11. In a liquidity crisis, which type of bank asset is most beneficial?

A) Real estate loans

B) Trading account assets

C) Cash and due from banks

D) Long-term corporate bonds

12. Bank A decides to issue new common stock to meet regulatory capital
requirements. Which Basel III component is this action most likely addressing?

A) Tier 1 Capital

B) Tier 2 Capital

C) Leverage Ratio

D) Liquidity Coverage Ratio

13. Which ratio would be most critical for a depositor evaluating a bank’s liqudity?

A) Return on Assets (ROA)

B) Operating Efficiency Ratio

 C) Net Stable Funding Ratio

D) Earnings Spread

14. If a bank has an ROA of 0.7% and an Equity Multiplier of 15, what is its ROE?

A) 10.5%

B) 9.5%

C) 8.5%

D) 7.5%

15. Suppose Bank B's ROA decreases to 0.5%, and it wants to maintain an ROE of
7.5%. What Equity Multiplier should it aim for?

A) 8

B) 10

C) 12

D) 15

Application and Analysis

16. In response to rising market risks, Bank Z increases its government securities
holdings. This strategy is primarily aimed at reducing:

A) Credit risk

B) Liquidity risk

C) Interest rate risk

D) Operational risk

17. A bank has $300 million in total loans with a loan loss reserve of $10 million. If it
charges off $2 million in worthless loans and recovers $1 million from previous
charge-offs, what is the ending loan loss reserve?

A) $9 million

B) $11 million
 C) $10 million

D) $8 million

18. Which of the following actions would most likely increase a bank’s ROE?

A) Reducing total assets

B) Increasing equity capital

C) Raising operating expenses

D) Increasing net profit margin

19. If a bank’s Net Interest Margin is declining, which action could potentially
improve it?

A) Increase short-term borrowings

B) Raise deposit rates

C) Decrease interest on liabilities

D) Reduce loan interest rates

20. Bank C has a total operating revenue of $150 million and total assets of $2
billion. What is its Asset Utilization ratio?

A) 0.075

B) 7.5%

C) 5%

D) 0.5%

21. Name two limitations of financial ratios that users should consider when using them.
Explain how these limitations affect the effectiveness of financial analysis using
ratios.
22. Discussing the roles of commercial banks.
23. Balance Sheet Analysis of Goldman Sachs

Given the following 2024 financial information for Goldman Sachs:

 • Cash and Cash Equivalents: $60 billion
• Accounts Receivable: $35 billion
• Gross Loans: $750 billion
• Investment Securities: $400 billion
• Accounts Payable: $25 billion
• Deposits: $800 billion
• Long-term Debt: $150 billion
• Surplus: $30 billion
• Interest Income: $150 billion
• Interest Expenses: $80 billion
• Undivided Profits: $80 billion
• Common Stock Par: $20 billion
• Allowance for Loan Losses: $50 billion
• Preferred Stock: Unknown
• Total Assets: Unknown
• Total Liabilities: Unknown
• Total Equity: Unknown

Questions: Organize the above information into a balance sheet.

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