1. Which of the following is NOT a true statement regarding profitability ratios?
Profitability ratios differ when banks have different asset and liability compositions.
Small banks typically report higher net interest margins than large banks
Large banks typically have higher ROEs Large banks typically have lower efficiency ratios
All of the above are true statements
2. PNC is a large depository institution. What balance sheet accounts for PNC would be affected (and how) if Arturo Rojas opens a money market deposit account with $5,000 and the funds are lent in the overnight market for one week?
Increase liabilities (money market deposit account) by $5,000 & Increase assets (Federal funds sold) by $5,000
Decrease liabilities (money market deposit account) by $5,000 & Decrease assets (Federal funds sold) by $5,000
Increase liabilities (money market deposit account) by $5,000 & Decrease assets (Federal funds sold) by $5,000
Decrease liabilities (money market deposit account) by $5,000 & Increase assets (Federal funds sold) by $5,000
There is no effect on the balance sheet.