Approaches to System Development - Chapter 8 Quiz
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Questions and Answers

What is the main difference between the predictive and adaptive approaches to the System Development Life Cycle (SDLC)?

  • The predictive approach is more flexible, while the adaptive approach follows a set plan.
  • The predictive approach assumes well-understood requirements and low technical risk, while the adaptive approach assumes uncertain requirements and high technical risk. (correct)
  • The predictive approach assumes high technical risk, while the adaptive approach assumes low technical risk.
  • The predictive approach involves incremental development, while the adaptive approach involves maintaining the system.

    • What is the main characteristic of the Waterfall model in the context of the SDLC?

  • It assumes that the project must be more flexible and adapt to changing needs as the project progresses.
  • It assumes that the project can be planned in advance and that the information system can be developed according to the plan. (correct)
  • It involves building the complete system structure early, but with bare-bones functionality.
  • It involves completing portions of the system in increments.

    • What is the purpose of the Support phase in the SDLC?

  • To implement incremental development.
  • To maintain and enhance the system after it is installed and in use. (correct)
  • To identify and fix problems/errors during system development.
  • To develop new systems and models.

    • What is one of the activities included in maintaining the system during the Support phase?

    <p>Adding or changing functionality to comply with regulations or legislation.</p> Signup and view all the answers

    What is meant by 'Incremental Development' in the context of Adaptive SDLC?

    <p>Completing portions of the system in increments.</p> Signup and view all the answers

    What is a characteristic of the Spiral Model in the context of Adaptive SDLC?

    <p>Being the first adaptive SDLC.</p> Signup and view all the answers

    What is the main difference between Structured Approach and Object-Oriented (OO) development?

    <p>The Structured Approach is an earlier approach, while OO development is a newer approach.</p> Signup and view all the answers

    What does 'Walking Skeleton' refer to in software development?

    <p>Building the complete system structure early, but with bare-bones functionality.</p> Signup and view all the answers

    What is the main aim of Asset Management for a commercial bank?

    <p>Deciding the diversified portfolio of uses of fund to generate maximum return</p> Signup and view all the answers

    What is the purpose of Liabiliy Management for a commercial bank?

    <p>Minimizing the cost of sources of fund</p> Signup and view all the answers

    What is the role of Liquidity Management in a commercial bank?

    <p>To ensure the bank can pay off its liabilities in case of deposit outflow</p> Signup and view all the answers

    How are Required Reserves (RR) calculated in a commercial bank?

    <p>RR = required reserve ratio (rD) * Deposits (D)</p> Signup and view all the answers

    What does the Excess Reserves refer to in Liquidity Management?

    <p>Reserves that exceed the required reserve ratio</p> Signup and view all the answers

    What is set legislatively by the Central bank to ensure Liquidity Management in commercial banks?

    <p>Required reserve ratio</p> Signup and view all the answers

    What is the equation for excess reserves (ER) in terms of excess reserve ratio (rE) and deposits (D)?

    <p>ER = rE * D</p> Signup and view all the answers

    What is the main objective of liquidity management in a bank?

    <p>Avoiding liquidity shortage</p> Signup and view all the answers

    What is the consequence of a cash withdrawal on a bank's reserves and deposits?

    <p>Reduction in reserves and deposits</p> Signup and view all the answers

    How is the required reserve ratio different from the excess reserve ratio?

    <p>Required reserve ratio is obligatory for all banks, while excess reserve ratio is optional</p> Signup and view all the answers

    What happens if a bank's actual reserves are lower than the required reserves?

    <p>Liquidity shortage occurs</p> Signup and view all the answers

    In dealing with liquidity shortage, which option is considered the best solution?

    <p>Selling securities at the current market price</p> Signup and view all the answers

    What is the calculation for required reserves as a percentage of current deposits?

    <p>$\text{Required reserve} = \text{Percentage} * \text{Deposits}$</p> Signup and view all the answers

    In a scenario where a bank has a $100 million deposit and a 10% reserve requirement, what would be the shortfall if $10 million is withdrawn?

    <p>$9 million reserve shortfall</p> Signup and view all the answers

    What is the main concern of liquidity management in a bank?

    <p>Maintaining the balance between avoiding liquidity shortage and increasing bank's returns</p> Signup and view all the answers

    What is the consequence of a cash withdrawal on a bank's reserves and deposits?

    <p>Decrease in both reserves and deposits</p> Signup and view all the answers

    How is liquidity shortage in a bank defined?

    <p>When actual reserves are lower than the required reserves</p> Signup and view all the answers

    What is the best solution for covering liquidity shortage in a bank, based on the provided options?

    <p>Selling securities at the current market price</p> Signup and view all the answers

    How are required reserves calculated in a commercial bank?

    <p>As a percentage of the current deposits in the bank</p> Signup and view all the answers

    What is the difference between required reserve ratio and excess reserve ratio?

    <p>Required reserve ratio is obligatory, while excess reserve ratio is optional and can differ between banks</p> Signup and view all the answers

    What does dealing with liquidity shortage involve in a commercial bank?

    <p>Recalling loans and losing customers</p> Signup and view all the answers

    What occurs if a bank's actual reserves are lower than the required reserves?

    <p>The bank faces liquidity shortage</p> Signup and view all the answers

    In a scenario where a commercial bank has $100 million deposit and 10% reserve requirement, what would be the amount of reserve shortfall if $10 million is withdrawn?

    <p>$9 million</p> Signup and view all the answers

    What is the main aim of asset management for a commercial bank?

    <p>To optimize the allocation of assets to achieve financial goals</p> Signup and view all the answers

    What is the equation for excess reserves (ER) in terms of excess reserve ratio (rE) and deposits (D)?

    <p>ER = rE * D</p> Signup and view all the answers

    How are required reserves calculated in a commercial bank?

    <p>As a percentage of the current deposits in the bank</p> Signup and view all the answers

    What is the best solution for covering liquidity shortage in a bank, based on the provided options?

    <p>Selling securities</p> Signup and view all the answers

    What does dealing with liquidity shortage involve in a commercial bank?

    <p>Covering the shortage through selling securities, borrowing, or recalling loans</p> Signup and view all the answers

    What is meant by 'Incremental Development' in the context of Adaptive SDLC?

    <p>Developing software in small, manageable parts</p> Signup and view all the answers

    What is the main aim of Asset Management for a commercial bank?

    <p>Balancing liquidity and returns</p> Signup and view all the answers

    What occurs if a bank's actual reserves are lower than the required reserves?

    <p>The bank has a liquidity shortage</p> Signup and view all the answers

    What is set legislatively by the Central Bank to ensure Liquidity Management in commercial banks?

    <p>Required reserve ratio</p> Signup and view all the answers

    How is liquidity shortage in a bank defined?

    <p>When actual reserves are lower than required reserves</p> Signup and view all the answers

    What is the main objective of Liquidity Management for a commercial bank?

    <p>Ensuring the bank can pay off its liabilities in case of cash outflow</p> Signup and view all the answers

    What is the purpose of Asset Management for a commercial bank?

    <p>Deciding the diversified portfolio of uses of funds for maximum return</p> Signup and view all the answers

    What is meant by 'Excess Reserves' in Liquidity Management?

    <p>The reserves kept above the required reserve ratio as a percentage of deposits</p> Signup and view all the answers

    How are Required Reserves calculated in a commercial bank?

    <p>Required reserve ratio (rD) * Deposits (D)</p> Signup and view all the answers

    In Liquidity Management, what does the Central bank legislatively obligate the banks to keep?

    <p>Required Reserve Ratio</p> Signup and view all the answers

    What does Asset Management aim at deciding for a commercial bank?

    <p>The diversified portfolio of uses of fund for maximum return</p> Signup and view all the answers

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