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Monetary Management and Banking Regulations

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Questions and Answers

What is the primary distinction between outside liability and inside liability in a financial institution?

Outside liability refers to funds from depositors, while inside liability refers to funds from owners (correct)
Outside liability refers to long-term borrowing, while inside liability refers to short-term borrowing
Outside liability refers to funds from owners, while inside liability refers to funds from depositors
Outside liability refers to short-term borrowing, while inside liability refers to long-term borrowing

What is the main purpose of earning assets in a financial institution?

To increase revenue
To maximize profit (correct)
To decrease cost
To minimize risk

What is the key characteristic of non-earning assets in a financial institution?

They generate high earnings
They are unable to generate earnings (correct)
They are used for long-term investing
They are used for short-term borrowing

What is the primary goal of financial institutions?

To maximize profit (D) Signup and view all the answers

What is the difference between asset structure and liability structure in a financial institution?

Asset structure refers to earning and non-earning assets, while liability structure refers to outside and inside liability (C) Signup and view all the answers

What is the purpose of a balance sheet in a financial institution?

To indicate the different segments of a financial institution (B) Signup and view all the answers

What type of liability is capital contributed by owners?

Inside liability (A) Signup and view all the answers

What is the relationship between depositors and financial institutions?

Depositors are outsiders to financial institutions (C) Signup and view all the answers

What is the term used to describe the bottom line of a financial institution's balance sheet?

Profit (C) Signup and view all the answers

What is the key difference between on-balance sheet items and off-balance sheet items?

On-balance sheet items are recorded on the balance sheet, while off-balance sheet items are not (A) Signup and view all the answers

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