Classes: FB15A

Instructions:
Semester: VI
a. You Have 2:00Hrs to Complete This Test
Subject: BANKING THEORY
b. Write Your Name& Your ID Number on every Exam Paper You Use.
Lecturer: ABDINASIR AHMED ALI
c. Label Your Question Numbers Clearly and Correctly.
d. This Test Will Account for 40% of Semester Marks Date:

Name: ________________________________________________________________IDNo: _________

PART ONE: MULTIPLE CHOICES
1. The First National Bank of Hometown has excess reserves of $400. Assuming a required reserve ratio of 10%, the
First National Bank can lend
a) $1500. c) $4000.
b) $750. d) $135
2. If reserves in the banking system increase by $700, then checkable deposits will increase by $5000 in the simple
model of deposit creation when the required reserve ratio is
a) 0.01
b) 0.06
c) 0.14
d) 0.20.
3. If the required reserve ratio is 40 percent, the simple deposit multiplier is
a) 5.0 b) 2 c) 4.0 d) 2.5.
4. If the banking system has excess reserves of $65, and the required reserve ratio is 20%, the potential expansion
of checkable deposits is
a) $75.
b) $325.
c) $37.50.
d) $375.
5. What is the features of a banker’s lien?
a) called as implied pledge
b) banker can retain the security
c) banker right to complain two accounts with same customer
d) a,b
6. The banker customer relationship in case of customer Pledge goods is that of …
a) Bailee-bailor
b) Trustee-beneficiary
c) Agent-Principal
d) Pawner and pawnee
7. Which of the following is not including inflow of commercial bank funds?
A) Increase in deposits
B) Increase in borrowing
C) Repayment of borrowing
D) A and b
8. Which one is not include outflow of commercial bank funds?
A) Increase in loans and advances
 B) Increase in investment
C) Return of invested funds on maturity
D) A and b
9. Central Bank functions include
A) Baker’s Bank
B) Government Bank
C) Cash credit
D) A and B
10. The word Bank was driven from
A) Banco
B) Banc
C) Banque
D) A, B and C

PART TWO:WRITE (T) in the bracket for true sentence or word (F) for false sentence
1. ( ) The process of credit creation takes place when banks provide loans and advances and accepts deposits.
2. ( ) A person who hasn’t an account in a bank in his own name and for whom a banker undertakes to provide
facilities as a banker is considered to be a customer.
3. ( ) Lien is a right of the bank to retain the goods of customer in his position until a debt due to him is paid.
4. ( ) The word overdraft means the act of drawing more than the money deposited in the bank account.
5. ( ) Unsecured loan is a loan in which the borrower pledges some asset as collateral for the loan.

PART THREE: DIRECT QUESTIONS ANSWER ANY THREE

1) Explain Commercial Banks: It’s Functions and Types
2) Explain major types of E- channels: define Electronic banking?
3) Explan concept of commercial bank its functions and principles and how its important to economy?
4) What are the components of agency services of commercial banks?
UNIVERSITY OF SOMALIA(UNISO)
COLLEGE OF BUSINESS & PBLIC ADMIN
ACADEMIC YEAR 2014-2015
MID TERM EXAMINATION