1. Bank A has checkable deposits of $100 million, vault cash equaling $1 million and deposits at the Fed equaling $14 million. If the required reserve rate is ten percent what is the maximum amount Bank A could lend?

2. Short term assets generally earn a higher rate of return than long-term assets, making short term assets a more desirable investment than long-term assets.

True

False

3. Which of the following activities will increase the short-term net cash flow for a firm?

a. Increase the average amount of time the firm takes to pay accounts.

b. Write off old accounts receivable that are considered uncollectible.

c. Increase the time you allow the firm's customers to pay for goods.

d. Increase the firm's days sales outstanding ratio without an increase in sales.

e. Increase a cash bonus for employees.