1. Dividends paid reduce bank capital. The ability of the subsidiary banks of Wells Fargo Bank Holding Company to pay dividends in the future depends to a certain extent on regulatory capital rules.

True/False

2. If the yield curve flattens out then the spread between the yields a bank earns on its assets and the cost of funding these assets will decline.

True/False

3. Bank Holding Companies typically pay dividends to their bank subsidiaries. This is an important source of liquidity for banks.

True/False

4. The discount window at the Federal Reserve helps to relieve liquidity strains for individual depository institutions and for the banking system as a whole by providing a source of funding in time of need.

True/False