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Banking
Q:
Non-interest expenses includes all of the following except:
a. occupancy expenses.
b. goodwill impairment.
c. insufficient funds service charges.
d. personnel expenses.
e. all of the above are considered non-interest expense.
Q:
Non-interest income includes all of the following except:
a. monthly fee income on checking accounts.
b. late fees on loans.
c. trust income.
d. insufficient funds service charges.
e. all of the above are considered non-interest income.
Q:
Non-interest income includes all of the following except:
a. checking account fees.
b. insufficient funds service charges.
c. trust income.
d. personnel expenses.
e. all of the above are considered non-interest income.
Q:
Net interest income is the difference between:
a. gross interest income and net interest expense.
b. gross interest income and non-interest income.
c. the burden and realized gains or losses.
d. non-interest income and net interest expense.
e. gross interest income and gross interest expense.
Q:
A bank currently owns a municipal bond paying a tax-exempt rate of 8%. If the banks marginal tax rate is 39%, what is the taxable equivalent yield?
a. 11.12%
b. 4.88%
c. 13.11%
d. 5.76%
e. 9.32%
Q:
A bank currently owns a municipal bond paying a tax-exempt rate of 6.5%. If the banks marginal tax rate is 40%, what is the taxable equivalent yield?
a. 3.90%
b. 10.83%
c. 9.10%
d. 4.64%
e. 9.32%
Q:
A bank currently owns a municipal bond paying a tax-exempt rate of 5%. If the banks marginal tax rate is 35%, what is the taxable equivalent yield?
a. 7.69%
b. 3.25%
c. 6.75%
d. 3.70%
e. 9.32%
Q:
Interest income includes:
a. interest earned on all of the bank's assets.
b. fees earned on all of the bank's assets.
c. fees earned on all of the bank's deposit accounts.
d. all of the above.
e. a. and b. only
Q:
Everything else the same, a bank's "burden" would most likely increase given:
a. a decrease in overhead expenses.
b. an increase in interest rates.
c. a decrease in interest rates.
d. an increase in executive salaries.
e. an increase in service charges collected by the bank.
Q:
A bank's "burden" is defined as:
a. net interest income minus non-interest income.
b. non-interest income minus non-interest expense.
c. non-interest expense minus non-interest income.
d. net interest income plus non-interest income.
e. interest expense plus non-interest expense.
Q:
The "provision for loan and lease losses":
a. are the realized losses from the previous accounting period.
b. represents management's estimate of potential lost revenue from bad loans.
c. determined by the Federal Reserve for all banks.
d. does not affect net income.
e. is another name for a bank's "burden."
Q:
Which of the following would be the least sensitive to changes in interest rates?
a. Demand deposits
b. Repurchase agreements
c. Federal funds purchased
d. Eurodollar liabilities
e. Jumbo CDs
Q:
Which of the following is not considered a volatile liability?
a. Jumbo CDs
b. Deposits in foreign offices
c. Repurchase agreements
d. Federal funds sold
e. All of the above are considered volatile liabilities
Q:
Core deposits consist of all of the following except:
a. demand deposits.
b. NOW accounts.
c. jumbo certificates of deposit.
d. savings accounts.
e. money market demand accounts.
Q:
A bank's core deposits are:
a. vault cash.
b. stable deposits that are not typically withdrawn over short periods of time.
c. the bank's deposits at the Federal Reserve.
d. the most interest rate sensitive liabilities of a bank.
e. deposits held in foreign offices.
Q:
Unsecured liabilities created from the exchange of immediately available funds are known as:
a. federal funds purchased.
b. repurchase agreements.
c. federal funds sold.
d. pledged securities.
e. brokered deposits.
Q:
Jumbo certificates of deposit (CDs) typically:
a. have maturities greater than 10 years..
b. are negotiable.
c. are $1 million in size.
d. All of the above
e. b. and c.
Q:
Jumbo CDs that a bank obtains from a third-party broker are called:
a. money market demand accounts.
b. time deposit accounts.
c. mortgage loans.
d. brokered deposits.
e. core deposits.
Q:
Checking accounts with unlimited check-writing and pay interest are known as:
a. demand deposit accounts.
b. money market deposit accounts.
c. NOW accounts.
d. certificates of deposit.
e. time deposits.
Q:
Which of the following is are only available to non-commercial customers?
a. Money Market Demand Accounts
b. Demand deposit accounts
c. Mortgage loans
d. Negotiable Orders of Withdrawal (NOW) accounts
e. Auto leases
Q:
_________ own(s) the bulk of demand deposit accounts.
a. Consumers
b. Businesses
c. State governments
d. The federal government
e. Non-profits
Q:
The volume of net deferred credit is commonly referred to as:
a. the burden.
b. NOW balances.
c. reserve requirements.
d. equity.
e. float.
Q:
The largest component of "non- interest cash and due from banks" is:
a. cash items in process of collection.
b. deposits held at other financial institutions.
c. federal funds sold.
d. vault cash.
e. loans from the Federal Reserve.
Q:
A negotiable instrument often used in trading goods that guarantees payment to the owner the instrument is known as (a):
a. bankers acceptance.
b. payment guarantee.
c. commercial paper.
d. bankers payment.
e. repurchase agreement.
Q:
Securities that require unrealized gains or losses to be recorded on the income statement are called:
a. held-to-maturity securities.
b. trading account securities.
c. available-for-sale securities.
d. revenue securities.
e. repurchase agreements
Q:
Securities that require unrealized gains or losses to be recorded as a change in stockholder's equity are called:
a. held-to-maturity securities.
b. trading account securities.
c. available-for-sale securities.
d. revenue securities.
e. repurchase agreements
Q:
Securities that are "held-to-maturity" are:
a. trading account securities.
b. recorded on the balance sheet at amortized cost.
c. marked-to-market.
d. a. and b.
e. a. and c.
Q:
Which of the following would a bank generally classify as a long-term investment?
a. Treasury bill
b. Vault cash
c. Cash items in process of collection
d. Municipal bond
e. Repurchase agreements
Q:
All other things constant, securities that are extremely liquid:
a. earn higher rates of return than securities that are less liquid.
b. have a longer maturity than less liquid securities.
c. have lower risk than less liquid securities.
d. a. and b.
e. b. and c.
Q:
Which of the following would a bank generally classify as a short-term investment?
a. Demand deposits
b. Deposits at the Federal Reserve
c. Repurchase agreements
d. Fed Funds purchased
e. Vault cash
Q:
Which of the following bank assets is the most liquid?
a. Long-term investments
b. Short-term investments
c. Loans
d. Demand deposits
e. Unearned income
Q:
An example of a contra-asset account is:
a. the loan and lease loss allowance.
b. unearned income.
c. buildings and equipment.
d. revenue bonds.
e. the provision for loan loss.
Q:
Which of the following adjustments are made to gross loans and leases to obtain net loans and leases?
a. The loan and lease loss allowance is subtracted from gross loans
b. Unearned income is subtracted from gross interest received
c. Investment income is added to gross interest received
d. a. and b.
e. a. and c.
Q:
Loans typically fall into each of the following categories except:
a. real estate.
b. individual.
c. commercial.
d. agricultural.
e. municipal.
Q:
Banks generate their largest portion of income from:
a. loans.
b. short-term investment.
c. demand deposits.
d. long-term investments.
e. certificates of deposit.
Q:
Which of the following would not be considered a commercial loan?
a. An interim construction loan
b. A working capital loan
c. A loans to another financial institution
d. A loan to purchase a piece of industrial equipment
e. A loan to expand a factory
Q:
A loan to an individual to purchase a home would be considered a:
a. consumer loan.
b. commercial loan.
c. agricultural loan.
d. construction loan.
e. real estate loan.
Q:
Typically, "Call loans" are:
a. residential mortgages.
b. farm loans.
c. demand deposits.
d. payable on demand.
e. automobile loans.
Q:
Bank assets fall into each of the following categories except:
a. loans.
b. investment securities.
c. demand deposits.
d. noninterest cash and due from banks.
e. other assets.
Q:
Which of the following is not a characteristic of a typical commercial bank?
a. Most banks own few fixed assets.
b. Most banks have a high degree of operating leverage.
c. Most banks have few fixed costs.
d. Many bank liabilities are payable on demand.
e. Banks generally operate with less equity capital than non-financial firms.
Q:
Which of the following led to the sharp decline in bank profits in 2008?
a. Record high loan loss provisions
b. Record gains in trading activities
c. Significant goodwill impairment expenses
d. All of the above.
e. a. & c. only.
Q:
The FDIC insures credit union accounts up to $250,000.
Q:
The Federal Reserve directly controls the discount rate.
Q:
A bank holding company is a shell organization that owns subsidiary firm.
Q:
State-chartered banks must be members of the Federal Reserve System.
Q:
Bank regulations can guarantee that bankers will make sound management decisions.
Q:
The annual number of bank failures since 2007 has increased dramatically.
Q:
Most banks have the ability to easily raise new capital by issuing new equity.
Q:
A function of investment banking is to facilitate corporate mergers and acquisitions.
Q:
A memorandum of understanding is a legal document that orders a firm to stop an unfair practice.
Q:
The McFadden Act of 1927 forbids national banks from underwriting equities.
Q:
Which of the following statements is/are correct?
a. Higher capital requirements often result in a higher cost of capital for banks.
b. Small banks have greater access to the equity markets than large banks.
c. Higher capital requirements encourage small banks to consolidate into larger banks.
d. All of the above are correct.
e. Only a. and c. are correct.
Q:
The _________ authorized the Treasury to purchase debt securities issued by the Fannie Mae, Freddie Mac, and the Federal Home Loan Banks and to purchase common stock.
a. Treasury Emergency Authority Provisions
b. Foreclosure Prevention Act
c. Troubled Asset Relief Program
d. Primary Dealer Credit Facility
e. Check 21 Act
Q:
The _________ created a fund originally designed to allow the U.S. Treasury to purchase distressed assets from financial institutions.
a. Capital Purchase Program
b. Foreclosure Prevention Act
c. Troubled Asset Relief Program
d. Primary Dealer Credit Facility
e. Check 21 Act
Q:
_________ allowed any institution to "truncate" the paper check at any point in the check clearing process.
a. Riegle-Neal Interstate Banking and Branching Efficiency Act
b. Fair and Accurate Credit Transactions Act
c. Troubled Asset Relief Program
d. Sarbanes-Oxley Act
e. Check 21 Act
Q:
The _________ established to Public Company Oversight Board to regulate public accounting firms that audit publicly-traded companies.
a. Riegle-Neal Interstate Banking and Branching Efficiency Act
b. Competitive Equality Banking Act
c. Financial Institutions Reform, Recovery and Enforcement Act
d. Sarbanes-Oxley Act
e. Depository Institutions Deregulation and Monetary Control Act
Q:
The _________ repealed the Glass-Steagall Act.
a. Riegle-Neal Interstate Banking and Branching Efficiency Act
b. Gramm-Leach-Bliley Act
c. Financial Institutions Reform, Recovery and Enforcement Act
d. Federal Deposit Insurance Corporation Improvement Act
e. Depository Institutions Deregulation and Monetary Control Act
Q:
The _________ requires disclosure of a bank's privacy policy.
a. Riegle-Neal Interstate Banking and Branching Efficiency Act
b. Gramm-Leach-Bliley Act
c. Financial Institutions Reform, Recovery and Enforcement Act
d. Federal Deposit Insurance Corporation Improvement Act
e. Depository Institutions Deregulation and Monetary Control Act
Q:
The _________ allows adequately capitalized bank holding companies to acquire banks in any state.
a. Riegle-Neal Interstate Banking and Branching Efficiency Act
b. Competitive Equality Banking Act
c. Financial Institutions Reform, Recovery and Enforcement Act
d. Federal Deposit Insurance Corporation Improvement Act
e. Depository Institutions Deregulation and Monetary Control Act
Q:
FASB 115 requires historical costs to be used for:
a. trading account securities.
b. available-for-sale securities.
c. retained earnings.
d. held-to-maturity securities.
e. net income.
Q:
The _________ mandated that the FDIC take prompt corrective action in dealing with bank failures.
a. Depository Institutions Act (Garn-St. Germain)
b. Competitive Equality Banking Act
c. Financial Institutions Reform, Recovery and Enforcement Act
d. Federal Deposit Insurance Corporation Improvement Act
e. Depository Institutions Deregulation and Monetary Control Act
Q:
The _________ created the Office of Thrift Supervision.
a. Depository Institutions Act (Garn-St. Germain)
b. Competitive Equality Banking Act
c. Financial Institutions Reform, Recovery and Enforcement Act
d. Federal Deposit Insurance Corporation Improvement Act
e. Depository Institutions Deregulation and Monetary Control Act
Q:
The _________ expanded the FDIC's authority for open bank assistance.
a. Depository Institutions Act (Garn-St. Germain)
b. Competitive Equality Banking Act
c. Financial Institutions Reform, Recovery and Enforcement Act
d. Federal Deposit Insurance Corporation Improvement Act
e. Depository Institutions Deregulation and Monetary Control Act
Q:
The _________ authorized money market deposit accounts.
a. Depository Institutions Act (Garn-St. Germain)
b. Competitive Equality Banking Act
c. Financial Institutions Reform, Recovery and Enforcement Act
d. Federal Deposit Insurance Corporation Improvement Act
e. Depository Institutions Deregulation and Monetary Control Act
Q:
Which of the following was a goal of the Depository Institutions Deregulation and Monetary Control Act of 1980?
a. To reduce the range of banking services offered.
b. To allow banks to pay market rates on deposits.
c. To allow banks to make long-term mortgage loans.
d. To allow banks to offer Money Market Deposit Accounts.
e. To reduce the number of leveraged buyouts.
Q:
Federal Reserve Reg. ____ requires disclosure of as to why a costumer was denied credit.
a. AA
b. BB
c. Z
d. C
e. B
Q:
Federal Reserve Reg. ____ makes it illegal for any lender to discriminate on the basis of national origin.
a. AA
b. BB
c. Z
d. C
e. B
Q:
Which type of financial institution has seen the largest drop in their share of U.S. financial assets?
a. Depository institutions
b. Mutual funds
c. Insurance companies
d. Pension plans
e. Finance companies
Q:
Which of the following is an overnight collateralized loan facility that provides loans for up to 120 days to primary dealers in exchange for a broad range of collateral?
a. Term Auction Facility
b. Term Securities Lending Facility
c. Primary Dealer Credit Facility
d. Troubled Asset Relief Program
e. Housing and Economic Recovery Facility
Q:
Which of the following loans Treasury securities to primary dealers in exchange for other securities held by the dealers?
a. Term Auction Facility
b. Term Securities Lending Facility
c. Primary Dealer Credit Facility
d. Troubled Asset Relief Program
e. Housing and Economic Recovery Facility
Q:
Which of the following allows depository institutions to borrow for a fixed term against a variety of collateral that is normally accepted for discount window loans?
a. Term Auction Facility
b. Term Securities Lending Facility
c. Primary Dealer Credit Facility
d. Troubled Asset Relief Program
e. Housing and Economic Recovery Facility
Q:
Currently, the Fed sets the discount rate __________ the target fed funds rate.
a. 1% - 1.5% below
b. 2% - 2.5% below
c. 3% - 3.5% above
d. 2% - 2.5% above
e. 1% - 1.5% above
Q:
Which of the following is the most flexible of the Fed's tools for implementing monetary policy?
a. Changes in the fed funds rate
b. Changes in the required reserve ratio
c. Changes in the discount rate
d. Open market operations
e. Private placements
Q:
Which of the following is not one of the Fed's monetary policy tools?
a. Open market operations
b. Changes in the fed funds rate
c. Changes in the discount rate
d. Changes in the required reserve ratio
e. All of the above are monetary policy tools of the Fed
Q:
The Federal Reserve has Reserve Banks and branches in ___ districts across the country.
a. 10
b. 12
c. 14
d. 16
e. 18
Q:
Which of the following is not a fundamental function of the Federal Reserve?
a. Conduct the nation's monetary policy.
b. Provide an effective payments system.
c. Regulate banking operations.
d. Ensure bank profitability.
e. All of the above are fundamental functions of the Federal Reserve.
Q:
Bank regulations:
a. can prevent bank failures.
b. can eliminate economic risk for banks.
c. serve as guidelines for sound operating policies.
d. guarantee bankers will make sound management decisions.
e. guarantee bankers act in an ethical manner.
Q:
The Federal Deposit Insurance Reform Act of 2005 created which of the following?
a. Bank Insurance Fund
b. Deposit Insurance Fund
c. Savings Association Insurance Fund
d. National Credit Union Shares Insurance Fund
e. Federal Savings and Loan Insurance Fund
Q:
Which of the following is the receiver of a failed depository institution?
a. Federal Reserve
b. Federal Deposit Insurance Corporation
c. Office of the Comptroller of the Currency
d. Office of Thrift Supervision
e. Federal Savings and Loan Insurance Corporation
Q:
Which of the following officially designates a bank as insolvent?
a. Office of the Comptroller of the Currency
b. Federal Reserve
c. Office of Thrift Supervision
d. Office of National Charters
e. Resolution Trust Corporation