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Banking
Q:
Which of the following is not a component of the Farm Credit System?
a. Farm Credit Banks
b. Agricultural Credit Associations
c. Federal Land Credit Associations
d. Farm Credit Administration
e. Agricultural Lending Office
Q:
Originally, the FDIC insured deposits up to:
a. $100,000
b. $50,000
c. $25,000
d. $10,000
e. $5,000
Q:
Which of the following institutions' customers have a "common bond"?
a. credit union
b. commercial bank
c. mortgage company
d. savings bank
e. thrift
Q:
Many insurance companies have organized as a _____________ in order to own a depository institution and bypass prohibitions in the Glass-Steagall Act and the Bank Holding Company Act.
a. unitary thrift holding company
b. commercial bank
c. mortgage company
d. savings bank
e. credit union
Q:
Savings institutions must maintain what percent of their assets in housing-related assets to be considered a "Qualified Thrift Lender"?
a. 100%
b. 15%
c. 70%
d. 85%
e. 65%
Q:
Savings and loans have historically specialized in:
a. commercial loans.
b. auto loans.
c. mutual loan.
d. real estate loans.
e. demand deposit accounts.
Q:
Commercial banks mostly specialize in:
a. mortgages.
b. mutual loans.
c. short-term business credit.
d. savings accounts.
e. share draft accounts.
Q:
The primary federal regulator of state banks that are members of the Fed is the:
a. Resolution Trust Corporation
b. Federal Reserve
c. Office of the Comptroller of the Currency
d. State Banking Authorities.
e. Federal Deposit Insurance Corporation.
Q:
The primary federal regulator of state banks that are not members of the Fed is the:
a. FDIC.
b. Office of the Comptroller of the Currency.
c. Office of Thrift Supervision.
d. state banking department.
e. National Credit Union Administration.
Q:
National and state charters are available for all of the following except:
a. credit unions.
b. commercial banks.
c. savings associations.
d. Federal Reserve banks.
e. National and state charters are available for all of the above.
Q:
A new charter to start a federal savings association is obtained from the:
a. Office of the Comptroller of the Currency.
b. National Credit Union Administration.
c. Office of Thrift Supervision.
d. State banking department.
e. Federal Reserve
Q:
A new charter to start a state bank must be obtained from the:
a. Federal Reserve.
b. Federal Deposit Insurance Corporation.
c. Office of the Comptroller of the Currency.
d. Office of Thrift Supervision.
e. State banking department.
Q:
A legal document that orders a firm to sop an unfair practice under full penalty of law is a:
a. cease and desist order.
b. capital request.
c. memorandum of understanding.
d. quality assurance directive.
e. national bank order.
Q:
A formal regulatory document that prescribes corrective action for a problem institution is a:
a. cease and desist order.
b. capital request.
c. memorandum of understanding.
d. quality assurance directive.
e. national bank order.
Q:
Which of the following is not represented in the CAMELS ratings.
a. Cash adequacy
b. Asset quality
c. Management quality
d. Liquidity
e. Sensitivity to market risk.
Q:
A primary purpose of maintaining the safety and soundness of banks is to:
a. encourage loan growth.
b. protect depositors.
c. ensure liquidity for the stock market.
d. prevent discrimination.
e. minimize bank losses.
Q:
Which of the following is not a purpose of bank regulation?
a. Guarantee minimal profitability of the banking system.
b. Provide monetary stability.
c. Ensure safety and soundness of banks.
d. Provide a competitive financial system.
e. Protect consumers from abuses by banks.
Q:
Which Act allowed the individual states to determine if a bank could branch within or outside its home state?
a. Competitive Equality Banking Act
b. Federal Reserve Act
c. McFadden Act
d. Glass-Steagall Act
e. Riegle-Neal Interstate Banking and Branching Efficiency Act
Q:
Which Act limited the activities a company could engage in if it owned a bank?
a. Federal Reserve Act
b. Bank Holding Act
c. McFadden Act
d. Glass-Steagall Act
e. Competitive Equality Banking Act
Q:
Which Act separated commercial banking, investment banking and insurance into three separate industries?
a. Glass-Steagall Act
b. Bank Holding Act
c. McFadden Act
d. Federal Reserve Act
e. Competitive Equality Banking Act
Q:
Historically, a commercial bank was defined as a firm that:
a. accepted NOW accounts and made consumer loans.
b. accepted demand deposits and made business loans.
c. accepted government deposits and made public loans.
d. accepted demand deposits and made consumer loans.
e. is regulated by the Federal Reserve.
Q:
Universal banks were originally centered in Western Europe.
Q:
Transaction banking emphasizes the personal relationship between the banker and customer.
Q:
Securitization refers to the process of splitting a single loan into several smaller loans.
Q:
The Federal Reserve may prevent the formation of a financial holding company if one of its insured depository institution subsidiaries is not well capitalized.
Q:
Financial holding company and bank holding company are different names for the same type of entity.
Q:
It is more difficult for multibank holding companies to realize economies of scale if they allow subsidiary banks to retain key decision-making authority.
Q:
Thrifts are supervised by the Office of Thrift Supervision.
Q:
An independent bank operates a single organization that accepts deposits and makes loans.
Q:
During the past 20 years, the number of distinct U.S. banking organizations has increased.
Q:
Super-regional banks typically have limited global operations.
Q:
Community banks tend to operate in a limited geographic region.
Q:
In 2008, the U.S. Treasury committed over $50 trillion dollars in financial support for financial institutions.
Q:
To help keep people in their homes, the SEC promoted loan modifications for troubled home-loan borrowers.
Q:
Smaller banks tended to have more subprime mortgage defaults than larger banks.
Q:
Mortgage defaults were greatest in geographic markets that had experienced the greatest run-up in real estate prices.
Q:
Which of the following is not a channel for delivering banking services?
a. Mobile banking.
b. Online banking.
c. Automated Teller Machines.
d. Branch banking.
e. Retail banking.
Q:
The primary appeal of online banking is:
a. prevention of identity theft.
b. high-volume traffic.
c. lack of face-to-face interaction.
d. its convenience.
e. the ability to make small dollar purchases.
Q:
Deposit insurance was temporarily increased to __________ per depositor through 2009.
a. $100,000
b. $150,000
c. $250,000
d. $300,000
e. $500,000
Q:
______________ refers to the process of pooling a group of assts with similar features and issuing securities that are collateralized by the assets.
a. Originate-to-Resell
b. Securitization
c. Mortgage Collateralization
d. Deposit Origination
e. Loan-to-Distribute
Q:
Deposits at credit unions are insured by the:
a. National Credit Union Association.
b. Federal Credit Union Administration.
c. Federal Reserve.
d. Federal Deposit Insurance Corporation.
e. Credit Union Insurance Corporation.
Q:
S-corporations must have no more than ___ shareholders.
a. 10
b. 50
c. 100
d. 500
e. 1,000
Q:
___-corporations have favorable tax treatment because a qualifying firm does not pay corporate income taxes.
a. C
b. Q
c. S
d. V
e. Z
Q:
The parent bank holding company assists bank subsidiaries with all of the following except:
a. asset and liability management.
b. strategic planning.
c. loan review.
d. deposit insurance.
e. business development.
Q:
A financial holding company cannot own which of the following?
a. A bank.
b. A bank holding company.
c. A thrift.
d. A thrift holding company.
e. A financial holding company may own all of the above.
Q:
The Federal Reserve may prevent the formation of a financial holding company if one of its insured depository institution subsidiaries:
a. received an unsatisfactory in its most recent Community Reinvestment Act exam.
b. has branches across state lines.
c. is part of a bank holding company.
d. makes subprime loans.
e. is well capitalized.
Q:
The _______________ repealed the restriction son banks affiliating with securities firms under the Glass-Steagall Act.
a. Sarbanes-Oxley Act
b. Bank Holding Company Act
c. Competitive Equality Banking Act
d. Gramm-Leach-Bliley Act
e. Financial Institutions Reform, Recovery and Enforcement Act
Q:
Banks created Section 20 affiliates to:
a. engage in investment banking activities.
b. make international loans.
c. purchase savings and loans.
d. invest in junk bonds.
e. compete with general-purpose finance companies.
Q:
Many insurance companies have formed __________ to operate banks as part of their financial services efforts.
a. one-bank holding companies
b. multibank holding companies
c. retail subsidiaries
d. finance companies
e. financial holding companies
Q:
The _________ gave regulatory responsibility over financial holding companies to the Federal Reserve..
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:
__________ control at least two commercial banks.
a. One-bank holding company
b. State holding company
c. National holding company
d. Multibank holding company
e. None of the above
Q:
Today, the primary motivation behind forming a bank holding company is:
a. to reduce competition.
b. the ability to circumvent restrictions on branching.
c. to broaden the scope of products the bank can offer.
d. to increase deposit concentration.
e. All of the above are motivating factors today for forming a bank holding company.
Q:
Controlling interest in a bank is defined as ownership or indirect control of ____ of the voting shares in the bank.
a. 15%
b. 20%
c. 25%
d. 30%
e. 51%
Q:
Bank holding companies and financial holding companies generally do not pay income tax because:
a. they are always chartered as non-profit corporations.
b. most of their income is subsidiary paid dividends, of which 80% is tax-exempt.
c. the subsidiaries always operate at a net loss.
d. bank holding companies must carry deposit insurance.
e. bank holding companies are not subject to Internal Revenue Service regulations.
Q:
What is the primary motivation today of forming a financial holding company?
a. To increase speculation.
b. To branch across state lines.
c. To engage in activities not permitted in a bank holding company.
d. To branch within a particular states boundaries.
e. To reduce the risk of bank failures.
Q:
At the end of June 2008, there were approximately ______ FDIC—insured banking organizations in the United States.
a. 1,400
b. 3,400
c. 5,400
d. 7,400
e. 9,400
Q:
An "independent" bank is:
a. an "independent" subsidiary of a multi-bank holding company.
b. another name for a one-bank holding company.
c. a bank that is exempt from paying federal income taxes.
d. a bank that is specifically created to underwrite corporate debt issues.
e. not controlled by a multi-bank holding company or any other outside interest.
Q:
__________ have a large international presence.
a. Global banks
b. Nationwide banks
c. Super regional banks
d. Regional banks
e. Specialty Banks
Q:
Banks with less than _______ in assets are generally called community banks.
a. more than $1 billion
b. less than $1 billion
c. more than $5 million
d. less than $1 trillion
e. more than $1 trillion
Q:
Which of the following is false regarding community banks?
a. They typically have assets in excess of $1 billion.
b. They typically operate in a limited geographic area.
c. Community banks often focus on lending to small businesses.
d. A bulk of their funding comes from deposits.
e. They tend to grow at a modest rate.
Q:
In 2008, the U.S. Treasury financial supported financial institutions by:
a. purchasing troubled assets.
b. buying preferred stock in some financial institutions.
c. issuing guarantees on money market funds.
d. increasing the deposit insurance limit.
e. all of the above.
Q:
At the end of 2008, which of the following investment banks remained independent?
a. Bear Stearns
b. Goldman Sachs
c. Lehman Brothers
d. Merrill Lynch
e. a. and b.
Q:
The U.S. government took all of the following actions to address the credit crisis in 2008 except:
a. putting Fannie Mae into conservatorship.
b. passed the Troubled Asset Relief Program (TARP).
c. created the Keep Banks Solvent (KBS) agency.
d. authorized large non-financial firms to sell bonds that were FDIC-insured.
e. temporarily increased FDIC domestic deposit coverage to $250,000.
Q:
Which of the following mortgage types were offered to "subprime" borrowers?
a. Interest Only
b. Option Adjustable-Rate
c. Principal Only
d. All of the above
e. a. and b. only
Q:
Which act limited the activities a company could engage in if it owned a bank?
a. Federal Reserve Act
b. Bank Holding Company Act
c. McFadden Act
d. Glass-Steagall Act
e. Competitive Equality Banking Act
Q:
Which act separated commercial banking, investment banking and insurance into three separate industries?
a. Glass-Steagall Act
b. Bank Holding Company Act
c. McFadden Act
d. Federal Reserve Act
e. Competitive Equality Banking Act
Q:
In the open-economy ISLM model, net export is specified as a function of and exchange arte is specified as a function of .
A. output; output.
B. money supply; interest rate.
C. exchange rate; interest rate.
D. exchange rate; money demand.
Q:
In the open-economy ISLM model, the goods market equilibrium condition is
A. output = consumption + investment + government spending.
B. output = consumption + investment + government spending - tax.
C. output = consumption + investment + government spending + net export.
D. output = potential output.
Q:
In the basic closed-economy ISLM model, as the interest sensitivity of investment spending increases, fiscal policy has ________ effect on output and monetary policy has ________ effect on output.
A. less; less
B. more; more
C. more; less
D. less; more
Q:
In the basic closed-economy ISLM model, as the interest sensitivity of money demand increases, fiscal policy has ________ effect on output and monetary policy has ________ effect on output.
A. less; less
B. more; more
C. more; less
D. less; more
Q:
In the basic closed-economy ISLM model, the LM curve can be described by an equation where
A. output is a function of consumption.
B. money is a function of interest rates.
C. output is a function of money.
D. interest rate is a function of output.
Q:
In the basic closed-economy ISLM model, the IS curve can be described by an equation where
A. output is a function of consumption.
B. money is a function of interest rates.
C. output is a function of money.
D. output is a function of interest rates.
Q:
In the basic closed-economy ISLM model, the money demand is a function of
A. output.
B. money supply.
C. interest rates.
D. both A and C.
Q:
In the basic closed-economy ISLM model, the goods market equilibrium condition is
A. output = consumption + investment + government spending.
B. output = consumption + investment + government spending - tax.
C. output = consumption + investment + government spending + net export.
D. output = potential output.
Q:
Which of the followings does NOT describe the money market in the ISLM model?
A. money demand function
B. investment function
C. money market equilibrium condition
D. money supply
Q:
Which of the followings does NOT describe the goods market in the ISLM model?
A. consumption function
B. investment function
C. government spending and tax
D. money supply
Q:
Which of the followings does NOT describe the goods market in the ISLM model?
A. consumption function
B. investment function
C. government spending and tax
D. money demand function
Q:
In the basic closed-economy ISLM model, the money market can be described by the
A. money demand function.
B. money supply.
C. money market equilibrium condition.
D. all of the above.
Q:
In the basic closed-economy ISLM model, the goods market can be described by the
A. consumption function.
B. investment function.
C. government spending and tax.
D. goods market equilibrium condition.
E. all of the above.
Q:
Using the long-run ISLM model, explain and demonstrate graphically the neutrality of money, for the case of an increase in the money supply.