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Banking
Q:
Mergers with anticompetitive effects can only be approved at the federal level if one of the banks involved is failing.
Q:
Under the terms of the Bank Merger Act, each federal agency must give top priority to the competitive effects of a proposed merger.
Q:
A proposed merger between two or more banks must be ratified by the board of directors of each bank involved, followed by the management of each of the banks, and then all the shareholders of all the banks. The merger can proceed thereafter once regulators' approval is received.
Q:
According to the textbook, the financial success of a bank merger depends heavily upon the comparative dollar amounts of earnings reported by the two banking organizations and their relative price-earnings ratios.
Q:
In the United States, regulations require bank merger premiums to range between 150 to 250 percent.
Q:
If a bank with a higher stock price-to-earnings ratio acquires a bank with a lower price-earnings ratio, earnings per share of the combined organization will increase, even if combined earnings fall after the merger.
Q:
In recent years, financial services industry has consistently ranked in the top five of all U.S. industries in the number or value of merger transactions every year.
Q:
When a merger takes place, some banks have been asked by the regulators to __________________ themselves of some of their branches to avoid anticompetitive activities. Many of these are sold to third parties.
Q:
The European Commission has emerged as a key arbiter for mergers involving European businesses. The commission is principally against the doctrine of _________________.
Q:
The degree of __________________ in a market is measured by the proportion of assets controlled by the largest institutions serving that market. In the banking industry, this is measured but the Herfindahl-Hirschman Index.
Q:
When a national bank wants to acquire another bank, it must apply to the __________________ for approval.
Q:
When a bank enters into a new market area as the result of a merger with another financial institution, they have practiced __________________ diversification.
Q:
When a bank expands the number of service options it offers after acquiring another financial firm, they have practiced __________________ diversification.
Q:
Increase in earnings of a bank as a result of consolidation of operations and elimination of unnecessary duplication usually exhibits improving ___________ efficiency.
Q:
Many mergers arise from expected ___________________________ benefits. This takes place particularly when an acquired firm has earnings losses that can be used to offset taxable profits of the acquirer.
Q:
One of the reasons for a merger is _________________. This is where the merger is encouraged by the FDIC as a way to conserve scarce federal deposit insurance resources.
Q:
The Financial Accounting Standards Board labels ____________ as the "intangible synergies" of a combined firm resulting from a merger.
Q:
When the existing ownership of a bank experiences a loss in their share of the company due to an increased number of shares going to new stockholders, it is known as _____________________.
Q:
One reason banks pursue mergers is for _____________________. This allows the bank to enter new markets and find new sources of revenue.
Q:
One reason banks pursue mergers is for _____________________. This allows the bank to reduce fluctuations in revenues and net income.
Q:
To most authorities, the recent upsurge in mergers reflects the expectation of the stockholders that the profit potential will _____________ once the merger is completed.
Q:
If a bank can show that the merger it proposes results in significant ______________________________, it may be able to overcome anticompetitive problems of the merger. This is the impact the merger has upon the convenience and service needs of the community.
Q:
A(n) ______________________ takeover is a merger which is resisted by the existing management and stockholders.
Q:
A large metropolitan or money center bank is often called a(n) ______________.
Q:
The _________________________________ is a measure of the market concentration in a given market area. The larger this number, the more concentrated the market.
Q:
The amount paid over the current stock price to shareholders of the acquired firm by the acquiring bank in a merger is known as ___________________________.
Q:
The ______________________ is the proportion of shares of stock the shareholders of an acquired firm receive from the acquiring firm.
Q:
The degree of dilution in earnings of a combined firm is a function of a differential in the _________ and relative size of the two merging companies.
Q:
In the ____________________________ method of acquisition, a bank assumes all of the assets and liabilities of the other bank which ceases to exist.
Q:
In the ______________________ method of acquisition, a bank purchases all or a portion of another bank's assets.
Q:
Under the terms of Bank Merger Act, federal regulating agencies must give top priority to the ______________________ of a proposed merger.
Q:
The _____________________ Act requires each merging bank to seek approval from its principal federal regulating agency before a merger can take place.
Q:
In real estate lending, competent property __________________ is vitally important to a loan decision. The value and condition of the property are determined by an independent party. These must conform to industry and government standards.
Q:
_____________________________ is the granting of loans to borrowers with below-average credit records. These loans tend to go to borrowers with a record of delinquent payments, previously charged-off loans, bankruptcies or court judgments.
Q:
The ________________________ Act provides consumers with an opportunity to order one free credit report annually from each of the three nationwide credit bureaus.
Q:
The fastest rising financial crime against individuals today is __________________ theft. This is a deliberate attempt to take unauthorized use of someone else's personal information in order to fraudulently obtain money, credit, or other property.
Q:
The ___________________________ Act prohibits lenders from asking certain questions to a customer, such as a customer's age or race.
Q:
Equifax, Transunion, and _________________ are the three biggest credit bureaus in the United States.
Q:
While considering an individual's income levels, a bank generally prefers the borrower report ______________________ rather than gross salary.
Q:
In the case of a borrower without a credit record or a very poor track record, a _______________ may be requested to support repayment. Technically if the borrower defaults on the payment, they are obligated to repay the loan.
Q:
Consumer loans tend to be _____________________ sensitive. They tend to rise in periods of economic expansion and tend to fall in periods of economic downturn.
Q:
________________________ are plastic cards that can be used to pay for goods and services but where credit is not extended. They are a convenient way to make deposits into and withdrawals from an ATM.
Q:
Credit cards are the best example of ______________________ that offer consumers convenience and flexibility. Consumers can access them whenever the need arises.
Q:
_________________________ loans are ones that families and individuals can draw upon for immediate cash needs and are repayable in a lump sum. These loans often cover the cost of a vacation, medical care, the purchase of a home appliance, or home repairs.
Q:
Traditional home equity loans are usually priced using _______-term interest rates while home equity lines of credit are priced using _________-term interest rates.
Q:
A popular credit scoring system developed and sold by Fair Isaac Corporation is known as ___________.
Q:
A popular prepaid card which carry balances that can be spent electronically in stores until the balance entered on the card is fully used up, often used like a credit card, especially popular in Europe, is known as a _________ card.
Q:
Many home mortgage agreements include an additional charge levied up front called _____________________. Generally, each of these corresponds to one percent of the face value of the amount borrowed.
Q:
A variable rate loan on a residential mortgage is known as a(n) ______________________.
Q:
______________________ is a basic method for calculating the interest owed on a loan that adjusts for declining balances and the time remaining on the loan.
Q:
The interest rate on most consumer loans is based on the cost of loanable funds to the bank, plus nonfunding cost, plus premiums for default and time to maturity, and also includes the desired profit margin on the loan. This method of pricing loans is known as _____________________.
Q:
A(n) ____________________________________________ mortgage is an agreement drawn up by a bank that gives the bank control of the property if the loan cannot be repaid as planned.
Q:
A rule of thumb used to determine how much interest income a bank is allowed to accrue at any point in time from a consumer loan that is being paid off in monthly installments is known as the ____________.
Q:
The interest rate method that adds the interest amount owed to the principal before calculating required installment payments is called the __________ method.
Q:
The interest rate method which requires the interest amount on a loan to be paid upfront is called the ______________________ method.
Q:
The ______________________ is the internal rate of return that equates present value of the payments with the amount of the loan. It is the rate required to be reported under the Truth in Lending Act.
Q:
______________________________________ is a practice of granting loans to weaker borrowers and charging them excessive fees and interest rates, increasing their risk of default.
Q:
The ___________________________________ Act prevents banks from redlining of certain neighborhoods and refusing to provide loans and other services in those areas.
Q:
The ________________________________ Act permits consumers to dispute billing errors with a merchant or credit card company and receive a prompt investigation into any such disputes.
Q:
A(n) ______________________ is a credit-rating agency that keeps records of borrowers' loan payment histories.
Q:
Short-term credit to finance the building of homes or other dwellings is called a _____________________.
Q:
The law that limits how far a creditor or credit collection agency can go in pressing a customer to pay a past due debt is the ______________________ Act. It does not allow a debt collector to "harass" a debtor.
Q:
The law that requires full disclosure of credit terms and which promotes the informed use of credit is the ______________________ Act. This law requires banks to report the APR of the loan, the dollar amount of all finance charges and, where appropriate, all fees.
Q:
A(n) __________________________ loan is one where a customer can use the difference between the appraised value of their home and the amount of mortgage remaining against it to secure a loan.
Q:
______________________ is a method to evaluate a large volume of consumer loans quickly with minimum labor. It is a statistical model which predicts whether the ability of a consumer to repay the loan.
Q:
The right of ______________________ allows a bank to call a loan that is in default and seize any checking or savings deposits the customer may hold with the bank in order to recover its funds.
Q:
When a borrower receives a loan at one lending institution to repay another, it is called ___________________________ of debt.
Q:
The fact that a consumer feels a strong moral and ethical responsibility to repay a loan on time refers to the ______________________ of the borrower. The loan officer must be assured that the borrower is serious about repaying the loan before the lending institution makes a loan.
Q:
Household borrowings tend to be relatively interest ______________________ by nature, that is, consumers are more concerned about the size of the debt repayments than the interest rate charged.
Q:
A(n) ______________________ loan is a short-term or a medium-term loan repayable in two or more consecutive payments, usually monthly or quarterly.
Q:
The purchase of a house or a multifamily dwelling such as a duplex, triplex or apartment building is usually financed through the use of a ______________________ loan.
Q:
A bankruptcy filing usually remains in the credit report of the filer for up to:
A. 2 years.
B. 5 years.
C. 10 years.
D. 20 years.
E. the individual's life.
Q:
A ____________ uses an average of a debtor's last six months of gross income to determine whether an applicant must file for bankruptcy under chapter 7 or 13 of the bankruptcy code.
A. ways test
B. means test
C. income test
D. feasibility test
E. bankruptcy test
Q:
The net effect of the new code under Bankruptcy Abuse Prevention and Consumer Protection Act, 2005 has generally been to make filing for bankruptcy:
A. more expensive and time consuming.
B. less expensive and seamless.
C. easier for home owners.
D. paperless and completely online.
E. easier for corporations.
Q:
According to a proposal under Dodd-Frank Wall Street Reform and Consumer Protection Act, lenders who are pooling and securitizing the mortgage loans they create and then selling them off should remain responsible for at least:
A. 10 percent of market risk attached to these loans.
B. 5 percent of market risk attached to these loans.
C. 10 percent of credit risk attached to these loans.
D. 5 percent of credit risk attached to these loans.
E. 50 percent of the credit risk attached to these loans.
Q:
Which of the following is the principal risk faced by a home equity lender?
A. Interest rates in the economy may rise
B. Interest rates in the economy may fall
C. Home prices in the area may rise
D. Home prices in the area may decline
E. There is no risk associated with home equity lending.
Q:
Michelle Woods, a 64 year old retired professor, has applied for a home equity loan from a bank in her neighborhood. The bank structured a loan against her property in a manner that she receives $5,000 every month. This is an example of:
A. mortgage loan.
B. construction loan.
C. retirement benefits.
D. reverse mortgage loan.
E. pass-through loan.
Q:
Richard Thornton has applied for a home equity loan from Capital Two Bank. The bank on its part has estimated the market value of Richard's property at $750,000. If the amount of existing mortgage loan on the property is $500,000 and Capital Two as a policy lends only up to 70 percent of the borrowing base, what is the maximum amount of loan will Richard get?
A. $100,000
B. $250,000
C. $175,000
D. $750,000
E. $500,000
Q:
The ______________________ Act requires that applicants for mortgage loans must be given a disclosure statement indicating whether the servicing rights could be transferred to another institution that borrowers will have to deal with during the loan tenure.
A. Equal Credit Opportunity
B. National Bank
C. Federal Lending
D. National Affordable Housing
E. Fair Credit Reporting
Q:
The principal task of the Consumer Financial Protection Bureau (CFPB) is to:
A. design the monetary policy.
B. ensure safety and soundness of the banking system.
C. write new rules to protect customers of the financial services industry.
D. provide insurance to the investors' funds in the banks.
E. ensure that the banks conform to the international banking regulations.