Q&A Hero

Finance

Q: A role of the central bank is to provide liquidity and to prevent panic.
Q: Banks are regulated in part to protect the nation's money supply, much of which is a liability of the banking industry.
Q: The American public has determined that the market is an adequate regulator of banks.
Q: In a clean bank purchase and assumption, the FDIC retains a "put" option to return bad loans to the acquiring bank.
Q: Private deposit insurance has not proven effective in preventing depositor panic.
Q: A "too big to fail" policy encourages small banks to take higher risks.
Q: The FDIC generally prefers to just pay off depositors of a failed bank.
Q: All state banking authorities have the power to charter banks.
Q: The FDIC charters many state banks.
Q: Federal deposit insurance has prevented widespread bank panics.
Q: Traditional level-premium deposit insurance encouraged excessive risk-taking.
Q: The Office of the Comptroller of the Currency (OCC) is the oldest bank regulatory agency.
Q: Regional and industry recessions were and still are a major cause of bank failures.
Q: Bank failures are now treated as a remote contingency at best.
Q: A U.S. bank with a loan to a Japanese manufacturer can reduce its currency risk associated with the loan by a. requiring that the payments be made in yen. b. speculating in yen futures. c. having the borrower seek third-party assistance. d. hedging the risk in yen futures.
Q: U.S. banks reduce their risk in foreign operations by a. seeking guarantees from borrowers. b. FDIC insurance. c. portfolio diversification. d. insurance through the International Monetary Fund e. both a and c
Q: A loan made by a U.S. bank to a foreign private corporation guaranteed by the host government and payable in dollars has what risks associated with it? a. bank risk b. country risk c. foreign exchange risk d. both a and c e. all of the above
Q: An Edge Act bank may a. be located in the United States outside a parent's own state. b. own foreign banking subsidiaries. c. engage only in international banking activities. d. all of the above
Q: A foreign branch office of a U.S. bank is regulated by a. U.S. bank regulations b. the host country bank regulation. c. the FDIC. d. the SEC. e. both a and b
Q: An initial foothold entry into international banking is a(n) a. representative office. b. branch bank. c. Edge Act corporation. d. IBF.
Q: Most U.S. foreign bank operations have been limited by regulation to lending and not controlling equity investments because of a concern for a. bank safety. b. promoting competition. c. keeping banking and other business activity separate. d. protecting bank depositors.
Q: The development of foreign banking activities in the 1960s was prompted by all of the following U.S. regulations that restricted U.S. capital flows abroad except: a. Foreign Direct Investment Program (FDIP) b. Agricultural Export Restraint Program (AERP) c. Interest Equalization Tax (IET) d. Voluntary Foreign Credit Restraint program (VFCR)
Q: A representative office a. can assist the parent bank's customer only in that country and cannot accept deposits or make loans. b. can only accept deposits and cannot make loans. c. can both accept deposits and make loans. d. can engage only in money market transactions.
Q: All of the following are techniques reducing credit risk in international lending except a. foreign government guarantees of loans to private corporations. b. pooling risk through syndication with other banks. c. making floating-rate loans as opposed to fixed-rate loans. d. diversification.
Q: Unlike banks based in the U.S., European-based banks are allowed to a. make floating-rate loans b. pay competitive rates on deposits c. make loans to borrowers with subprime credit ratings d. take equity stakes in non-financial companies e. make overnight interbank loans
Q: Which of the following statements is true? a. In general, U.S. banks are permitted to engage in a wider range of business activities in the U.S. than in foreign countries. b. In general, U.S. banks are permitted to engage in a wider range of business activities in foreign countries than in the U.S. c. In general, U.S. banks are permitted to engage in a wider range of business activities in the U.S. than foreign banks. d. In general, foreign banks are permitted to engage in a wider range of business activities in the U.S. than in their home countries. e. Both a and d are true statements.
Q: Which of the following is NOT true about International Banking Facilities (IBFs)? a. IBFs may be established by a U.S.-chartered depository institution, a U.S. branch or agency of a foreign bank, or a U.S. office of an Edge Act Corporation. b. An IBFs is a set of asset and liability accounts segregated on the books of the establishing institution. c. IBFs can accept deposits over $100,000 from non-U.S. residents or other IBFs. d. Deposits generated can be used to make domestic loans only. e. All of the above is true.
Q: The purpose of the International Banking Act of 1978 was to a. return the competitive edge to U.S. banks. b. return competitive equality between domestic and foreign banks. c. slow down the competitiveness of foreign banks. d. none of the above
Q: The 1978 International Bank Act a. prohibited foreign banks from establishing any new U.S. banking operations. b. allowed U.S. banks to engage in a wider range of non-banking activities overseas. c. allowed U.S. banks to take equity positions in overseas business ventures. d. reduced the competitive advantage of foreign banks over U.S. banks.
Q: Which of the following is notrelated to rescheduling activities of a troubled sovereign loan? a. Shortening the repayment schedule. b. The consolidation of several loans into one. c. The extension of governmental guarantees to private business debt. d. The granting of a grace period, during which no payment is expected.
Q: The rescheduling of troubled international loans involves all of the following except a. the separation of larger loans into several more, smaller loans that are easier to repay. b. the extension of governmental guarantees to private sector debts. c. the granting of grace periods, which defers payment for a time. d. the extension of the payment date.
Q: A U.S. bank loan to a Mexican manufacturer payable in pesos accepts which risks? a. country risk b. credit risk c. currency risk d. both a and c e. all of the above
Q: International floating-rate bank loans are funded by a. relatively long-term time deposits because the loans have long maturities. b. syndicated demand deposits. c. short-term time deposits. d. cash flows from loan interest and principal.
Q: Which of the following factors is an important consideration in international lending? a. credit risk b. country risk c. currency risk d. all of the above
Q: The LIBOR is a. an interbank lending rate. b. an index rate used to price many international loans. c. the highest yield available on time deposits in international banks. d. the informal currency exchange in London. e. both a and b
Q: Which of the following is associated with the currency risk of international lending by a U.S. bank? a. The Spanish borrower is slow to pay the U.S. bank. b. The U.S. bank is paid dollars by its foreign borrowers. c. A U.S. bank receives an interest payment from a French borrower paid in Euros. d. A U.S. bank holds a mortgage on property in a country in the middle of a civil war.
Q: Which of the following is not an example of country or sovereign risk in international lending? a. profit controls b. loan default by borrower c. nationalization of borrower d. a new political party now controls the government
Q: An international lender's concern about the changing tax rate on interest income from an international loan is an example of a. credit risk. b. country risk. c. foreign exchange risk. d. reinvestment risk.
Q: A loan syndication is similar to a. loan securitization. b. investment banking underwriting syndicates. c. defaulting on a loan. d. having a mortgage on specific asset to support the loan. e. credit insurance.
Q: International lending based on LIBOR with a rollover-pricing feature protects the bank from a. liquidity risk. b. interest rate risk. c. default risk. d. solvency risk.
Q: Most of the largest banks in the world are based in a. Europe b. the United States c. Japan d. China e. Latin America
Q: International bank lending is characterized by all of the following except that loans a. are unsecured. b. have floating rates. c. are made for relatively small amounts. d. are priced relative to the LIBOR.
Q: Which of the following forms of international banking organization was intended to bring offshore, shell banking back to the U. S.? a. Edge Act banks b. correspondent bank c. international banking facility d. foreign subsidiary bank
Q: Which of the following forms of international banking organization is a separately incorporated bank owned entirely or in part by a U.S. bank or bank holding company? a. foreign subsidiary bank b. international banking facility c. Edge Act bank d. shell branch
Q: Which of the following forms of international banking organization is a separate federal corporate charter to operate international banking business including equity investments? a. international banking facility b. foreign branch c. correspondent bank d. Edge Act bank
Q: Which of the following forms of international banking organization is an extension of a domestic bank but is located in a foreign country? a. foreign branch b. shell branch c. representative office d. international banking facility e. correspondent bank
Q: Which of the following forms of international banking organization is associated with providing a complete range of international banking services associated with foreign trade to domestic banks? a. international banking facility b. shell branch c. correspondent bank d. Edge Act bank
Q: Which of the following forms of international banking organization is associated with interbank money market transactions? a. representative office b. shell branch c. Edge Act corporation d. international banking facility
Q: Which of the following laws is NOTassociated with U.S. regulation of international banking? a. Federal Reserve Act of 1913 b. Edge Act of 1919 c. National Banking Act of 1863 d. International Banking Act of 1978
Q: While country central banks have pursued their own country interests, recently under the framework of the Bank for International Settlements, central banks from leading economies have agreed to a. allow international banks to branch throughout every country involved. b. stabilize interest rates. c. establish minimum capital ratios for international banks. d. maintain fixed exchange rates.
Q: Unlike the United States, many countries grant their banks the authority for a. full merchant banking. b. deposit banking. c. forming bank holding companies. d. lending to foreign companies and countries. e. borrowing from foreign markets
Q: Most shell branches of U.S. banks operate in a. Japan. b. United Kingdom. c. Bahamas and British West Indies. d. Canada.
Q: Which of the following is NOT a reason for the rapid expansion of U.S. banks overseas between 1980 and 2000 ? a. the establishment of the Edge Act b. overall expansion of U.S. world trade c. the growth of multinational corporations d. restrictions on outflow of funds from the U.S. e. the International Bank Act of 1978
Q: Under U.S. regulations Edge Act subsidiaries must devote at least 50 percent of their business to assisting customers with export-import trade and international credit.
Q: The major period for the US banks to grow internationally is after 2000 due to the deregulation of banking industry.
Q: Most large international loans are funded in the Eurocurrency market.
Q: Correspondent banks can nprovide full banking services in foreign country.
Q: Troubled sovereign loans to less developed countries are usually rescheduled rather than foreclosed.
Q: IBFs collect small domestic deposits and make foreign loans.
Q: Shell branches are developed for international money market transactions without contact with the public of the host country.
Q: Representative offices are usually established to coordinate business between domestic and foreign banks.
Q: U.S. banks have been permitted to engage in a wider range of business activities in foreign countries than at home in order to be competitive with foreign banks.
Q: Shell branches pay no local taxes and usually operate in stable political environment.
Q: Foreign branches of U.S. banks evolved in the 1960s as a reaction to capital flow regulations in the U.S.
Q: Until the passage of the International Bank Act of 1978, foreign banks enjoyed substantial operating advantages over domestic banks in the U.S.
Q: Expropriation and nationalization are two methods of guaranteeing payment of U.S. bank loans to developing countries.
Q: Pooling and third-party guarantees are two methods of reducing international currency risk.
Q: Pooling risk entails lending by several banks to a foreign borrower.
Q: Participating in a syndicated loan helps banks reduce their credit risk.
Q: Edge Act corporations can engage in some types of equity investments.
Q: International banking facilities (IBFs) operate as subsidiaries of bank holding companies.
Q: Foreign branches of U.S. banks are subject to both the host nation's regulations and the regulations in the U.S.
Q: Representative offices can accept deposits and make loans in the host country.
Q: U.S. bank regulators allow U.S. banks overseas to engage in all banking activities allowed by the host country.
Q: The Edge Act of 1919 permitted U.S. banks to create international banking facilities.
Q: IBFs may be established by a U. S.-chartered depository institution, a U.S. branch or agency of a foreign bank, or a U. S. office of an Edge Act Corporation.
Q: How did technology innovations and internationalization of banking industry change the regulation? How are these trends related to economies of scale and scope in the banking industry? How did these changes lead to changes in regulations of bank activities and changes in geographic restrictions ?
Q: Explain how syndicated bank loans work and why they are particularly popular in international lending.
Q: What were the primary reasons U.S. banks began to develop overseas operations after World War II?
Q: Explain the "rollover pricing" feature of LIBOR lending?
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