Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
86 Cards in this Set
- Front
- Back
|
The presence of so many commercial banks in the United States is most likely the result of: |
Previous restrictions on branch banking |
|
|
The ability to use once common resource to provide different products and services is: A. Economies of scale B. Diversification C. Economies of Scope D. Vertical Integration |
Economies of scope |
|
|
An advantage to American banks operating foreign branches is that Eurodollar deposits in offshore branches are: A. Insured by the FDIC B. Subject to extensive regulatory supervision C. All demand Deposits that pay no interest D. Not subject to reserve requirements |
not subject to reserve requirements |
|
|
Which of the following is likely a result of increased interest-rate volatility |
An increase in demand for financial services and products |
|
|
When depositors withdraw funds from commercial banks to seek other more attractive assets, deposit losses in the banking system may restrict the amount of funds that banks can lend. Which of the following identifies this process? A. Disintermediation B. Capital mobility C. Hedging D. Flight safety |
Disintermediation |
|
|
Currency in circulation that cannot be redeemed for gold is called: A. Gold bills B. Fiat money C. Junk Bonds D. State Money |
Fiat Money |
|
|
Thrift institution include: A. Commercial Banks B. Mutual Savings Banks C. Brokerage Firms D. Insurance Companies |
Mutual savings bank |
|
|
Commercial banks that provide a full range of banking, securities, and insurance services, all within a single legal entity, are part of: A. Barrier-free banking B. An international banking system C. A universal banking system D. Decentralized banking |
A universal banking system |
|
|
Since the passage of the International Banking Act of 1978, the competitive advantage enjoyed by foreign banks been: A. Mildly explained B. Eroded C. Greatly expanded D. Completely Eliminated |
Eroded |
|
|
Financial instruments with returns tied to previously issued securities are called: |
Financial Derivatives |
|
|
The Glass-Steagall Act, which was repealed in 1999, prohibited commercial banks from: |
Engaging in underwriting and dealing in corporate securities |
|
|
Which of the following is requirement of the Federal Deposit Insurance Corporation? |
Member banks of the Federal Reserve System are required to purchase FDIC insurance for their depositors |
|
|
Agreements to provide a standardized commodity to a buyer at a specific price on a specific date are: A. Future contracts B. Mortgage-backed securities C. Call options D. Put options |
Future Contracts |
|
|
What is a primary characteristics of credit unions? |
Credit unions are organized around a group of individuals that belong to a common institutions |
|
|
As a result of strict banking regulations, the United States has: A. A few dominant banks that hold most of the assets in the banking industry B. Many more smaller banks when compared to other industrialized countries C. Too few banks when compared to other industrialized countries D. Banks that are quite large relative to those in other industrialized countries |
Many more smaller banks when compared to other industrialized countries |
|
|
Experts predict that future trends in the U.S. banking industry will lead to: A. a few hundred banks B. Several thousand banks C. An increased number of banks D. As few as ten banks |
Several thousand banks |
|
|
Why was the United States one of the last major industrialized countries to have a central bank? A. The banking lobby always opposed the creation of a central bank and its potential to diminish the profits of the banking industry B. Attempts to create a central bank in the past (For example, the First or Second Bank of the United States) resulted in total failure C. Most felt that a central bank was not necessary as long as the United States operated on a gold or silver standard D. Agricultural and other U.S. interests were suspicious of centralized power and opposed the creation of a central bank |
Agricultural and other U.S. interests were suspicious of centralized power and opposed the creation of a central bank |
|
|
Why does the US operate under a dual banking system? ( Check all that apply ) A. Financial innovation is more likely to occur in a dual banking system B. Federally chartered banks help to stabilize the banking system and are less prone to failure C. Dual banking systems encourage competition between state-chartered banks and federally chartered banks D. There is skepticism of centralized power in the U.S. Banking system E. Dual banking systems are always more efficient and economically sounds than other banking systems |
Federally chartered banks help to stabilize the banking system and are less prone to failure There is skepticism of centralized power in the U.S. banking system |
|
|
Which of the following is not a motivation for the original Glass-Steagall Act in 1933? A. The desire to prevent losses to depositors in the even of future bank panics B. The need to separate the activities of commercial banking from investment banking C. The need to further consolidate the banking industry and securities industry D. A need for federal deposit insurance to prevent future runs banks |
The need to further consolidate the banking industry and securities industry |
|
|
How does the emergence of interest-rate risk help explain financial innovation A. It allows financial institutions to avoid the limits set on the interest rate paid on time deposit B. It increases the demand for financial products and services that could reduce that risk C. It increases profits for financial institutions and thus increases the supply of new financial instruments D. It decreases the demand for new financial innovation because these products are often risky How does the emergence of interest-risk help explain financial innovation An increase in interest-rate risk _______ the demand for financial innovation (Decreases, Increases, or Does not change) |
It increases the demand for financial products and services that could reduce that risk Increases |
|
|
If inflation had not risen in the 1960s and 1970s, the banking industry might be healthier today. Is this statement true, false, or uncertain? A. True. Higher inflation helped raise interest rates, which cause the disintermediation process to occur and helped create money market mutual funds. B. False. Higher inflation helped raise interest rates, which helped the banking industry. Problems in the US banking system are primarily due to the abolishment of Regulation Q C. False. Higher inflation helped raise interest rates, which helped the banking industry. Problems in US banking system are primarily due to financial innovation. D. True. Higher inflation helped raise interest rates, which cause the disintermediation process to occur and prompted the reinstatement of Regulation Q and NOW accounts |
True. Higher inflation helped raise intrest rates, which caused the disintermediation process to occur and helped create money market mutual funds. |
|
|
How do sweep accounts and money market mutual funds allow banks to avoid reserve requirements? A. Because banks are able to "sweep" funds from these accounts into other transaction accounts, they are able to avoid reserve requirements B. Because theses accounts pay a return that is slightly below the regulation Q ceiling, they are not subject to reserve requirements. C. Although they function as interest-earning deposits, these accounts are not legally deposits an so are not subject to reserve requirements. D. Reserve requirements on any interest bearing account cannot be avoided because they are mandated by the Federal Reserve System |
Although they function as interest-earning deposits, these accounts are not legally deposits and so are not subject to reserve requirements |
|
|
If reserve requirements were eliminated in the future, as some economists advocate, what effect would this have on the size of money market mutual funds? Money market mutual funds ( MMMFs) would likely ( Become Larger, Become Smaller, Remain Unchanged ) |
Become smaller |
|
|
Why is loophole mining so prevalent in the banking industry in the US? A. Banks engages in loophole mining in order to protect their depositors from the risks of regulatory constraints. B. Because banks are heavily regulated, loopholes are always written into new legislation C. Banks engage in loophole mining in order to avoid regulatory constraints that restrict their ability to earn profits D. By engaging in loophole mining, banks can limit financial innovation and thus increase their profits |
Banks engage in loophole mining in order to avoid regulatory constraints that restrict their ability to earn profits |
|
|
Why have banks been losing cost advantages in acquiring funds in recent years? A. The reinstatement of Regulation Q and the appearance of NOW accounts significantly increased disintermediation B. The increased cost of funds from higher rates and the abolishment of Regulation Q C. Foreign banks have been able to tap a large pool of domestic savings, thereby lowering their cost of funds relative to American Banks D. Both A and C are correct E. All of the above are correct |
The increased cost of funds from higher rates and the abolishment of Regulation Q |
|
|
Why have banks been losing income advantages on their assets in recent years A. The Growth of the commercial paper market and the development of the junk bond market have given corporations alternatives to borrowing funds from banks, thus eroding the competitive advantage of banks on the lending side B. The collapse of the subprime mortgage market has put banks at a comparative disadvantage because regulators are requiring them to refinance subprime mortgages with terms that are unfavorable to the banks C. Securitization has enabled other financial institutions to originate loans, taking away some of the banks' loan business D. Both A and C are correct E. All of the above |
Both A and C The Growth of the commercial paper market and the development of the junk bond market have given corporations alternatives to borrowing funds from banks, thus eroding the competitive advantage of banks on the lending side Securitization has enabled other financial institutions to originate loans, taking away some of the banks' loan business |
|
|
The commercial banking industry in Canada is less competitive than the commercial banking industry in the United States, because in Canada only a few large banks dominate the industry, while in the US there are around 6500 commercial banks'. Is this statement true or false? A. True. The reason for the large number of US banks is regulations that promote competitions such as branching restrictions B. False. The reason for the large number of US banks is anti-competitive regulations such as branching restrictions C. True. The banking industry is less competitive in Canada than in the US because Canada has a national banking system, i.e., owned and operated by the government D. False. It is not true that the industry is dominated by a few large firms; thus, based on the Herfindahl-Hirschman Index, the banking industry in Canada is just as competitive as in the US |
False. The reason for the large number of US banks is anti-competitive regulations such as branching restrictions |
|
|
Which of the following is not a reason for the dramatic increase in the number bank holding companies? A. Bank holding companies can circumvent branching restriction because they can own a controlling interest in several banks even if branching is not permitted B. Bank holding companies can provide leasing, credit card services, and servicing of loans in other states C. Bank holding companies can engage in other activities related to banking, which can be highly profitable D. Bank holding companies can monopolize the market for banking services in a given region |
Bank holding companies can monopolize the market for banking services in a given region |
|
|
The presence of so many commercial banks in the US is most likely the result of: A. Consumer preferences for federally chartered banks B. Previous restrictions on branch banking C. Asymmetric information problems that give local banks a competitive advantage over larger banks D. Consumers' desire to deal with local banks only |
Previous restrictions on branch banking |
|
|
The McFadden Act of 1927 A. Separated commercial banks and investment banks B. Required that banks maintain bank capital equal to at least 6% of their assets C. Prohibited banks from branching across state lines D. Required that all banks seek deposit insurance |
Prohibited banks from branching across state lines |
|
|
What are the disadvantages of interest banking? A. Diversification of a bank's loan portfolio increases the bank's risk B. There may be a decrease in competition as small banks may fail C. Interstate lending may cause a reduction in lending to small businesses D. There may be increased risk from expanding into new geographical markets |
There may be increase risk from expanding into new geographical markets There may be a decrease in competition as small banks may fail Interstate lending may cause a reduction in the lending to small businesses |
|
|
Bank holding companies that rival money center banks in size but are not located in money center cities are known as: A. District Branch Banks B. International Bank C. Multinational Banks D. Super-regional Banks |
Super-regional banks |
|
|
The ability to use one common resource to provide different products and services is: A. Economies of Scope B. Economies of Scale C. Diversification D. Vertical Integration |
Economies of scope |
|
|
Which of the following repealed the prohibition on interest banking A. Garn-St. Germain Act. B. Riegle-Neal Act C. Gramm-Leach Bliley Act D. Glass Steagall Act |
Riegle-Neal Act |
|
|
How did competitive forces lead to the repeal of the Glass-Steagall Act's separation of the banking and securities industries? A. Financial innovation motivated banks and other financial institutions to bypass the intent of the Glass-Steagall Act B. Banks were allowed to hold substantial equity stakes in commercial firms in order to keep them competitive C. The Act's restrictions put American banks at a competitive disadvantage relative to foreign banks D. The Fed allowed bank holding companies to enter the underwriting business |
Financial innovation motivated banks and other financial institutions to bypass the intent of the Glass-Steagall Act The Act's restrictions put American banks at a competitive disadvantage relative to foreign banks The Fed allowed bank holding companies to enter the underwriting business |
|
|
What has been the likely effect of the Gramm-Leach-Bliley Act on financial consolidation? A. This legislation further stimulated financial consolidation of the banking industry. Thus more financial mergers are likely to occur which will increase both the size and complexity of financial institutions in the future B. This legislation placed limits on financial consolidation in the banking industry. Thus, fewer financial mergers are likely to occur, and there will be a larger number of smaller banks in the future C. this legislation led to further consolidation of the banking industry; however, it is likely that the costs of consolidation D. The Gramm-Leach-Bliley Act was later appealed and thus has no impact on financial consolidation |
This legislation further stimulated financial consolidation of the banking industry. Thus more financial mergers are likely to occur which will increase both the size and complexity of financial institutions in the future |
|
|
Which of the following repealed the Glass-Steagall Act A. Garn-St. Germain Act B. McFadden Act C. Gramm-Leach-Bliley Act D. Riegle-Neal Act |
Gramm-Leach-Bliley Act. |
|
|
What is the major difference between banking systems in the US and Japan A. American banks are not allowed to hold substantial equity stakes in commercial firms, whereas Japanese can B. Japanese banks are usually organized as bank holding companies C. Bank Holding companies are illegal in the US D. Japanese banks are not allowed to hold substantial equity stakes in commercial firms, whereas American banks can |
American banks are not allowed to hold substantial equity stakes in commercial firms, whereas Japanese banks can |
|
|
Why is there a higher percentage of banks with less than $25 million of assets among commercial banks than among savings and loans and mutual savings banks A. Because commercial banks specialize in providing demand deposit and other transaction-based serviced, they tend to be smaller than S&Ls and mutual savings banks, which specialize in making mortgage B. Because restrictions on branching are stricter for commercial banks than for savings and loans, small commercial banks have greater protection from competition and are more likely to survive than small savings and loans C. Because restriction on branching are stricter for commercial banks than for savings and loans, small commercial banks have greater protection from competition and are more likely to survive than small savings and loans D. Because commercial banks specialize in providing credit card and other transaction-based services, they ten to be smaller than S&Ls and mutual savings bank, which specialize in making mortgage loans and other large loans. |
Because restrictions on branching are stricter for commercial banks than for savings and loans, small commercial banks have greater protection from competition and are more likely to survive than small savings and loans |
|
|
Unlike commercial banks, savings and loans, and mutual savings banks, credit unions did not have restrictions on locating branches in other states. Why, then, are credit unions typically smaller than the other depository institutions A. To maintain their tax-exempt status, credit unions must remain smaller than other depository institutions B. Credit unions are small because they operate under diseconomies of scale C. Credit unions are small because members usually share a common employer or have ties to a particular organization D. The National Credit Union Association (NCUA) regulates the size of credit unions |
Credit unions are small because members usually share a common employer or have ties to a particular organization |
|
|
Which of the following is responsible for the supervision of savings and loan association A. FSLIC B. Federal Home Loan Bank System C. Comptroller of the Currency D. Federal Reserve System |
Federal Home Loan Bank System |
|
|
Thrift institution include: A. Insurance companies B. Commercial banks C. Brokerage firms D. Mutual savings banks |
Mutual savings bank |
|
|
Which of the following factors does not explain the rapid growth in international banking A. Rapid growth in international trade and multinational corporations B. Increased regulation of the US banking industry C. The expansions of US banks into the Eurodollar market D. Increased profitability |
Increased regulation of the US banking industry |
|
|
Which of the following is not an incentive created by regulators agencies to encourage international banking A. Relaxed branching regulations for Edge Act corporations B. Special tax treatment C. Direct federal subsidies D. Relaxed branching regulations for international banking facilities (IBFs) |
Direct federal subsidies |
|
|
How could the approval of international banking facilities (IBFs) by the Fed in 1981 have reduced employment in the banking industry in Europe? A. IBFs encourage American and foreign banks to do more banking business in the United States, thus shifting employment from Europe to the US B. Actually, the approval of IBFs discouraged European banks from conducting banking in the US, thus increasing employment in the banking industry in Europe C. By making it easier to evade taxes, IBFs encourage American and foreign banks to do more banking business in the United States, thus shifting employment from Europe to the US D. Actually, the approval of IBFs encouraged more US banks to conduct business outside the US, thus shifting employment from the US to Europe |
IBF's encourage American and foreign banks to do more banking business in the US, thus shifting employment from Europe to the United States |
|
|
If the bank at which you keep your checking account is owned by foreigners, should you worry that your deposits are less safe than if the bank were owned by Americans A. Yes, because the foreign bank is not subject to the same regulations as the American-owned bank B. No. Although the foreign bank is subject to the same regulations as the American-owned bank, it is subject to international banking regulations, which are essentially equivalent to US banking regulations C. Yes. Although the foreign bank is subject to the same regulations as the American-owned bank, it is much easier for the foreign bank to circumvent these regulations, thus putting your deposits at greater risk. D. No, because the foreign bank is subject to the same regulation as the American-owned bank |
No, because the foreign bank is subject to the same regulation as the American-owned bank |
|
|
Why is there only one US bank among the ten largest banks in the world? A. US banks are more heavily regulated than foreign banks, thus limiting the number of mergers in the US. With fewer mergers and bank consolidation. US banks are less dominant in world markets B. With current legislation, US banks are not permitted to open foreign branches, which may indicate why US banks are less dominant in world markets C. The financial crisis of 2007-2009 led to a decline in the number of US banks. With fewer banks in operation, US banks are now less dominant in world markets D. Under the Basel Accords, US banks are trending away from international coordination of banking regulations, thus leading to less dominance of US banks in world markets US banks are _____ regulated than foreign banks, which _____ bank consolidation and mergers in US banks. less or more Limits or encourages |
US banks are more heavily regulated than foreign banks, thus limiting the number of mergers in the US. With fewer mergers and bank consolidation. US banks are less dominant in world markets More; Limits There is more competition among banks in the US, which keeps US banks smaller |
|
|
Which regulatory agency has the primary responsibility for supervising the following categories of commercial banks? A. National Banks: ( Comptroller of the Currency, FDIC, or Federal Reserve System ) B. Bank Holding Companies: ( Comptroller of the Currency, FDIC, or Federal Reserve System ) C. Non-Federal Reserve member state banks: ( Comptroller of the Currency, FDIC, State Banking Authorities, or Federal Reserve System ) D. Federal Reserve member state banks: ( Comptroller of the Currency, FDIC, or Federal Reserve System ) E. Federally chartered savings and loan associations: ( Comptroller of the Currency, Office of Thrift Supervision, FDIC, or Federal Reserve System ) F. Federally Chartered credit unions: ( Comptroller of the Currency, National Credit Union Administration, FDIC, or Federal Reserve System ) |
A. Comptroller of the Currency B. Federal Reserve System C. State Banking Authorities D. Federal Reserve System E. Office of Thrift Supervision F. National Credit Union Administration |
|
|
If inflation had not risen in the 1960s and 1970s, the banking industry might be healthier today. Is this statement true, false, or uncertain? Explain A. False. Higher inflation helped raise interest rates which helped the banking industry. Problems in the US banking systems are primarily due to financial innovation B. True. Higher inflation helped raise interest rates, which cause the disintermediation process to occur and helped create money market mutual funds C. True. Higher Inflation helped raise interest rates, which caused the disintermediation process to occur and prompted the reinstatement of Regulation Q and NOW account D. False. Higher inflation helped raise interest rates, which helped the banking industry. Problems in the US banking system are primarily due to the abolishment of Regulation Q |
True. Higher inflation helped raise interest rates, which cause the disintermediation process to occur and helped create money market mutual funds |
|
|
How do sweep accounts and money market mutual funds allow banks to avoid reserve requirement? A. Because these accounts pay a return that is slightly below the Regulation Q ceiling, they are not subject to reserve requirements B. Because banks are able to "sweep" funds from these accounts into other transaction accounts, they are able to avoid reserve requirements C. Although they function as interest-earnings deposits, these accounts are not legally deposits and so are not subject to reserve requirements D. Reserve requirements on any interest bearing account cannot be avoided because they are mandated by the Federal Reserve System |
Although they function as interest-earnings deposits, these accounts are not legally deposits and so are not subject to reserve requirements |
|
|
How does the emergence of the interest-rate-risk help explain financial innovation? A. It increases profits for financial institutions and thus increase the supple of new financial instruments B. It decreases the demand for a new financial innovation because these products are often risky C. It allows financial institutions to avoid the limits set on the interest rate paid on time deposits D. It increases the demand for financial products and services that could reduce that risk How does the emergence of interest-rate-risk help explain financial innovation? An increase in interest-rate-risk ( increases, decreases or does not change ) the demand for financial innovation |
It increases the demand for financial products and services that could reduce that risk Increases |
|
|
Foreign banks may engage in banking activities in the US by opening all of the following except A. A subsidiary US bank B. A McFadden Corporation C. A branch of the foreign bank D. An agency office of the foreign bank |
A McFadden Corporation |
|
|
If a foreign bank operates a subsidiary bank in the US, the subsidiary bank is A. Restricted to accepting deposits form foreign citizens living in the US B. Restricted to making loans to only foreign citizens in the US C. Subject to the same regulations as a US owned Bank D. Only subject to the Regulations of the country in which the foreign bank is chartered |
Subject to the same regulations as a US owned Bank |
|
|
An advantage to American banks from operating foreign branches is that Eurodollar deposits in offshore branches are A. Insured by FDIC B. Subject to extensive regulatory C. All demand Deposits that pay no interest D. Not subject to reserve requirements |
Not subject to reserve requirements |
|
|
Eurodollars are A. dollar-denominated deposits held in the US banks by Europeans B. Deposits held by US banks in foreign countries C. dollar-dominated deposits held in banks outside the US D. Deposits held by US banks in Europe |
dollar-dominated deposits held in banks outside the US |
|
|
The spectacular growth in international banking can be explained by A. The desire for US banks to escape burdensome domestic regulations B. The creation of the World Trade Organization C. The Rapid Growth in international trade D. The 1988 Basel Agrreement |
The Rapid Growth in international trade |
|
|
Why might American businesses want to hold Eurodollars A. Eurodollar deposits are insured by FDIC B. Minimum transaction sizes are very low, making Eurodollars an attractive savings instrument for consumers C. Many commercial transactions and international contracts are denominated in dollars D. Eurodollar deposits are heavily regulated |
Many commercial transactions and international contracts are denominated in dollars |
|
|
Mutual Savings banks are owned by A. Depositors B. Foreign investors C. Partners D. Shareholders |
Depositors |
|
|
The FHLBS gives loans to S&Ls and thus performs a function similar to the _____ for commercial banks A. US Mint B. US Treasury C. Office of the Comptroller of the Currency D. Federal Reserve |
Federal Reserve |
|
|
What is the primary characteristic of credit unions A. Branching across state lines is prohibited in credit unions B. Credit Unions are typically large C. Lending is primarily in the form of mortgage loans for credit unions D. Credit unions are organized around a group of individuals that belong to a common institution |
Credit unions are organized around a group of individuals that belong to a common institution |
|
|
Under the Gramm-Leach-Bliley Act the oversight of the securities activities of bank holding companies belongs to A. The US Treasury B. The Comptroller of the Currency C. The SEC D. The Federal Reserve |
The SEC |
|
|
Under the Gramm-Leach-Bliley Act states retain regulatory authority over A. Insurance activities B. Bank holding companies C. Securities activities D. Bank Subsidiaries engaged in securities underwriting |
Insurance activities |
|
|
One of the concerns of increased bank consolidation is the reduction in community banks which could result in A. More banking regulation B. Less lending to small businesses C. Higher interest rates D. Loss of cultural identity |
Less lending to small businesses |
|
|
Although it has a population about half that of the US, Japan has A. About 25% of the number of banks B. More than 5000 commercial banks C. Fewer than 100 commercial banks D. Many more banks |
Fewer than 100 commercial banks |
|
|
The large number of banks in the United States is an indication of A. Consumer preference for local banks B. Vigorous competition within the banking industry C. Lack of competition within the banking industry D. Only Efficient banks operating within the US |
Lack of competition within the banking industry |
|
|
The most important developments that have reduced banks cost advantages in the past thirty years include: A. The growth of the junk bond market B. The growth of securitization C. The growth in the commercial paper market D. The competition from money market mutual funds |
The competition from money market mutual funds |
|
|
Disintermediation resulted from A. Reserve requirements B. Elimination of Regulation Q (the regulation imposing interest rate ceilings on bank deposits) C. Interest rate ceilings combined with inflation-driven increases in interest rates D. Increases in federal income taxes |
Interest rate ceilings combined with inflation-driven increases in interest rates |
|
|
In this type of arrangement, any balances above a certain amount in a corporation's checking account at the end of the business day are "removed" and invested in overnight securities that pay the corporation interest. This innovation is referred to as a A. Share draft account B. Sweep account C. Removed-repo account D. Stockman Account |
Sweep Account |
|
|
Prior to 1980, the Fed set an interest rate _____, a maximum limit on the interest rate that could be paid on time deposits A. Floor B. Ceiling C. Window D. Wall |
Ceiling |
|
|
Prior to 2008, the bank's cost of holding reserves equaled A. The interest paid on deposits time the amount of reserves. B. The interest paid on deposits times the amount of deposits C. The interest earned on loans time the amount of loans D. the interest earned on loans times the amount on reserves |
the interest earned on loans times the amount on reserves |
|
|
The development of money market mutual funds contributed to the growth of _____ since the money market mutual funds need to hold liquid, high-quality, short-terms assets A. The commercial paper market B. The municipal bond market C. The junk bond market D. The corporate bond market |
The commercial paper market |
|
|
Automated teller machines A. Cost nothing to use, so banks provide their services free of charge B. Are more costly to use than human tellers, so banks discourage their use by charging more for us of ATMs C. Cost about the same to use as human teller in banks, so banks discourage their use by charging more for use of ATMs D. Cost less than human tellers, so banks may encourage their use by charging less for using ATMs |
Cost less than human tellers, so banks may encourage their use by charging less for using ATMs |
|
|
A debit card differs from a credit card in that A. A debit card is a loan while for a credit card purchase, payment is made immediately B. A credit card is a long-term loan while a debit card is a short-term loan C. A debit card is a long-term loan while a credit card is a short-term loan D. A credit card is a loan while for a debit card purchase, payment is made immediately |
A credit card is a loan while for a debit card purchase, payment is made immediately |
|
|
Rising interest-rate risk A. Reduced the demand for financial innovation B. Increased the cost of financial innovation C. Increased the demand for financial innovation D. Reduced the cost of financial innovation |
Increased the demand for financial innovation |
|
|
_______ is the process of researching and developing profitable new product and services by financial institutions A. Financial manipulation B. Customer engineering C. Financial Engineering D. Customer manipulation |
Financial Engineering |
|
|
Uncertainty about future interest-rate volatility and returns is known as: A. Interest-rate irregularities B. Interest-rate risk C. Hedging D. Interest rate parity |
Interest-rate risk |
|
|
________ it the process of researching and developing new instruments to address the needs of investors and institutions in a rapidly changing financial climate. A. Customer engineering B. Financial manipulation C. Financial Engineering D. Customer manipulation |
Financial Engineering |
|
|
The Glass-Steagall Act, before its repeal in 1999, prohibited commercial banks from A. Selling new issues of government securities B. Purchasing any debt securities C. Engaging in underwriting and dealing of corporate securities D. Issuing Equity to finance bank expansion |
Engaging in underwriting and dealing of corporate securities |
|
|
With the creation of the Federal Deposit Insurance Corporation, A. Member banks of the Federal Reserve System were required to purchase FDIC insurance for their depositors, while non-member commercial banks could choose to buy deposit insurance B. Member banks of the Federal Reserve System were given the option to purchase FDIC insurance for their depositors, while non-member commercial banks were required to buy deposit insurance C. Both member and non-member banks of the Federal Reserve System were required to purchase FDIC insurance for their depositors D. Both member and non-member banks of the Federal Reserve System could choose, but were not required, to purchase FDIC insurance for their depositors |
Member banks of the Federal Reserve System were required to purchase FDIC insurance for their depositors, while non-member commercial banks could choose to buy deposit insurance |
|
|
The Federal Reserve Act of 1913 required that A. State banks be subject to the same regulation as national banks B. National banks join the Federal Reserve System C. State banks could join the Federal Reserve System D. National banks establish branches in the cities containing Federal Reserve banks |
National banks join the Federal Reserve System |
|
|
The regulatory system that has evolved in the US whereby banks are regulated at the state level, the national level, or both, is known as a A. Bilateral regulatory system B. Tiered regulatory system C. Dual banking system D. Two-Tiered regulatory system |
Dual banking system |
|
|
Prior to 1863, all commercial banks in the US A. Were regulated by the Federal Reserve B. Were regulated by the Central Bank C. Were chartered by the US Treasury Department D. Were chartered by the banking commission of the state in which they operated |
Were chartered by the banking commission of the state in which they operated |
|
|
Currency circulated by banks that could be redeemed for gold was called A. Junk bonds B. State money C. Banknotes D. Gold Bills |
Banknotes |
|
|
A major controversy involving the banking industry in its early years was A. What percentage of deposits banks should hold as fractional reserves B. Whether banks should be allowed to issue their own bank notes C. Whether the federal government or the states should charter banks D. Whether banks should both accept deposits and make loans or whether these functions should be separated into different institutions |
Whether the federal government or the states should charter banks |
|
|
Which of the following is a requirement of the Federal Deposit Insurance Corporation? A. Non-Federal reserve commercial banks are required to buy deposit insurance for their Depositors B. Only state-chartered banks are required to purchase insurance for their depositors C. Both member and non-member banks of the Federal Reserve must purchase FDIC insurance for their depositors D. Member banks of the federal reserve system are required to purchase FDIC insurance for their depositors |
Member banks of the federal reserve system are required to purchase FDIC insurance for their depositors |
|
|
The bank panic of 1907 led to passage of the A. Garn-St. Germain Act of 1982 B. National Bank Act of 1863 C. National Bank Charter Amendments of 1918 D. Federal reserve Act of 1913 |
Federal reserve Act of 1913 |
