Question 1

Which of the following is not a thrift?

Accepted Answer

A)  a savings-and-loan 
B)  a commercial bank 
C)  a credit union 
D)  a mutual savings bank 
A)  a savings-and-loan 
B)  a commercial bank 
C)  a credit union 
D)  a mutual savings bank B

Question 2

The leverage ratio for the U.S. banking system in 2007 was about __________ percent.

Accepted Answer

A)  two 
B)  five 
C)  ten 
D)  eighteen 
A)  two 
B)  five 
C)  ten 
D)  eighteen C

Question 3

A bank that improves its service may be able to __________ the rate on its loans and so __________ its net interest income.

Accepted Answer

A)  lower; lower 
B)  lower; raise 
C)  raise; lower 
D)  raise; raise 
A)  lower; lower 
B)  lower; raise 
C)  raise; lower 
D)  raise; raise D

Question 4

Which type of thrift institution was relatively unaffected by the traumas of deregulation in the 1980s?

Accepted Answer

A)  credit unions 
B)  savings-and-loans 
C)  mutual savings banks 
D)  IBFs 
A)  credit unions 
B)  savings-and-loans 
C)  mutual savings banks 
D)  IBFs

Question 5

The one-year re-pricing GAP is a measure of __________ risk.

Accepted Answer

A)  credit 
B)  leverage 
C)  interest rate 
D)  liquidity 
A)  credit 
B)  leverage 
C)  interest rate 
D)  liquidity

Question 6

The McFadden Act was passed to prevent

Accepted Answer

A)  banks from competing on the basis of deposit rates. 
B)  foreign banks from operating in the United States. 
C)  large nationwide banks from forming. 
D)  banks from holding corporate stock as an asset. 
A)  banks from competing on the basis of deposit rates. 
B)  foreign banks from operating in the United States. 
C)  large nationwide banks from forming. 
D)  banks from holding corporate stock as an asset.

Question 7

For S&Ls in the early 1980s the __________ cost of short-term deposits turned their net interest margin __________.

Accepted Answer

A)  increasing; positive 
B)  increasing; negative 
C)  decreasing; positive 
D)  decreasing; negative 
A)  increasing; positive 
B)  increasing; negative 
C)  decreasing; positive 
D)  decreasing; negative

Question 8

In 1964 a certain foreign bank opened a branch in the United States. That branch

Accepted Answer

A)  has always been allowed to underwrite securities. 
B)  has never been allowed to underwrite securities. 
C)  gained the right to underwrite securities by the International Banking Act of 1978. 
D)  lost the right to underwrite securities by the International Banking Act of 1978. 
A)  has always been allowed to underwrite securities. 
B)  has never been allowed to underwrite securities. 
C)  gained the right to underwrite securities by the International Banking Act of 1978. 
D)  lost the right to underwrite securities by the International Banking Act of 1978.

Question 9

A bank with some monopoly power may be able to __________ the rate on its deposits and so __________ its net interest income.

Accepted Answer

A)  lower, lower 
B)  lower, raise 
C)  raise, lower 
D)  raise, raise 
A)  lower, lower 
B)  lower, raise 
C)  raise, lower 
D)  raise, raise

Question 10

If a security held by a bank falls in market value, that loss

Accepted Answer

A)  must be recorded by the bank, no matter what. 
B)  will be recorded by the bank only if the security is of the type they hold to maturity. 
C)  will be recorded by the bank only if the security is of the type they often sell before maturity. 
D)  will be recorded by the bank only if it sells the security. 
A)  must be recorded by the bank, no matter what. 
B)  will be recorded by the bank only if the security is of the type they hold to maturity. 
C)  will be recorded by the bank only if the security is of the type they often sell before maturity. 
D)  will be recorded by the bank only if it sells the security.

Question 11

"Reciprocity pacts" started springing up in the

Accepted Answer

A)  1920s. 
B)  1950s. 
C)  1960s. 
D)  1980s. 
A)  1920s. 
B)  1950s. 
C)  1960s. 
D)  1980s.

Question 12

Because banking is very __________-intensive, a bank generally becomes successful if it can __________ the ratio of salary and wages to total assets.

Accepted Answer

A)  capital; raise 
B)  capital; lower 
C)  labor; raise 
D)  labor; lower 
A)  capital; raise 
B)  capital; lower 
C)  labor; raise 
D)  labor; lower

Question 13

For banks, net interest income is becoming a __________ proportion of their total operating income as the banks are __________ nontraditional sources of revenue.

Accepted Answer

A)  rising; shifting into 
B)  rising; pulling out of 
C)  falling; shifting into 
D)  falling; pulling out of 
A)  rising; shifting into 
B)  rising; pulling out of 
C)  falling; shifting into 
D)  falling; pulling out of

Question 14

Since 1970 there has been a clear increase in the proportion of the banking industry assets made up of

Accepted Answer

A)  mortgage loans. 
B)  state and local government securities. 
C)  cash. 
D)  business loans. 
A)  mortgage loans. 
B)  state and local government securities. 
C)  cash. 
D)  business loans.

Question 15

The assets of a bank are its __________ of funds

Accepted Answer

A)  uses 
B)  sources 
C)  reserves 
D)  excess 
A)  uses 
B)  sources 
C)  reserves 
D)  excess

Question 16

Non-transactions deposits are different from transactions deposits in that

Accepted Answer

A)  transactions deposits have unlimited check writing privileges while non-transactions deposits do not. 
B)  transactions deposits have limited check writing privileges while non-transactions deposits have unlimited check writing privileges. 
C)  transactions deposits have no check writing privileges while non-transactions deposits do. 
D)  transactions deposits have no check writing privileges while non-transactions deposits have limited check writing privileges. 
A)  transactions deposits have unlimited check writing privileges while non-transactions deposits do not. 
B)  transactions deposits have limited check writing privileges while non-transactions deposits have unlimited check writing privileges. 
C)  transactions deposits have no check writing privileges while non-transactions deposits do. 
D)  transactions deposits have no check writing privileges while non-transactions deposits have limited check writing privileges.

Question 17

The ratio of non-performing loans to total loans is a measure of a bank's __________ risk.

Accepted Answer

A)  credit 
B)  leverage 
C)  interest rate 
D)  liquidity 
A)  credit 
B)  leverage 
C)  interest rate 
D)  liquidity

Question 18

A bank's net interest margin can be adversely affected by all of the following except

Accepted Answer

A)  credit risk. 
B)  interest rate risk. 
C)  leverage risk. 
D)  stock market risk. 
A)  credit risk. 
B)  interest rate risk. 
C)  leverage risk. 
D)  stock market risk.

Question 19

The largest type of depository institution in the United States is

Accepted Answer

A)  savings-and-loans. 
B)  commercial banks. 
C)  credit unions. 
D)  mutual funds. 
A)  savings-and-loans. 
B)  commercial banks. 
C)  credit unions. 
D)  mutual funds.

Question 20

With overnight repos, __________ gain access to short-term funds to lend.

Accepted Answer

A)  corporations 
B)  banks 
C)  governments 
D)  consumers 
A)  corporations 
B)  banks 
C)  governments 
D)  consumers

Exam 12: Depository Financial Institutions

Which of the following is not a thrift?

The leverage ratio for the U.S. banking system in 2007 was about __________ percent.

A bank that improves its service may be able to __________ the rate on its loans and so __________ its net interest income.

Which type of thrift institution was relatively unaffected by the traumas of deregulation in the 1980s?

The one-year re-pricing GAP is a measure of __________ risk.

The McFadden Act was passed to prevent

For S&Ls in the early 1980s the __________ cost of short-term deposits turned their net interest margin __________.

In 1964 a certain foreign bank opened a branch in the United States. That branch

A bank with some monopoly power may be able to __________ the rate on its deposits and so __________ its net interest income.

If a security held by a bank falls in market value, that loss

"Reciprocity pacts" started springing up in the

Because banking is very __________-intensive, a bank generally becomes successful if it can __________ the ratio of salary and wages to total assets.

For banks, net interest income is becoming a __________ proportion of their total operating income as the banks are __________ nontraditional sources of revenue.

Since 1970 there has been a clear increase in the proportion of the banking industry assets made up of

The assets of a bank are its __________ of funds

Non-transactions deposits are different from transactions deposits in that

The ratio of non-performing loans to total loans is a measure of a bank's __________ risk.

A bank's net interest margin can be adversely affected by all of the following except

The largest type of depository institution in the United States is

With overnight repos, __________ gain access to short-term funds to lend.

Introducing Money, Banking, and Financial Markets

The Role of Money in the Macroeconomy

Financial Instruments, Markets, and Institutions

Interest Rate Measurement and Behavior

The Term and Risk Structure of Interest Rates

The Structure and Performance of Securities Markets

The Pricing of Risky Financial Assets

Money and Capital Markets

Demystifying Derivatives

Understanding Foreign Exchange

The Nature of Financial Intermediation

Nondepository Financial Institutions

Understanding Financial Contracts

The Regulation of Markets and Institutions

Financial System Design

Who's in Charge Here?

Bank Reserves and the Money Supply

The Instruments of Central Bankin

Understanding Movements in Bank Reserves

Monetary Policy Strategy

The Classical Foundations

The Keynesian Framework

The ISLM World

Money and Economic Stability in the ISLM World

An Aggregate Supply and Demand Perspective on Money and Economic Stability

Rational Expectations: Theory and Policy Implications

Empirical Evidence on the Effectiveness of Monetary Policy

Tying It All Together

Filters

A bank that improves its service may be able to the rate on its loans and so its net interest income.

For S&Ls in the early 1980s the cost of short-term deposits turned their net interest margin .

A bank with some monopoly power may be able to the rate on its deposits and so its net interest income.

Because banking is very -intensive, a bank generally becomes successful if it can the ratio of salary and wages to total assets.

For banks, net interest income is becoming a proportion of their total operating income as the banks are nontraditional sources of revenue.