Question 1

The Gramm-Leach-Bliley Act

Accepted Answer

A)  has allowed affiliates of financial holding companies to engage in commercial and investment banking. 
B)  provides for the regulation of holding company affiliates by functional supervisors such as the SEC. 
C)  designates the Federal Reserve as the "umbrella" regulator. 
D)  All of the above. 
A)  has allowed affiliates of financial holding companies to engage in commercial and investment banking. 
B)  provides for the regulation of holding company affiliates by functional supervisors such as the SEC. 
C)  designates the Federal Reserve as the "umbrella" regulator. 
D)  All of the above.

Question 2

Banking regulation in the United States is strongly influenced by the large amount of __________ deposits and __________ assets banks hold.

Accepted Answer

A)  time; illiquid 
B)  time; liquid 
C)  checkable; illiquid 
D)  checkable; liquid 
A)  time; illiquid 
B)  time; liquid 
C)  checkable; illiquid 
D)  checkable; liquid

Question 3

In order to manage risk of failure and protect guarantors, the Employee Retirement income Security Act (ERISA)established all of the following requirements on pension funds except for minimum

Accepted Answer

A)  disclosure of information. 
B)  reporting requirements 
C)  investment standards. 
D)  risk-based capital requirements. 
A)  disclosure of information. 
B)  reporting requirements 
C)  investment standards. 
D)  risk-based capital requirements.

Question 4

Risk-based deposit insurance premiums have recently been __________ and this is expected to __________ the moral hazard problem of deposit insurance.

Accepted Answer

A)  abolished; alleviate 
B)  abolished; worsen 
C)  established; alleviate 
D)  established; worsen 
A)  abolished; alleviate 
B)  abolished; worsen 
C)  established; alleviate 
D)  established; worsen

Question 5

An example of an "insider trading" law is that

Accepted Answer

A)  no officer of a corporation is allowed to hold stock in that corporation. 
B)  an officer of a corporation must report to the SEC any buying or selling of stock in that corporation. 
C)  no dealer in domestic securities is allowed to handle foreign securities. 
D)  no more than 25 percent of the outstanding shares of a corporation may be held by the executives of that corporation. 
A)  no officer of a corporation is allowed to hold stock in that corporation. 
B)  an officer of a corporation must report to the SEC any buying or selling of stock in that corporation. 
C)  no dealer in domestic securities is allowed to handle foreign securities. 
D)  no more than 25 percent of the outstanding shares of a corporation may be held by the executives of that corporation.

Question 6

A bank run __________ possibly mushroom into a bank panic because the quality of a bank's portfolio of loans __________ made public information by bank examining agencies.

Accepted Answer

A)  can; is 
B)  can; is not 
C)  cannot; is 
D)  cannot; is not 
A)  can; is 
B)  can; is not 
C)  cannot; is 
D)  cannot; is not

Question 7

State chartered banks were supposed to be driven out of business by the National Currency Act of 1863 and the National Banking Act of 1864 by

Accepted Answer

A)  imposing a tax on their issuance of state bank notes. 
B)  prohibiting them from having interstate branches. 
C)  prohibiting them from paying interest on demand deposits. 
D)  regulating the amount of interest they could pay on savings accounts. 
A)  imposing a tax on their issuance of state bank notes. 
B)  prohibiting them from having interstate branches. 
C)  prohibiting them from paying interest on demand deposits. 
D)  regulating the amount of interest they could pay on savings accounts.

Question 8

What was particularly significant about the failure of the Bank of New England in 1991?

Accepted Answer

A)  It was the FDIC's first use of the purchase and assumption method. 
B)  It fell under the FDIC's "too big to fail" policy. 
C)  The FDIC had to delay bank liquidation due to lack of funds. 
D)  The FDIC began its policy of insuring checkable deposits fully. 
A)  It was the FDIC's first use of the purchase and assumption method. 
B)  It fell under the FDIC's "too big to fail" policy. 
C)  The FDIC had to delay bank liquidation due to lack of funds. 
D)  The FDIC began its policy of insuring checkable deposits fully.

Question 9

The __________ policy dealt with the problem of the consequences of identification of weak banks by changing the closure rule.

Accepted Answer

A)  forbearance 
B)  setting of "firewalls" 
C)  prompt corrective action 
D)  risk-based capital ratio 
A)  forbearance 
B)  setting of "firewalls" 
C)  prompt corrective action 
D)  risk-based capital ratio

Question 10

When the Federal Reserve was formed, state-chartered banks were __________ Fed member banks.

Accepted Answer

A)  automatically made 
B)  required to become 
C)  given the option to become 
D)  not allowed to become 
A)  automatically made 
B)  required to become 
C)  given the option to become 
D)  not allowed to become

Question 11

The smaller the typical depositor at a financial institution, the __________ likely that some of the institution's deposits are federally insured and thus the __________ heavily that institution tends to be regulated.

Accepted Answer

A)  less; less 
B)  less; more 
C)  more; less 
D)  more; more 
A)  less; less 
B)  less; more 
C)  more; less 
D)  more; more

The Gramm-Leach-Bliley Act

Banking regulation in the United States is strongly influenced by the large amount of deposits and assets banks hold.

In order to manage risk of failure and protect guarantors, the Employee Retirement income Security Act (ERISA)established all of the following requirements on pension funds except for minimum

Risk-based deposit insurance premiums have recently been and this is expected to the moral hazard problem of deposit insurance.

An example of an "insider trading" law is that

A bank run possibly mushroom into a bank panic because the quality of a bank's portfolio of loans made public information by bank examining agencies.

State chartered banks were supposed to be driven out of business by the National Currency Act of 1863 and the National Banking Act of 1864 by

What was particularly significant about the failure of the Bank of New England in 1991?

The __________ policy dealt with the problem of the consequences of identification of weak banks by changing the closure rule.

When the Federal Reserve was formed, state-chartered banks were __________ Fed member banks.

The smaller the typical depositor at a financial institution, the likely that some of the institution's deposits are federally insured and thus the heavily that institution tends to be regulated.

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

Depository Financial Institutions

Nondepository Financial Institutions

Understanding Financial Contracts

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

Exam 15: The Regulation of Markets and Institutions

The Gramm-Leach-Bliley Act

Banking regulation in the United States is strongly influenced by the large amount of __________ deposits and __________ assets banks hold.

In order to manage risk of failure and protect guarantors, the Employee Retirement income Security Act (ERISA)established all of the following requirements on pension funds except for minimum

Risk-based deposit insurance premiums have recently been __________ and this is expected to __________ the moral hazard problem of deposit insurance.

An example of an "insider trading" law is that

A bank run __________ possibly mushroom into a bank panic because the quality of a bank's portfolio of loans __________ made public information by bank examining agencies.

State chartered banks were supposed to be driven out of business by the National Currency Act of 1863 and the National Banking Act of 1864 by

What was particularly significant about the failure of the Bank of New England in 1991?

The __________ policy dealt with the problem of the consequences of identification of weak banks by changing the closure rule.

When the Federal Reserve was formed, state-chartered banks were __________ Fed member banks.

The smaller the typical depositor at a financial institution, the __________ likely that some of the institution's deposits are federally insured and thus the __________ heavily that institution tends to be regulated.

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

Depository Financial Institutions

Nondepository Financial Institutions

Understanding Financial Contracts

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

Banking regulation in the United States is strongly influenced by the large amount of deposits and assets banks hold.

Risk-based deposit insurance premiums have recently been and this is expected to the moral hazard problem of deposit insurance.

A bank run possibly mushroom into a bank panic because the quality of a bank's portfolio of loans made public information by bank examining agencies.

The smaller the typical depositor at a financial institution, the likely that some of the institution's deposits are federally insured and thus the heavily that institution tends to be regulated.