Question 1

A major difference between the United States and Japanese banking systems is that

Accepted Answer

A) American banks are allowed to hold substantial equity stakes in commercial firms,whereas Japanese banks cannot. 
B) Japanese banks are allowed to hold substantial equity stakes in commercial firms,whereas American banks cannot. 
C) bank holding companies are illegal in the United States. 
D) Japanese banks are usually organized as bank holding companies. 
A) American banks are allowed to hold substantial equity stakes in commercial firms,whereas Japanese banks cannot. 
B) Japanese banks are allowed to hold substantial equity stakes in commercial firms,whereas American banks cannot. 
C) bank holding companies are illegal in the United States. 
D) Japanese banks are usually organized as bank holding companies.

Question 2

The legislation that overturned the prohibition on interstate banking is

Accepted Answer

A) the McFadden Act. 
B) the Gramm-Leach-Bliley Act. 
C) the Glass-Steagall Act 
D) the Riegle-Neal Act 
A) the McFadden Act. 
B) the Gramm-Leach-Bliley Act. 
C) the Glass-Steagall Act 
D) the Riegle-Neal Act

Question 3

Both ________ and ________ were financial innovations that occurred because of interest rate volatility.

Accepted Answer

A) adjustable-rate mortgages; commercial paper 
B) adjustable-rate mortgages; financial derivatives 
C) sweep accounts; financial derivatives 
D) sweep accounts; commercial paper 
A) adjustable-rate mortgages; commercial paper 
B) adjustable-rate mortgages; financial derivatives 
C) sweep accounts; financial derivatives 
D) sweep accounts; commercial paper

Question 4

The large number of banks in the United States is an indication of

Accepted Answer

A) vigorous competition within the banking industry. 
B) lack of competition within the banking industry. 
C) only efficient banks operating within the United States. 
D) consumer preference for local banks. 
A) vigorous competition within the banking industry. 
B) lack of competition within the banking industry. 
C) only efficient banks operating within the United States. 
D) consumer preference for local banks.

Question 5

The FHLBS gives loans to S&Ls and thus performs a function similar to the ________ for commercial banks.

Accepted Answer

A) Federal Reserve 
B) U.S.Treasury 
C) Office of the Comptroller of the Currency 
D) U.S.Mint 
A) Federal Reserve 
B) U.S.Treasury 
C) Office of the Comptroller of the Currency 
D) U.S.Mint

Question 6

The driving force behind the securitization of mortgages and automobile loans has been

Accepted Answer

A) the rising regulatory constraints on substitute financial instruments. 
B) the desire of mortgage and auto lenders to exit this field of lending. 
C) the improvement in computer technology. 
D) the relaxation of regulatory restrictions on credit card operations. 
A) the rising regulatory constraints on substitute financial instruments. 
B) the desire of mortgage and auto lenders to exit this field of lending. 
C) the improvement in computer technology. 
D) the relaxation of regulatory restrictions on credit card operations.

Question 7

Prior to 2008,the bank's cost of holding reserves equaled

Accepted Answer

A) the interest paid on deposits times the amount of reserves. 
B) the interest paid on deposits times the amount of deposits. 
C) the interest earned on loans times the amount of loans. 
D) the interest earned on loans times the amount on reserves. 
A) the interest paid on deposits times the amount of reserves. 
B) the interest paid on deposits times the amount of deposits. 
C) the interest earned on loans times the amount of loans. 
D) the interest earned on loans times the amount on reserves.

Question 8

Bank consolidation will likely result in

Accepted Answer

A) less competition. 
B) the elimination of community banks. 
C) increased competition. 
D) a shift in assets from larger banks to smaller banks. 
A) less competition. 
B) the elimination of community banks. 
C) increased competition. 
D) a shift in assets from larger banks to smaller banks.

Question 9

What country is given credit for the birth of the Eurodollar market?

Accepted Answer

A) The United States 
B) England 
C) The Soviet Union 
D) Japan 
A) The United States 
B) England 
C) The Soviet Union 
D) Japan

Question 10

One factor contributing to the rapid growth of the commercial paper market since 1970 is

Accepted Answer

A) the fact that commercial paper has no default risk. 
B) improved information technology making it easier to screen credit risks. 
C) government regulation. 
D) FDIC insurance for commercial paper. 
A) the fact that commercial paper has no default risk. 
B) improved information technology making it easier to screen credit risks. 
C) government regulation. 
D) FDIC insurance for commercial paper.

Question 11

So-called fallen angels differ from junk bonds in that

Accepted Answer

A) junk bonds refer to newly issued bonds with low credit ratings,whereas fallen angels refer to previously issued bonds that have had their credit ratings fall below Baa. 
B) junk bonds refer to previously issued bonds that have had their credit ratings fall below Baa,whereas fallen angels refer to newly issued bonds with low credit ratings. 
C) junk bonds have ratings below Baa,whereas fallen angels have ratings below C. 
D) fallen angels have ratings below Baa,whereas junk bonds have ratings below C. 
A) junk bonds refer to newly issued bonds with low credit ratings,whereas fallen angels refer to previously issued bonds that have had their credit ratings fall below Baa. 
B) junk bonds refer to previously issued bonds that have had their credit ratings fall below Baa,whereas fallen angels refer to newly issued bonds with low credit ratings. 
C) junk bonds have ratings below Baa,whereas fallen angels have ratings below C. 
D) fallen angels have ratings below Baa,whereas junk bonds have ratings below C.

Question 12

The modern commercial banking system began in America when the

Accepted Answer

A) Bank of United States was chartered in New York in 1801. 
B) Bank of North America was chartered in Philadelphia in 1782. 
C) Bank of United States was chartered in Philadelphia in 1801. 
D) Bank of North America was chartered in New York in 1782. 
A) Bank of United States was chartered in New York in 1801. 
B) Bank of North America was chartered in Philadelphia in 1782. 
C) Bank of United States was chartered in Philadelphia in 1801. 
D) Bank of North America was chartered in New York in 1782.

Question 13

The National Bank Act of 1863,and subsequent amendments to it,

Accepted Answer

A) created a banking system of state-chartered banks. 
B) established the Office of the Comptroller of the Currency. 
C) broadened the regulatory powers of the Federal Reserve. 
D) created insurance on deposit accounts. 
A) created a banking system of state-chartered banks. 
B) established the Office of the Comptroller of the Currency. 
C) broadened the regulatory powers of the Federal Reserve. 
D) created insurance on deposit accounts.

Question 14

Although the National Bank Act of 1863 was designed to eliminate state-chartered banks by imposing a prohibitive tax on banknotes,these banks have been able to stay in business by

Accepted Answer

A) issuing credit cards. 
B) ignoring the regulations. 
C) acquiring funds through deposits. 
D) branching into other states. 
A) issuing credit cards. 
B) ignoring the regulations. 
C) acquiring funds through deposits. 
D) branching into other states.

A major difference between the United States and Japanese banking systems is that

The legislation that overturned the prohibition on interstate banking is

Both and were financial innovations that occurred because of interest rate volatility.

The large number of banks in the United States is an indication of

The FHLBS gives loans to S&Ls and thus performs a function similar to the ________ for commercial banks.

The driving force behind the securitization of mortgages and automobile loans has been

Prior to 2008,the bank's cost of holding reserves equaled

Bank consolidation will likely result in

What country is given credit for the birth of the Eurodollar market?

One factor contributing to the rapid growth of the commercial paper market since 1970 is

So-called fallen angels differ from junk bonds in that

The modern commercial banking system began in America when the

The National Bank Act of 1863,and subsequent amendments to it,

Although the National Bank Act of 1863 was designed to eliminate state-chartered banks by imposing a prohibitive tax on banknotes,these banks have been able to stay in business by

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

Understanding Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Financial Crises

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Central Banks and the Federal Reserve System

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory,inflation and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

The ISLM Model

Filters

Exam 12: Banking Industry: Structure and Competition

A major difference between the United States and Japanese banking systems is that

The legislation that overturned the prohibition on interstate banking is

Both ________ and ________ were financial innovations that occurred because of interest rate volatility.

The large number of banks in the United States is an indication of

The FHLBS gives loans to S&Ls and thus performs a function similar to the ________ for commercial banks.

The driving force behind the securitization of mortgages and automobile loans has been

Prior to 2008,the bank's cost of holding reserves equaled

Bank consolidation will likely result in

What country is given credit for the birth of the Eurodollar market?

One factor contributing to the rapid growth of the commercial paper market since 1970 is

So-called fallen angels differ from junk bonds in that

The modern commercial banking system began in America when the

The National Bank Act of 1863,and subsequent amendments to it,

Although the National Bank Act of 1863 was designed to eliminate state-chartered banks by imposing a prohibitive tax on banknotes,these banks have been able to stay in business by

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

Understanding Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Financial Crises

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Central Banks and the Federal Reserve System

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory,inflation and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

The ISLM Model

Filters

Both and were financial innovations that occurred because of interest rate volatility.