Question 1

________ is a secondary mortgage quasi-independent corporation created in 1970.

Accepted Answer

A)  The secondary mortgage market 
B)  Freddie Mac 
C)  Fannie Mae 
D)  The NYSE 
E)  The Federal Deposit Insurance Corporation 
A)  The secondary mortgage market 
B)  Freddie Mac 
C)  Fannie Mae 
D)  The NYSE 
E)  The Federal Deposit Insurance Corporation B

Question 2

The Dodd-Frank Act is a legislation aimed at ________.

Accepted Answer

A)  promoting subprime mortgages 
B)  reforming the banking industry 
C)  outlawing financial insurances 
D)  outlawing loan foreclosures 
E)  establishing more credit agencies 
A)  promoting subprime mortgages 
B)  reforming the banking industry 
C)  outlawing financial insurances 
D)  outlawing loan foreclosures 
E)  establishing more credit agencies B

Question 3

Credit derivatives based on home mortgages are known as mortgage-backed securities.

Accepted Answer

A) True 
 B)False  True

Question 4

The LTV value of the home loans issued by a bank is 80 percent.This means that the ________.

Accepted Answer

A)  borrowers must make a down payment of at least 20 percent 
B)  loan is offered at a low interest rate 
C)  loan is offered at prime rate to borrowers 
D)  interest charged on the loan amount is 8 percent 
E)  borrowers should provide a third-party guarantee for 80 percent of the loan amount 
A)  borrowers must make a down payment of at least 20 percent 
B)  loan is offered at a low interest rate 
C)  loan is offered at prime rate to borrowers 
D)  interest charged on the loan amount is 8 percent 
E)  borrowers should provide a third-party guarantee for 80 percent of the loan amount

Question 5

Lower interest rates will ________.

Accepted Answer

A)  tempt people buy cheaper homes 
B)  lead to low prices of houses 
C)  boost the housing market 
D)  make the credit procedures stricter 
E)  have an overall negative impact in the housing market 
A)  tempt people buy cheaper homes 
B)  lead to low prices of houses 
C)  boost the housing market 
D)  make the credit procedures stricter 
E)  have an overall negative impact in the housing market

Question 6

Experian,TransUnion,and Equifax are the three major ________ in the United States.

Accepted Answer

A)  credit rating agencies 
B)  mortgage brokers 
C)  investment bankers 
D)  credit unions 
E)  finance companies 
A)  credit rating agencies 
B)  mortgage brokers 
C)  investment bankers 
D)  credit unions 
E)  finance companies

Question 7

Which of the following statements is true of the Dodd-Frank Act legislation passed in 2010?

Accepted Answer

A)  The Act was formed to reform the software industry. 
B)  The Act made it mandatory to bail out suffering banks. 
C)  The Act outlawed transferring risk on investments. 
D)  The Act called for closer scrutiny of the derivatives market. 
E)  The Act recommends short-term incentives to long-term incentives. 
A)  The Act was formed to reform the software industry. 
B)  The Act made it mandatory to bail out suffering banks. 
C)  The Act outlawed transferring risk on investments. 
D)  The Act called for closer scrutiny of the derivatives market. 
E)  The Act recommends short-term incentives to long-term incentives.

Question 8

Compare and contrast commercial banks and investment banks.

Accepted Answer

Commercial banks are financial instituti

Question 9

The ________ is the federal agency responsible for protecting money in customer accounts and managing the transition of assets whenever a bank fails.

Accepted Answer

A)  Federal National Loan Corporation 
B)  Federal Deposit Insurance Corporation 
C)  Federal Home Loan Association 
D)  Federal Mortgage Corporation 
E)  Federal National Mortgage Association 
A)  Federal National Loan Corporation 
B)  Federal Deposit Insurance Corporation 
C)  Federal Home Loan Association 
D)  Federal Mortgage Corporation 
E)  Federal National Mortgage Association

Question 10

Explain how the housing bubble collapsed in 2008 to lead to a financial crisis.

Accepted Answer

Through the fall of 2007,the unstable ho

Question 11

Investment banks are banks that assist high net-worth individuals in managing real estate,establishing trust funds,and planning philanthropic giving.

Accepted Answer

A) True 
 B)False

Question 12

The Fed decides to lower the discount rate offered to banks in the United States.This would ________.

Accepted Answer

A)  slow down economic activities 
B)  lead to high interest rates 
C)  slow down market activity 
D)  increase the money supply 
E)  reduce the availability of credit 
A)  slow down economic activities 
B)  lead to high interest rates 
C)  slow down market activity 
D)  increase the money supply 
E)  reduce the availability of credit

Question 13

________ rate is the rate a bank charges its best loan customers.

Accepted Answer

A)  Federal funds 
B)  Discount 
C)  Prime 
D)  Paper 
E)  Overnight 
A)  Federal funds 
B)  Discount 
C)  Prime 
D)  Paper 
E)  Overnight

Question 14

Compare and contrast retail banks and merchant banks.

Accepted Answer

Retail banks service consumers with chec

Question 15

Describe how MBS issuers tranch an MBS into multiple layers.

Accepted Answer

To offer a range of bonds to satisfy var

Question 16

________ are not-for-profit,member-owned cooperatives that offer deposit accounts and lending services to consumers and small businesses.

Accepted Answer

A)  Loan associations 
B)  Retail banks 
C)  Credit unions 
D)  Thrift banks 
E)  Merchant banks 
A)  Loan associations 
B)  Retail banks 
C)  Credit unions 
D)  Thrift banks 
E)  Merchant banks

Question 17

________ banks offer a variety of services related to initial public stock offerings,mergers and acquisitions.

Accepted Answer

A)  Merchant 
B)  Retail 
C)  Thrift 
D)  Private 
E)  Investment 
A)  Merchant 
B)  Retail 
C)  Thrift 
D)  Private 
E)  Investment

Question 18

Which of the following federal actions is aimed at reducing the money supply in markets?

Accepted Answer

A)  The Fed liberalizes credit controls actions on loans. 
B)  The Fed buys treasury bills from the market. 
C)  The Federal Reserve raises the discount rate. 
D)  The Federal Reserve reduces the reserve requirement. 
E)  The Federal Reserve promotes new loans to small businesses. 
A)  The Fed liberalizes credit controls actions on loans. 
B)  The Fed buys treasury bills from the market. 
C)  The Federal Reserve raises the discount rate. 
D)  The Federal Reserve reduces the reserve requirement. 
E)  The Federal Reserve promotes new loans to small businesses.

Question 19

Andrew has a low credit score and his home loan application was rejected by many banks.However,RS bank offers a home loan to him with loan-to-value at 80 percent.This loan is an example of a(n)________.

Accepted Answer

A)  subprime mortgage 
B)  high LTV loan 
C)  option ARM 
D)  zero LTV loan 
E)  unsecured loan 
A)  subprime mortgage 
B)  high LTV loan 
C)  option ARM 
D)  zero LTV loan 
E)  unsecured loan

Question 20

Compare and contrast liquidity crisis and a credit freeze.

Accepted Answer

Liquidity crisis refers to a severe shor

________ is a secondary mortgage quasi-independent corporation created in 1970.

The Dodd-Frank Act is a legislation aimed at ________.

Credit derivatives based on home mortgages are known as mortgage-backed securities.

The LTV value of the home loans issued by a bank is 80 percent.This means that the ________.

Lower interest rates will ________.

Experian,TransUnion,and Equifax are the three major ________ in the United States.

Which of the following statements is true of the Dodd-Frank Act legislation passed in 2010?

Compare and contrast commercial banks and investment banks.

The ________ is the federal agency responsible for protecting money in customer accounts and managing the transition of assets whenever a bank fails.

Explain how the housing bubble collapsed in 2008 to lead to a financial crisis.

Investment banks are banks that assist high net-worth individuals in managing real estate,establishing trust funds,and planning philanthropic giving.

The Fed decides to lower the discount rate offered to banks in the United States.This would ________.

________ rate is the rate a bank charges its best loan customers.

Compare and contrast retail banks and merchant banks.

Describe how MBS issuers tranch an MBS into multiple layers.

________ are not-for-profit,member-owned cooperatives that offer deposit accounts and lending services to consumers and small businesses.

________ banks offer a variety of services related to initial public stock offerings,mergers and acquisitions.

Which of the following federal actions is aimed at reducing the money supply in markets?

Andrew has a low credit score and his home loan application was rejected by many banks.However,RS bank offers a home loan to him with loan-to-value at 80 percent.This loan is an example of a(n)________.

Compare and contrast liquidity crisis and a credit freeze.

Developing a Business Mindset

Understanding Basic Economics

The Global Marketplace

Business Ethics and Corporate Social Responsibility

Forms of Ownership

Entrepreneurship and Small Business Ownership

Management Roles, Functions, and Skills

Organization and Teamwork

Production Systems

Employee Motivation

Human Resources Management

Labor Relations

The Art and Science of Marketing

Product and Pricing Strategies

Distribution and Marketing Logistics

Customer Communication

Financial Information and Accounting Concepts

Financial Management

Financial Markets and Investment Strategies

Filters

Exam 20: The Money Supply and Banking Systems

________ is a secondary mortgage quasi-independent corporation created in 1970.

The Dodd-Frank Act is a legislation aimed at ________.

Credit derivatives based on home mortgages are known as mortgage-backed securities.

The LTV value of the home loans issued by a bank is 80 percent.This means that the ________.

Lower interest rates will ________.

Experian,TransUnion,and Equifax are the three major ________ in the United States.

Which of the following statements is true of the Dodd-Frank Act legislation passed in 2010?

Compare and contrast commercial banks and investment banks.

The ________ is the federal agency responsible for protecting money in customer accounts and managing the transition of assets whenever a bank fails.

Explain how the housing bubble collapsed in 2008 to lead to a financial crisis.

Investment banks are banks that assist high net-worth individuals in managing real estate,establishing trust funds,and planning philanthropic giving.

The Fed decides to lower the discount rate offered to banks in the United States.This would ________.

________ rate is the rate a bank charges its best loan customers.

Compare and contrast retail banks and merchant banks.

Describe how MBS issuers tranch an MBS into multiple layers.

________ are not-for-profit,member-owned cooperatives that offer deposit accounts and lending services to consumers and small businesses.

________ banks offer a variety of services related to initial public stock offerings,mergers and acquisitions.

Which of the following federal actions is aimed at reducing the money supply in markets?

Andrew has a low credit score and his home loan application was rejected by many banks.However,RS bank offers a home loan to him with loan-to-value at 80 percent.This loan is an example of a(n)________.

Compare and contrast liquidity crisis and a credit freeze.

Developing a Business Mindset

Understanding Basic Economics

The Global Marketplace

Business Ethics and Corporate Social Responsibility

Forms of Ownership

Entrepreneurship and Small Business Ownership

Management Roles, Functions, and Skills

Organization and Teamwork

Production Systems

Employee Motivation

Human Resources Management

Labor Relations

The Art and Science of Marketing

Product and Pricing Strategies

Distribution and Marketing Logistics

Customer Communication

Financial Information and Accounting Concepts

Financial Management

Financial Markets and Investment Strategies

Filters