Question 1

Which of the following statements is false?

Accepted Answer

A)  It is not possible for a bank to invest all of its funds in profitable loans or securities. 
B)  All states now permit statewide branch banking. 
C)  Regulation Q established interest rate ceilings on time and savings deposits. 
D)  The depositors of a bank are creditors and hence have a claim that is superior to that of stockholders in the event of liquidation. 
A)  It is not possible for a bank to invest all of its funds in profitable loans or securities. 
B)  All states now permit statewide branch banking. 
C)  Regulation Q established interest rate ceilings on time and savings deposits. 
D)  The depositors of a bank are creditors and hence have a claim that is superior to that of stockholders in the event of liquidation.

Question 2

Which of the following statements is most correct?

Accepted Answer

A)  The National Banking Act of 1894 has long lost any relationships to modern bank regulation. 
B)  The Federal Reserve System was created in large measure to force state chartered banks into conformity with nationally chartered banks. 
C)  "Wildcat banking" during the first half of the 1800s referred to risky banking practices by many state banks, such as excessive note issues, lack of adequate bank capital, and insufficient reserves against their notes and deposits. 
D)  The Federal Reserve Act required all banks to sell gold to the Government. 
A)  The National Banking Act of 1894 has long lost any relationships to modern bank regulation. 
B)  The Federal Reserve System was created in large measure to force state chartered banks into conformity with nationally chartered banks. 
C)  "Wildcat banking" during the first half of the 1800s referred to risky banking practices by many state banks, such as excessive note issues, lack of adequate bank capital, and insufficient reserves against their notes and deposits. 
D)  The Federal Reserve Act required all banks to sell gold to the Government.

Question 3

What is the primary sources of funds for insurance companies?

Accepted Answer

A)  Individual savings 
B)  Premiums paid on policies 
C)  Employee/employer contributions 
D)  Other financial institutions 
A)  Individual savings 
B)  Premiums paid on policies 
C)  Employee/employer contributions 
D)  Other financial institutions

Question 4

The primary type of liability on a bank's balance sheet is deposits.

Accepted Answer

A) True 
 B)False

Question 5

Commercial banks are aggressive and often assume large amounts of risk.

Accepted Answer

A) True 
 B)False

Question 6

_______________ accept the savings of individuals and lend the pooled savings to individuals.

Accepted Answer

A)  Investment banks 
B)  Savings and loan associations 
C)  Pension funds 
D)  Finance companies 
A)  Investment banks 
B)  Savings and loan associations 
C)  Pension funds 
D)  Finance companies

Question 7

The Bank of North America

Accepted Answer

A)  was the first incorporated bank in the United States. 
B)  was patterned after the Central Bank of England. 
C)  was established to assist in financing the Civil War. 
D)  oversees the Federal Reserve Bank. 
A)  was the first incorporated bank in the United States. 
B)  was patterned after the Central Bank of England. 
C)  was established to assist in financing the Civil War. 
D)  oversees the Federal Reserve Bank.

Question 8

A debt security created by pooling together a group of mortgage loans.

Accepted Answer

A)  Mortgage-backed security 
B)  Serial mortgage 
C)  Mortgage package 
D)  Secured mortgage 
A)  Mortgage-backed security 
B)  Serial mortgage 
C)  Mortgage package 
D)  Secured mortgage

Question 9

A loan backed by real property in the form of buildings and houses.

Accepted Answer

A)  Mortgage-backed security 
B)  Serial mortgage 
C)  Mortgage 
D)  Secured mortgage 
E)  Unsecured loan 
A)  Mortgage-backed security 
B)  Serial mortgage 
C)  Mortgage 
D)  Secured mortgage 
E)  Unsecured loan

Question 10

Branch banking is permitted on an interstate basis by all state banks.

Accepted Answer

A) True 
 B)False

Question 11

NOW accounts

Accepted Answer

A)  are not subject to ceiling rates under Regulation Q. 
B)  enable depository institutions to compete effectively for funds that were flowing in large amounts to nonblank money market funds. 
C)  typically pay interest rates equal to that paid by money market funds. 
D)  don't allow transfers to checking accounts. 
A)  are not subject to ceiling rates under Regulation Q. 
B)  enable depository institutions to compete effectively for funds that were flowing in large amounts to nonblank money market funds. 
C)  typically pay interest rates equal to that paid by money market funds. 
D)  don't allow transfers to checking accounts.

Question 12

The Glass-Steagall Act of 1933 was also known as the Great Depression Recovery Act of 1933.

Accepted Answer

A) True 
 B)False

Question 13

A bank's tier 1 ratio is calculated as its tier 1 capital divided by its risk-adjusted assets all times 100.

Accepted Answer

A) True 
 B)False

Question 14

The Bank Holding Company Act of 1956

Accepted Answer

A)  established uniform standards to evaluate the legality of bank holding company acquisitions. 
B)  allowed bank holding companies to acquire credit card companies. 
C)  defined a bank holding company as one which owns 25% or more of the voting shares of each of two or more banks. 
D)  allowed banks to own corporations. 
A)  established uniform standards to evaluate the legality of bank holding company acquisitions. 
B)  allowed bank holding companies to acquire credit card companies. 
C)  defined a bank holding company as one which owns 25% or more of the voting shares of each of two or more banks. 
D)  allowed banks to own corporations.

Question 15

Reasons that banks become insolvent include all of the following except

Accepted Answer

A)  excessive credit risk. 
B)  interest rate risk. 
C)  insufficient collateral. 
D)  continued operating losses. 
A)  excessive credit risk. 
B)  interest rate risk. 
C)  insufficient collateral. 
D)  continued operating losses.

Question 16

The _______________________ made it possible for banks to receive federal charters and provided a basis for national banking laws.

Accepted Answer

A)  Glass Steagall Act 
B)  National Banking Act 
C)  Garn-Saint Germain Act 
D)  Federal Reserve Act 
A)  Glass Steagall Act 
B)  National Banking Act 
C)  Garn-Saint Germain Act 
D)  Federal Reserve Act

Question 17

The 2007-08 financial crisis and the 2008-09 Great Recession led to the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Accepted Answer

A) True 
 B)False

Question 18

The Federal Savings and Loan Insurance Corporation

Accepted Answer

A)  has ceased operations and has been replaced by the Savings Association Insurance Fund (SAIF) in its insuring operations. 
B)  protects credit unions. 
C)  insures money market accounts. 
D)  is responsible for insuring deposits at savings banks. 
A)  has ceased operations and has been replaced by the Savings Association Insurance Fund (SAIF) in its insuring operations. 
B)  protects credit unions. 
C)  insures money market accounts. 
D)  is responsible for insuring deposits at savings banks.

Question 19

The interest rate charged by banks for short-term unsecured loans to their highest quality business customers is referred to as the

Accepted Answer

A)  discount rate. 
B)  federal fund rate. 
C)  prime rate. 
D)  the LIBOR rate. 
A)  discount rate. 
B)  federal fund rate. 
C)  prime rate. 
D)  the LIBOR rate.

Question 20

The primary types of assets on a bank's balance sheet include cash and deposits.

Accepted Answer

A) True 
 B)False

Which of the following statements is false?

Which of the following statements is most correct?

What is the primary sources of funds for insurance companies?

The primary type of liability on a bank's balance sheet is deposits.

Commercial banks are aggressive and often assume large amounts of risk.

_______________ accept the savings of individuals and lend the pooled savings to individuals.

The Bank of North America

A debt security created by pooling together a group of mortgage loans.

A loan backed by real property in the form of buildings and houses.

Branch banking is permitted on an interstate basis by all state banks.

NOW accounts

The Glass-Steagall Act of 1933 was also known as the Great Depression Recovery Act of 1933.

A bank's tier 1 ratio is calculated as its tier 1 capital divided by its risk-adjusted assets all times 100.

The Bank Holding Company Act of 1956

Reasons that banks become insolvent include all of the following except

The _______________________ made it possible for banks to receive federal charters and provided a basis for national banking laws.

The 2007-08 financial crisis and the 2008-09 Great Recession led to the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

The Federal Savings and Loan Insurance Corporation

The interest rate charged by banks for short-term unsecured loans to their highest quality business customers is referred to as the

The primary types of assets on a bank's balance sheet include cash and deposits.

The Financial Environment

Money and the Monetary System

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 3: Banks and Other Financial Institutions

Which of the following statements is false?

Which of the following statements is most correct?

What is the primary sources of funds for insurance companies?

The primary type of liability on a bank's balance sheet is deposits.

Commercial banks are aggressive and often assume large amounts of risk.

_______________ accept the savings of individuals and lend the pooled savings to individuals.

The Bank of North America

A debt security created by pooling together a group of mortgage loans.

A loan backed by real property in the form of buildings and houses.

Branch banking is permitted on an interstate basis by all state banks.

NOW accounts

The Glass-Steagall Act of 1933 was also known as the Great Depression Recovery Act of 1933.

A bank's tier 1 ratio is calculated as its tier 1 capital divided by its risk-adjusted assets all times 100.

The Bank Holding Company Act of 1956

Reasons that banks become insolvent include all of the following except

The _______________________ made it possible for banks to receive federal charters and provided a basis for national banking laws.

The 2007-08 financial crisis and the 2008-09 Great Recession led to the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

The Federal Savings and Loan Insurance Corporation

The interest rate charged by banks for short-term unsecured loans to their highest quality business customers is referred to as the

The primary types of assets on a bank's balance sheet include cash and deposits.

The Financial Environment

Money and the Monetary System

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters