Question 1

Banks accept and invest individual savings and also facilitate the sale and transfer of securities between investors.

Accepted Answer

A) True 
 B)False

Question 2

Credit risk is the likelihood that a bank will be unable to meet depositor withdrawal demands and other liabilities when due.

Accepted Answer

A) True 
 B)False

Question 3

Limited branch banking

Accepted Answer

A)  permits banks to located offices within a geographically defined distance of the main office. 
B)  is controlled by the Federal Reserve system. 
C)  means that banks may only engage in certain limited activities. 
D)  only bank holding companies can open branches. 
A)  permits banks to located offices within a geographically defined distance of the main office. 
B)  is controlled by the Federal Reserve system. 
C)  means that banks may only engage in certain limited activities. 
D)  only bank holding companies can open branches.

Question 4

The three basic ways to clear a check through the U.S. banking system includes all of the following except

Accepted Answer

A)  through a Federal Reserve Bank. 
B)  through the U.S. Treasury Bank. 
C)  through a bank clearinghouse. 
D)  bank to bank. 
A)  through a Federal Reserve Bank. 
B)  through the U.S. Treasury Bank. 
C)  through a bank clearinghouse. 
D)  bank to bank.

Question 5

The Resolution Trust Corporation was brought into existence to

Accepted Answer

A)  help savings and loan institutions invest funds in a wide range of higher yielding instruments. 
B)  authorize savings and loan institutions to issue a new money market account with no regulated interest rate ceiling. 
C)  take over and liquidate the assets of failed savings and loan institutions. 
D)  to sell securities for investment banks. 
A)  help savings and loan institutions invest funds in a wide range of higher yielding instruments. 
B)  authorize savings and loan institutions to issue a new money market account with no regulated interest rate ceiling. 
C)  take over and liquidate the assets of failed savings and loan institutions. 
D)  to sell securities for investment banks.

Question 6

Which of the following institutions is not part of the modern banking system?

Accepted Answer

A)  credit unions 
B)  savings and loan associations 
C)  mutual funds 
D)  mutual savings banks 
A)  credit unions 
B)  savings and loan associations 
C)  mutual funds 
D)  mutual savings banks

Question 7

Bank solvency reflects the ability to meet depositor withdrawals and to pay off other liabilities when due.

Accepted Answer

A) True 
 B)False

Question 8

_______________ are cooperative nonprofit organizations that exist primarily to provide member depositors with consumer credit, including the financing of automobiles and the purchase of homes, and derive their funds almost entirely from the savings of their members.

Accepted Answer

A)  Commercial banks 
B)  Thrift institutions 
C)  Savings banks 
D)  Credit unions 
A)  Commercial banks 
B)  Thrift institutions 
C)  Savings banks 
D)  Credit unions

Question 9

__________________ collect premiums on insurance policies and employee/employer contributions and provide retirement benefits and insurance against major financial losses.

Accepted Answer

A)  Banks 
B)  Pension funds 
C)  Investment banking firms 
D)  Brokerage firms 
A)  Banks 
B)  Pension funds 
C)  Investment banking firms 
D)  Brokerage firms

Question 10

The First Bank of the United States ceased operations because

Accepted Answer

A)  it was superseded by the Second Bank of the United States. 
B)  of the opposition of state banking interests. 
C)  its charter had expired and there was no provision for its renewal. 
D)  the need to provide financing for the Civil War was not supported by Congress. 
A)  it was superseded by the Second Bank of the United States. 
B)  of the opposition of state banking interests. 
C)  its charter had expired and there was no provision for its renewal. 
D)  the need to provide financing for the Civil War was not supported by Congress.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Savings and loan institutions collect premiums on insurance policies and employee/employer contributions from pension fund participants and provide retirement benefits and insurance against major financial losses.

Accepted Answer

A) True 
 B)False

Question 13

An organization that sells shares in their firms to individuals and others and invests the proceeds in corporate and government securities is called a(n)

Accepted Answer

A)  investment company. 
B)  investment bank. 
C)  insurance company. 
D)  brokerage firm. 
A)  investment company. 
B)  investment bank. 
C)  insurance company. 
D)  brokerage firm.

Question 14

Finance firms provide loans directly to consumers and businesses, as well as help borrowers obtain mortgage loans on real property.

Accepted Answer

A) True 
 B)False

Question 15

Interest rate risk results from possible price fluctuations in fixed-rate debt instruments associated with changes in market interest rates.

Accepted Answer

A) True 
 B)False

Question 16

The Equity Capital Ratio for a bank with owners' equity of $3 million and total assets of $50 million would be

Accepted Answer

A)  3 percent. 
B)  6 percent. 
C)  2.83 percent. 
D)  5.66 percent. 
A)  3 percent. 
B)  6 percent. 
C)  2.83 percent. 
D)  5.66 percent.

Question 17

Depository institutions include commercial banks, savings and loans, mutual savings banks, and credit unions.

Accepted Answer

A) True 
 B)False

Question 18

Foreign banks in the United States

Accepted Answer

A)  are prohibited in all 50 states. 
B)  need the approval of the Federal Reserve. 
C)  are not subject to federal examination. 
D)  do not need FDIC insurance. 
A)  are prohibited in all 50 states. 
B)  need the approval of the Federal Reserve. 
C)  are not subject to federal examination. 
D)  do not need FDIC insurance.

Question 19

During the colonial period in the nation's history, banks depended on

Accepted Answer

A)  their own issue of paper money. 
B)  foreign sources for their loanable funds. 
C)  deposits of foreign currency such as the Spanish dollar. 
D)  the investment of their own stockholders. 
A)  their own issue of paper money. 
B)  foreign sources for their loanable funds. 
C)  deposits of foreign currency such as the Spanish dollar. 
D)  the investment of their own stockholders.

Question 20

Major types of financial institutions in the U.S. include commercial banks, mutual funds, insurance companies, and pension funds.

Accepted Answer

A) True 
 B)False

Banks accept and invest individual savings and also facilitate the sale and transfer of securities between investors.

Credit risk is the likelihood that a bank will be unable to meet depositor withdrawal demands and other liabilities when due.

Limited branch banking

The three basic ways to clear a check through the U.S. banking system includes all of the following except

The Resolution Trust Corporation was brought into existence to

Which of the following institutions is not part of the modern banking system?

Bank solvency reflects the ability to meet depositor withdrawals and to pay off other liabilities when due.

_______________ are cooperative nonprofit organizations that exist primarily to provide member depositors with consumer credit, including the financing of automobiles and the purchase of homes, and derive their funds almost entirely from the savings of their members.

__________________ collect premiums on insurance policies and employee/employer contributions and provide retirement benefits and insurance against major financial losses.

The First Bank of the United States ceased operations because

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

Savings and loan institutions collect premiums on insurance policies and employee/employer contributions from pension fund participants and provide retirement benefits and insurance against major financial losses.

An organization that sells shares in their firms to individuals and others and invests the proceeds in corporate and government securities is called a(n)

Finance firms provide loans directly to consumers and businesses, as well as help borrowers obtain mortgage loans on real property.

Interest rate risk results from possible price fluctuations in fixed-rate debt instruments associated with changes in market interest rates.

The Equity Capital Ratio for a bank with owners' equity of $3 million and total assets of $50 million would be

Depository institutions include commercial banks, savings and loans, mutual savings banks, and credit unions.

Foreign banks in the United States

During the colonial period in the nation's history, banks depended on

Major types of financial institutions in the U.S. include commercial banks, mutual funds, insurance companies, and pension funds.

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

Banks accept and invest individual savings and also facilitate the sale and transfer of securities between investors.

Credit risk is the likelihood that a bank will be unable to meet depositor withdrawal demands and other liabilities when due.

Limited branch banking

The three basic ways to clear a check through the U.S. banking system includes all of the following except

The Resolution Trust Corporation was brought into existence to

Which of the following institutions is not part of the modern banking system?

Bank solvency reflects the ability to meet depositor withdrawals and to pay off other liabilities when due.

_______________ are cooperative nonprofit organizations that exist primarily to provide member depositors with consumer credit, including the financing of automobiles and the purchase of homes, and derive their funds almost entirely from the savings of their members.

__________________ collect premiums on insurance policies and employee/employer contributions and provide retirement benefits and insurance against major financial losses.

The First Bank of the United States ceased operations because

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

Savings and loan institutions collect premiums on insurance policies and employee/employer contributions from pension fund participants and provide retirement benefits and insurance against major financial losses.

An organization that sells shares in their firms to individuals and others and invests the proceeds in corporate and government securities is called a(n)

Finance firms provide loans directly to consumers and businesses, as well as help borrowers obtain mortgage loans on real property.

Interest rate risk results from possible price fluctuations in fixed-rate debt instruments associated with changes in market interest rates.

The Equity Capital Ratio for a bank with owners' equity of $3 million and total assets of $50 million would be

Depository institutions include commercial banks, savings and loans, mutual savings banks, and credit unions.

Foreign banks in the United States

During the colonial period in the nation's history, banks depended on

Major types of financial institutions in the U.S. include commercial banks, mutual funds, insurance companies, and pension funds.

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