Question 1

The principal assets of all depository institutions are cash, securities, and loans.

Accepted Answer

A) True 
 B)False

Question 2

An organization that sells or markets new securities issued by businesses to individuals and institutional investors is called a(n)

Accepted Answer

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

Question 3

Depository institutions accept deposits or savings from businesses, governments, and individuals and then lend these pooled savings to individuals.

Accepted Answer

A) True 
 B)False

Question 4

The Federal Reserve Act of 1913 created a system of central banks in the United States.

Accepted Answer

A) True 
 B)False

Question 5

The most basic functions of depository institutions are

Accepted Answer

A)  safekeeping for depositors. 
B)  record keeping for depositors. 
C)  efficient and economical transfer of payments. 
D)  accepting deposits and granting loans. 
A)  safekeeping for depositors. 
B)  record keeping for depositors. 
C)  efficient and economical transfer of payments. 
D)  accepting deposits and granting loans.

Question 6

What is the primary sources of funds for investment banking firms?

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 7

Primary capital consists of owners' capital, preferred stock, debt convertible into common stock, and loan loss reserves.

Accepted Answer

A) True 
 B)False

Question 8

The function of the bank capital of a commercial bank is to

Accepted Answer

A)  meet bank reserve requirements. 
B)  provide funds for real estate loans. 
C)  provide a cushion for possible bank losses. 
D)  support the purchase of bank buildings and equipment. 
A)  meet bank reserve requirements. 
B)  provide funds for real estate loans. 
C)  provide a cushion for possible bank losses. 
D)  support the purchase of bank buildings and equipment.

Question 9

Investment banking firms sell shares in their firms to businesses and invest the pooled proceeds in corporate and government securities.

Accepted Answer

A) True 
 B)False

Question 10

The principal assets of banks do not include

Accepted Answer

A)  cash. 
B)  loans. 
C)  time deposits. 
D)  securities owned. 
A)  cash. 
B)  loans. 
C)  time deposits. 
D)  securities owned.

Question 11

The Federal Deposit Insurance Corporation Improvement Act of 1991

Accepted Answer

A)  transferred the reserves and functions of the Federal Savings and Loan Insurance Corporation to the FDIC. 
B)  required that failed banks be handled in such a way as to provide the lowest cost to the FDIC. 
C)  increased federal deposit insurance from $40,000 to $100,000 for each account. 
D)  extended federal deposit insurance to S&L depositors. 
A)  transferred the reserves and functions of the Federal Savings and Loan Insurance Corporation to the FDIC. 
B)  required that failed banks be handled in such a way as to provide the lowest cost to the FDIC. 
C)  increased federal deposit insurance from $40,000 to $100,000 for each account. 
D)  extended federal deposit insurance to S&L depositors.

Question 12

Credit risk is the chance of nonpayment or delayed payment of interest or principal.

Accepted Answer

A) True 
 B)False

Question 13

Early chartered banks included

Accepted Answer

A)  the Bank of North America. 
B)  the Bank of California. 
C)  Wells Fargo Bank. 
D)  Bank of America. 
A)  the Bank of North America. 
B)  the Bank of California. 
C)  Wells Fargo Bank. 
D)  Bank of America.

Question 14

Which of the following is not an asset of depository institutions?

Accepted Answer

A)  cash 
B)  unsecured loans 
C)  time deposits 
D)  U.S. government securities 
A)  cash 
B)  unsecured loans 
C)  time deposits 
D)  U.S. government securities

Question 15

Part of the reason that the Banking Act of 1933 was passed was in response to the large numbers of bank failures.

Accepted Answer

A) True 
 B)False

Question 16

Primary reserves

Accepted Answer

A)  include the cash assets of the firm under the heading "cash and balances due from depository institutions. 
B)  are short term securities held by banks that are quickly converted into cash at little cost to the banks. 
C)  reflects the bank's ability to meet depositor withdrawals. 
D)  reflects the bank's ability to keep the value of a bank's assets greater than its liabilities. 
A)  include the cash assets of the firm under the heading "cash and balances due from depository institutions. 
B)  are short term securities held by banks that are quickly converted into cash at little cost to the banks. 
C)  reflects the bank's ability to meet depositor withdrawals. 
D)  reflects the bank's ability to keep the value of a bank's assets greater than its liabilities.

Question 17

An organization that provides loans directly to consumers and businesses or aid individuals in obtaining financing for durable goods is called a(n)

Accepted Answer

A)  commercial bank. 
B)  investment bank. 
C)  savings and loan. 
D)  finance company. 
A)  commercial bank. 
B)  investment bank. 
C)  savings and loan. 
D)  finance company.

Question 18

International banking exists when banks operate in more than one country.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following would not be part of primary bank capital?

Accepted Answer

A)  bank premises 
B)  common stock of the bank 
C)  loan loss reserves 
D)  perpetual preferred stock 
A)  bank premises 
B)  common stock of the bank 
C)  loan loss reserves 
D)  perpetual preferred stock

Question 20

What is the primary sources of funds for savings banks?

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

The principal assets of all depository institutions are cash, securities, and loans.

An organization that sells or markets new securities issued by businesses to individuals and institutional investors is called a(n)

Depository institutions accept deposits or savings from businesses, governments, and individuals and then lend these pooled savings to individuals.

The Federal Reserve Act of 1913 created a system of central banks in the United States.

The most basic functions of depository institutions are

What is the primary sources of funds for investment banking firms?

Primary capital consists of owners' capital, preferred stock, debt convertible into common stock, and loan loss reserves.

The function of the bank capital of a commercial bank is to

Investment banking firms sell shares in their firms to businesses and invest the pooled proceeds in corporate and government securities.

The principal assets of banks do not include

The Federal Deposit Insurance Corporation Improvement Act of 1991

Credit risk is the chance of nonpayment or delayed payment of interest or principal.

Early chartered banks included

Which of the following is not an asset of depository institutions?

Part of the reason that the Banking Act of 1933 was passed was in response to the large numbers of bank failures.

Primary reserves

An organization that provides loans directly to consumers and businesses or aid individuals in obtaining financing for durable goods is called a(n)

International banking exists when banks operate in more than one country.

Which of the following would not be part of primary bank capital?

What is the primary sources of funds for savings banks?

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

The principal assets of all depository institutions are cash, securities, and loans.

An organization that sells or markets new securities issued by businesses to individuals and institutional investors is called a(n)

Depository institutions accept deposits or savings from businesses, governments, and individuals and then lend these pooled savings to individuals.

The Federal Reserve Act of 1913 created a system of central banks in the United States.

The most basic functions of depository institutions are

What is the primary sources of funds for investment banking firms?

Primary capital consists of owners' capital, preferred stock, debt convertible into common stock, and loan loss reserves.

The function of the bank capital of a commercial bank is to

Investment banking firms sell shares in their firms to businesses and invest the pooled proceeds in corporate and government securities.

The principal assets of banks do not include

The Federal Deposit Insurance Corporation Improvement Act of 1991

Credit risk is the chance of nonpayment or delayed payment of interest or principal.

Early chartered banks included

Which of the following is not an asset of depository institutions?

Part of the reason that the Banking Act of 1933 was passed was in response to the large numbers of bank failures.

Primary reserves

An organization that provides loans directly to consumers and businesses or aid individuals in obtaining financing for durable goods is called a(n)

International banking exists when banks operate in more than one country.

Which of the following would not be part of primary bank capital?

What is the primary sources of funds for savings banks?

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