Question 1

Which of the following involves banks borrowing funds from firms or other banks using the value of underlying securities as collateral?

Accepted Answer

A)  federal funds 
B)  repurchase agreement 
C)  counterparty lending 
D)  money market account 
A)  federal funds 
B)  repurchase agreement 
C)  counterparty lending 
D)  money market account

Question 2

A key difference between small-denomination and large-denomination time deposits is that

Accepted Answer

A)  small-denomination time deposits pay no interest. 
B)  large-denomination time deposits may be bought and sold on secondary markets. 
C)  large-denomination time deposits carry a significant penalty for early withdrawal. 
D)  small-denomination time deposits carry a significant penalty for early withdrawal. 
A)  small-denomination time deposits pay no interest. 
B)  large-denomination time deposits may be bought and sold on secondary markets. 
C)  large-denomination time deposits carry a significant penalty for early withdrawal. 
D)  small-denomination time deposits carry a significant penalty for early withdrawal.

Question 3

Banks use repurchase agreements to

Accepted Answer

A)  ensure that payments on consumer loans are made on time. 
B)  borrow funds from business firms or other banks. 
C)  guard against price fluctuations on long-term bonds. 
D)  ensure that they always have enough funds on hand to meet their federal tax liabilities. 
A)  ensure that payments on consumer loans are made on time. 
B)  borrow funds from business firms or other banks. 
C)  guard against price fluctuations on long-term bonds. 
D)  ensure that they always have enough funds on hand to meet their federal tax liabilities.

Question 4

Collateral is

Accepted Answer

A)  the interest rate that banks charge high-quality borrowers. 
B)  assets pledged to the bank in the event the borrower defaults. 
C)  the difference between the value of a bank's assets and the value of a bank's liabilities. 
D)  required reserves minus excess reserves. 
A)  the interest rate that banks charge high-quality borrowers. 
B)  assets pledged to the bank in the event the borrower defaults. 
C)  the difference between the value of a bank's assets and the value of a bank's liabilities. 
D)  required reserves minus excess reserves.

Question 5

If the value of bank's loans declines,what is the corresponding reduction in a liability entry that the bank makes?

Accepted Answer

A)  Deposits are reduced by the amount of the decline in the value of the loan. 
B)  Borrowings are reduced by the amount of the decline in the value of the loan. 
C)  Net worth is reduced by the amount of the decline in the value of the loan. 
D)  Cash items in the process of collection are reduced by the amount of the decline in the value of the loan. 
A)  Deposits are reduced by the amount of the decline in the value of the loan. 
B)  Borrowings are reduced by the amount of the decline in the value of the loan. 
C)  Net worth is reduced by the amount of the decline in the value of the loan. 
D)  Cash items in the process of collection are reduced by the amount of the decline in the value of the loan.

Question 6

On a bank's balance sheet,assets are

Accepted Answer

A)  the uses of acquired funds. 
B)  the sources of acquired funds. 
C)  those items owed by the bank to depositors and others. 
D)  by definition equal to the bank's liabilities. 
A)  the uses of acquired funds. 
B)  the sources of acquired funds. 
C)  those items owed by the bank to depositors and others. 
D)  by definition equal to the bank's liabilities.

Question 7

How does moral hazard contribute to high bank leverage?

Accepted Answer

First,bank managers are typically compen

Question 8

Which of the following is a bank liability?

Accepted Answer

A)  reserves 
B)  consumer loans 
C)  nontransaction deposits 
D)  securities 
A)  reserves 
B)  consumer loans 
C)  nontransaction deposits 
D)  securities

Question 9

Which of the following is the source of funds for bank loans?

Accepted Answer

A)  marketable securities 
B)  required reserves 
C)  excess reserves 
D)  bank capital 
A)  marketable securities 
B)  required reserves 
C)  excess reserves 
D)  bank capital

Question 10

The Federal Reserve System was created in

Accepted Answer

A)  1836. 
B)  1863. 
C)  1913. 
D)  1945. 
A)  1836. 
B)  1863. 
C)  1913. 
D)  1945.

Question 11

Which of the following can be described as when a bank buys securities owned by a business while agreeing to sell them back at a later date?

Accepted Answer

A)  repurchase agreement 
B)  reverse repurchase agreement 
C)  federal funds 
D)  discount loans 
A)  repurchase agreement 
B)  reverse repurchase agreement 
C)  federal funds 
D)  discount loans

Question 12

From the peak before the financial crisis,lending to small businesses by the largest banks has

Accepted Answer

A)  increased by about 25%. 
B)  remained unchanged. 
C)  declined by about 40%. 
D)  virtually stopped. 
A)  increased by about 25%. 
B)  remained unchanged. 
C)  declined by about 40%. 
D)  virtually stopped.

Question 13

A loan officer uses a credit scoring system to

Accepted Answer

A)  compare the interest rate on a loan to interest rates on other assets with comparable risk. 
B)  keep track of the fraction of a bank's assets tied up in loans to a single individual or business. 
C)  predict statistically whether an individual is likely to default on a loan. 
D)  match any particular loan with the deposits being used to fund it. 
A)  compare the interest rate on a loan to interest rates on other assets with comparable risk. 
B)  keep track of the fraction of a bank's assets tied up in loans to a single individual or business. 
C)  predict statistically whether an individual is likely to default on a loan. 
D)  match any particular loan with the deposits being used to fund it.

Question 14

Bank borrowing from the Fed is referred to as

Accepted Answer

A)  federal funds. 
B)  discount loans. 
C)  repurchase agreements. 
D)  reverse repurchase agreements. 
A)  federal funds. 
B)  discount loans. 
C)  repurchase agreements. 
D)  reverse repurchase agreements.

Question 15

The difference between the interest a bank earns on loans and securities and the interest paid on deposits and debt divided by the total value of its assets is called

Accepted Answer

A)  interest spread. 
B)  net interest margin. 
C)  return on assets. 
D)  return on equity. 
A)  interest spread. 
B)  net interest margin. 
C)  return on assets. 
D)  return on equity.

Question 16

National banks are chartered by the

Accepted Answer

A)  Office of the Comptroller of the Currency. 
B)  Office of Bank Supervision. 
C)  Securities and Exchange Commission. 
D)  Office of Management and the Budget. 
A)  Office of the Comptroller of the Currency. 
B)  Office of Bank Supervision. 
C)  Securities and Exchange Commission. 
D)  Office of Management and the Budget.

Question 17

What are federally chartered banks called?

Accepted Answer

A)  federal banks 
B)  Federal Reserve banks 
C)  national banks 
D)  central banks 
A)  federal banks 
B)  Federal Reserve banks 
C)  national banks 
D)  central banks

Question 18

Which of the following is a checkable deposit?

Accepted Answer

A)  a NOW account 
B)  a money market deposit account 
C)  a certificate of deposit 
D)  a savings account 
A)  a NOW account 
B)  a money market deposit account 
C)  a certificate of deposit 
D)  a savings account

Question 19

Limits on the value of the assets that commercial banks can acquire relative to their capital is known as

Accepted Answer

A)  equity requirements. 
B)  capital requirements. 
C)  required reserves. 
D)  asset requirements. 
A)  equity requirements. 
B)  capital requirements. 
C)  required reserves. 
D)  asset requirements.

Question 20

The Federal Reserve System was created in response to

Accepted Answer

A)  the stock market crash of 1929. 
B)  the ending of the Civil War. 
C)  the banking panic of 1907. 
D)  difficulties of the free-banking era. 
A)  the stock market crash of 1929. 
B)  the ending of the Civil War. 
C)  the banking panic of 1907. 
D)  difficulties of the free-banking era.

Which of the following involves banks borrowing funds from firms or other banks using the value of underlying securities as collateral?

A key difference between small-denomination and large-denomination time deposits is that

Banks use repurchase agreements to

Collateral is

If the value of bank's loans declines,what is the corresponding reduction in a liability entry that the bank makes?

On a bank's balance sheet,assets are

How does moral hazard contribute to high bank leverage?

Which of the following is a bank liability?

Which of the following is the source of funds for bank loans?

The Federal Reserve System was created in

Which of the following can be described as when a bank buys securities owned by a business while agreeing to sell them back at a later date?

From the peak before the financial crisis,lending to small businesses by the largest banks has

A loan officer uses a credit scoring system to

Bank borrowing from the Fed is referred to as

The difference between the interest a bank earns on loans and securities and the interest paid on deposits and debt divided by the total value of its assets is called

National banks are chartered by the

What are federally chartered banks called?

Which of the following is a checkable deposit?

Limits on the value of the assets that commercial banks can acquire relative to their capital is known as

The Federal Reserve System was created in response to

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I- the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters

Exam 10: The Economics of Banking

Which of the following involves banks borrowing funds from firms or other banks using the value of underlying securities as collateral?

A key difference between small-denomination and large-denomination time deposits is that

Banks use repurchase agreements to

Collateral is

If the value of bank's loans declines,what is the corresponding reduction in a liability entry that the bank makes?

On a bank's balance sheet,assets are

How does moral hazard contribute to high bank leverage?

Which of the following is a bank liability?

Which of the following is the source of funds for bank loans?

The Federal Reserve System was created in

Which of the following can be described as when a bank buys securities owned by a business while agreeing to sell them back at a later date?

From the peak before the financial crisis,lending to small businesses by the largest banks has

A loan officer uses a credit scoring system to

Bank borrowing from the Fed is referred to as

The difference between the interest a bank earns on loans and securities and the interest paid on deposits and debt divided by the total value of its assets is called

National banks are chartered by the

What are federally chartered banks called?

Which of the following is a checkable deposit?

Limits on the value of the assets that commercial banks can acquire relative to their capital is known as

The Federal Reserve System was created in response to

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I- the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters