Question 1

Foreign banking firms operating in Mexico cannot control insurance companies.

Accepted Answer

A) True 
 B)False  False

Question 2

Demand deposits have become more important to banks over the years.

Accepted Answer

A) True 
 B)False  False

Question 3

Collateralized mortgage obligations allow banks to invest in a marketable, diversified pool of mortgage loans that have been proven to carry very little risk.

Accepted Answer

A) True 
 B)False  False

Question 4

Loans of reserves between banks are made through a market known as the federal funds market.

Accepted Answer

A) True 
 B)False

Question 5

Using the the description or the definition below, identify each of the terms and concepts from this chapter.
a. A corporation owning stock in one or more banks. 
b. Banking organization that sells services through multiple offices. 
c. Liberalizing any government rules that restrict what private businesses, including financial institutions, can do.
d. Cash and deposits held with other banks.

Accepted Answer

a. Bank holding comp

Question 6

The NAFTA Agreement provides banks in North America with national treatment which means:

Accepted Answer

A)  U.S. and Canadian banks cannot branch into Mexico 
B)  Foreign investment is subject to domestic laws 
C)  Regulations of the home country are dominant 
D)  Foreign banks operate under same rules as domestic banks 
E)  None of the above 
A)  U.S. and Canadian banks cannot branch into Mexico 
B)  Foreign investment is subject to domestic laws 
C)  Regulations of the home country are dominant 
D)  Foreign banks operate under same rules as domestic banks 
E)  None of the above

Question 7

The principal transaction account in the U.S. today is the:

Accepted Answer

A)  NOW account 
B)  ATS service 
C)  Demand deposit 
D)  Savings deposit 
E)  Time deposit 
A)  NOW account 
B)  ATS service 
C)  Demand deposit 
D)  Savings deposit 
E)  Time deposit

Question 8

The reason(s) American banks and other American financial institutions dominate the top ten of the world's largest banks and financial institutions is that:

Accepted Answer

A)  America is the world's largest economy 
B)  American savers are the thriftiest among the developed world 
C)  America invented international banking 
D)  All of the above 
E)  None of the above, the statement is untrue 
A)  America is the world's largest economy 
B)  American savers are the thriftiest among the developed world 
C)  America invented international banking 
D)  All of the above 
E)  None of the above, the statement is untrue

Question 9

Banks that invest some of their owner's capital in their customer's projects, thus becoming principals as well as creditors in business investment projects, are known as:

Accepted Answer

A)  Holding company banks 
B)  Reciprocal banks 
C)  Nonbank banks 
D)  Universal banks 
E)  None of the above 
A)  Holding company banks 
B)  Reciprocal banks 
C)  Nonbank banks 
D)  Universal banks 
E)  None of the above

Question 10

At first most ATMs were located in retail centers; however, more recently most ATM growth has been in other areas.

Accepted Answer

A) True 
 B)False

Question 11

The demand deposit (check) is no longer the principal means of making payments in the U.S. economy.

Accepted Answer

A) True 
 B)False

Question 12

The U.S. has about ____ regional automated clearinghouses in operation today to transfer information from one financial institution to another via computer tape.

Accepted Answer

A)  50 
B)  30 
C)  100 
D)  200 
E)  300 
A)  50 
B)  30 
C)  100 
D)  200 
E)  300

Question 13

Commercial banks have the power to create money in the form of new checkable deposits.

Accepted Answer

A) True 
 B)False

Question 14

Consolidation in the banking industry:

Accepted Answer

A)  Will clearly lead to a small number of banks and monopoly 
B)  Has been possible because of the profitability of the industry 
C)  Is less necessary as technology improves 
D)  Is a response to more volatile interest rates and increasing competition 
E)  None of the above 
A)  Will clearly lead to a small number of banks and monopoly 
B)  Has been possible because of the profitability of the industry 
C)  Is less necessary as technology improves 
D)  Is a response to more volatile interest rates and increasing competition 
E)  None of the above

Question 15

Recent events have caused investors and government officials to question the stability of securitized debt.

Accepted Answer

A) True 
 B)False

Question 16

Many banks in Great Britain and Western Europe long ago took measures to become:

Accepted Answer

A)  Nonbank banks 
B)  Consolidated holding corporations 
C)  Merchant banks 
D)  Agency operations 
E)  None of the above 
A)  Nonbank banks 
B)  Consolidated holding corporations 
C)  Merchant banks 
D)  Agency operations 
E)  None of the above

Question 17

A commercial bank holds $120 million in transaction deposits and $240 million in nontransaction reservable liabilities. Suppose that reserve requirements set by the Federal Reserve Board stipulate that 3 percent of the first $30 million in transaction deposits and 12 percent of any excess transaction deposits over $30 million must be held in a legal reserve account. Similarly, suppose 3 percent of nontransaction liabilities must be placed in the legal reserve account. What is the bank's total reserve requirement based on the above deposit totals? Suppose the bank's legal reserve account has a current average balance of $20 million. Does the bank have any excess reserves? If so, how much?

Accepted Answer

The bank's total legal reserve requireme

Question 18

The allowance for loan and lease losses (ALL) is a loss reserve or contra asset account.

Accepted Answer

A) True 
 B)False

Question 19

One of the reasons that financial services holding companies were allowed to exist in the United States is:

Accepted Answer

A)  To eliminate small banks 
B)  To illuminate regional banking 
C)  To help U.S. banks compete more effectively internationally 
D)  All of the above 
E)  None of the above 
A)  To eliminate small banks 
B)  To illuminate regional banking 
C)  To help U.S. banks compete more effectively internationally 
D)  All of the above 
E)  None of the above

Question 20

In banking, problem loans, which are loans that are very doubtful in being paid back:

Accepted Answer

A)  Reduce bank revenues 
B)  Raise bank operating expenses 
C)  Can cause alteration in the loan contracts being offered 
D)  All of the above 
E)  None of the above 
A)  Reduce bank revenues 
B)  Raise bank operating expenses 
C)  Can cause alteration in the loan contracts being offered 
D)  All of the above 
E)  None of the above

Exam 14: Banking and Financial Services: Regulations, Operations, and Trends

Foreign banking firms operating in Mexico cannot control insurance companies.

Demand deposits have become more important to banks over the years.

Collateralized mortgage obligations allow banks to invest in a marketable, diversified pool of mortgage loans that have been proven to carry very little risk.

Loans of reserves between banks are made through a market known as the federal funds market.

The NAFTA Agreement provides banks in North America with national treatment which means:

The principal transaction account in the U.S. today is the:

The reason(s) American banks and other American financial institutions dominate the top ten of the world's largest banks and financial institutions is that:

Banks that invest some of their owner's capital in their customer's projects, thus becoming principals as well as creditors in business investment projects, are known as:

At first most ATMs were located in retail centers; however, more recently most ATM growth has been in other areas.

The demand deposit (check) is no longer the principal means of making payments in the U.S. economy.

The U.S. has about ____ regional automated clearinghouses in operation today to transfer information from one financial institution to another via computer tape.

Commercial banks have the power to create money in the form of new checkable deposits.

Consolidation in the banking industry:

Recent events have caused investors and government officials to question the stability of securitized debt.

Many banks in Great Britain and Western Europe long ago took measures to become:

The allowance for loan and lease losses (ALL) is a loss reserve or contra asset account.

One of the reasons that financial services holding companies were allowed to exist in the United States is:

In banking, problem loans, which are loans that are very doubtful in being paid back:

Understanding the Financial System and Its Impact on the Economy and Markets

Financial Systems, Monetary Units, and the Role of Money in the Economy

Financial Indices, Market Information, and Economic Data

The Financial Crisis and Its Impact on the Mortgage Market and Economy

Understanding Interest Rates, Savings, and the Wealth Effect

Financial Concepts and Interest Rates

Effects of Inflation and Yield Curves on Stock Prices and Investments

Understanding Risk and Market Factors in Financial Securities

Exploring Financial Markets and Hedging Strategies

Factors Affecting the Volume of CDs

Exploring the Reserve Accounting System, Money Markets, and Financial Instruments

Exploring Central Banks and Their Impact on the Economy and Financial System

Central Banking and Monetary Policy: Exploring Tools and Strategies

Comparative Analysis of Financial Institutions and Their Operations

Exploring Various Aspects of Pension Funds, Finance Companies, and Insurance Industry

The Impact of Deregulation and Regulation on Financial Institutions and Banking Industry in the United States

Treasury Auctions, Public Debt, and Government Borrowing: Exploring the Us Treasury System

Corporate Bond Pricing, Market Development, and Financing Strategies

The Truth About Regulation Fd and Stock Holdings: Debunking Common Myths in the Financial Market

Flexible Savings Account Options

Mortgage Market and Mortgage Instruments

International Financial Transactions and Balance of Payments

International Banking and Financial Regulations

Exploring the Complexities of Financial Services and Regulation

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