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

The label "commercial" means that banks devote a substantial portion of their resources to meeting the financial needs of business firms.

A bank chartered by the federal government in the United States is known as a:

Super NOW accounts may be offered only to business firms.

A money-dispensing machine which is located away from the bank's main office in retail stores and shopping centers and is designed to reduce the need for conventional branch offices is known as a/an:

The failure rate in the U.S. banking industry increase dramatically during the credit crisis of 2007-2009.

The Graham Leach Bliley Act of 1999 allowed the creation of:

The principal means of making payments in the U.S. economy is:

The number one expense item for U.S. commercial banks is:

Which of the following reasons account for the recent increase in the failure of U.S. banks?

A bank's pledge to pay a third party if its customer who borrowed from that third party cannot repay his or her loan is known as a:

One of the advantages of standby credit letters is that they generate fee income without using up scarce bank funds.

During the last 25 years the number of U.S. commercial banks has dropped from about 14,000 to less than:

Major banks have been shifting more of their activities on to their balance sheets.

Greater use of computers and electronic machines for transferring financial information will make banking more labor intensive.

Loans are attractive to banks because of their high yield.

Regulations effective in the United States December 31, 2006 require bankers to develop more sophisticated account access procedures in order to protect their online customers, which include randomly asking a customer one or more personal questions, the use of tokens to randomize account passwords or they use of a customer's physical characteristics such as a retinal scan.

A banking facility abroad that offers all or most of the services the home office provides, including the taking of deposits and the booking of loans, is a/an:

The road to complete European economic and financial unity will not be an easy journey because:

Loans are typically the highest-return assets on a bank's balance sheet. If this is so, then why do banks sell these loans in a process called securitization?

Suppose that the banking system receives an injection of new reserves amounting to $100,000 in new checkbook (demand deposit) funds which carry a legal reserve requirement of 15 percent. Moreover, banks belonging to the system typically set aside an additional 3 percent in cash reserves to cover any unexpected deposit withdrawals or unanticipated loan demand. With this newly added amount of $100,000 in legal reserves (and assuming no leakages from the banking system and that all new loanable funds are kept in checkable deposits) what total volume of new deposits and new loans will the banking system as a whole eventually generate as funds pass from bank to bank in the system?