Question 1

The driving force behind the securitization of mortgages and automobile loans has been

Accepted Answer

A) the rising regulatory constraints on substitute financial instruments. 
B) the desire of mortgage and auto lenders to exit this field of lending. 
C) the improvement in information technology. 
D) the relaxation of regulatory restrictions on credit card operations. 
A) the rising regulatory constraints on substitute financial instruments. 
B) the desire of mortgage and auto lenders to exit this field of lending. 
C) the improvement in information technology. 
D) the relaxation of regulatory restrictions on credit card operations.

Question 2

Since 1980

Accepted Answer

A) banks have decreased risk taking to offset the decline in profits. 
B) banks have offset the decline in profits from traditional activities with increased income from off-balance-sheet activities. 
C) banks have offset the decline in profits from off-balance-sheet activities with increased income from traditional activities. 
D) bank profits have grown rapidly due to deregulation. 
A) banks have decreased risk taking to offset the decline in profits. 
B) banks have offset the decline in profits from traditional activities with increased income from off-balance-sheet activities. 
C) banks have offset the decline in profits from off-balance-sheet activities with increased income from traditional activities. 
D) bank profits have grown rapidly due to deregulation.

Question 3

If a foreign bank operates a subsidiary bank in the U.S. ,the subsidiary bank is

Accepted Answer

A) subject to the same regulations as a U.S. owned bank. 
B) only subject to the regulations of the country in which the foreign bank is chartered. 
C) restricted to making loans to only foreign citizens in the U.S. 
D) restricted to accepting deposits from foreign citizens living in the U.S. 
A) subject to the same regulations as a U.S. owned bank. 
B) only subject to the regulations of the country in which the foreign bank is chartered. 
C) restricted to making loans to only foreign citizens in the U.S. 
D) restricted to accepting deposits from foreign citizens living in the U.S.

Question 4

Although it has a population about half that of the United States,Japan has

Accepted Answer

A) many more banks. 
B) about 25 percent of the number of banks. 
C) more than 5,000 commercial banks. 
D) fewer than 100 commercial banks. 
A) many more banks. 
B) about 25 percent of the number of banks. 
C) more than 5,000 commercial banks. 
D) fewer than 100 commercial banks.

Question 5

Securitization is a process of asset transformation that involves a number of different financial institutions working together. These financial institutions are known collectively as the

Accepted Answer

A) transformers. 
B) amalgamation. 
C) movers and shakers. 
D) shadow banking system. 
A) transformers. 
B) amalgamation. 
C) movers and shakers. 
D) shadow banking system.

Question 6

The Federal Reserve Act of 1913 required all ________ banks to become members of the Federal Reserve System,while ________ banks could choose to become members of the system.

Accepted Answer

A) state;national 
B) state;municipal 
C) national;state 
D) national;municipal 
A) state;national 
B) state;municipal 
C) national;state 
D) national;municipal

Question 7

Newly-issued high-yield bonds rated below investment grade by the bond-rating agencies are frequently referred to as

Accepted Answer

A) municipal bonds. 
B) Yankee bonds. 
C) "fallen angels." 
D) junk bonds. 
A) municipal bonds. 
B) Yankee bonds. 
C) "fallen angels." 
D) junk bonds.

Question 8

Because of the abuses by state banks and the clear need for a central bank to help the federal government raise funds during the War of 1812,Congress created the

Accepted Answer

A) Bank of United States in 1812. 
B) Bank of North America in 1814. 
C) Second Bank of the United States in 1816. 
D) Second Bank of North America in 1815. 
A) Bank of United States in 1812. 
B) Bank of North America in 1814. 
C) Second Bank of the United States in 1816. 
D) Second Bank of North America in 1815.

Question 9

The legislation that separated investment banking from commercial banking until its repeal in 1999 is known as the

Accepted Answer

A) National Bank Act of 1863. 
B) Federal Reserve Act of 1913. 
C) Glass-Steagall Act. 
D) McFadden Act. 
A) National Bank Act of 1863. 
B) Federal Reserve Act of 1913. 
C) Glass-Steagall Act. 
D) McFadden Act.

Question 10

Under the Gramm-Leach-Bliley Act states retain regulatory authority over

Accepted Answer

A) bank holding companies. 
B) securities activities. 
C) insurance activities. 
D) bank subsidiaries engaged in securities underwriting. 
A) bank holding companies. 
B) securities activities. 
C) insurance activities. 
D) bank subsidiaries engaged in securities underwriting.

Question 11

The regulatory system that has evolved in the United States whereby banks are regulated at the state level,the national level,or both,is known as a

Accepted Answer

A) bilateral regulatory system. 
B) tiered regulatory system. 
C) two-tiered regulatory system. 
D) dual banking system. 
A) bilateral regulatory system. 
B) tiered regulatory system. 
C) two-tiered regulatory system. 
D) dual banking system.

Question 12

The decline in traditional banking internationally can be attributed to

Accepted Answer

A) increased regulation. 
B) improved information technology. 
C) increasing monopoly power of banks over depositors. 
D) increased protection from competition. 
A) increased regulation. 
B) improved information technology. 
C) increasing monopoly power of banks over depositors. 
D) increased protection from competition.

Question 13

The legislation that effectively prohibited banks from branching across state lines and forced all national banks to conform to the branching regulations in the state in which they reside is the

Accepted Answer

A) McFadden Act. 
B) National Bank Act. 
C) Glass-Steagall Act. 
D) Garn-St.Germain Act. 
A) McFadden Act. 
B) National Bank Act. 
C) Glass-Steagall Act. 
D) Garn-St.Germain Act.

Question 14

Allowing bank branching across state lines gives banks greater ability to coordinate bank operations. This makes it easier for them to receive the benefits of

Accepted Answer

A) the dual banking system. 
B) economies of scale. 
C) disintermediation. 
D) interest-rate irregularities. 
A) the dual banking system. 
B) economies of scale. 
C) disintermediation. 
D) interest-rate irregularities.

Question 15

Probably the most significant factor explaining the drastic drop in the number of bank failures since the Great Depression has been

Accepted Answer

A) the creation of the FDIC. 
B) rapid economic growth since 1941. 
C) the employment of new procedures by the Federal Reserve. 
D) better bank management. 
A) the creation of the FDIC. 
B) rapid economic growth since 1941. 
C) the employment of new procedures by the Federal Reserve. 
D) better bank management.

Question 16

The legislation overturning the Glass-Steagall Act is

Accepted Answer

A) the McFadden Act. 
B) the Gramm-Leach-Bliley Act. 
C) the Garn-St. Germain Act. 
D) the Riegle-Neal Act. 
A) the McFadden Act. 
B) the Gramm-Leach-Bliley Act. 
C) the Garn-St. Germain Act. 
D) the Riegle-Neal Act.

Question 17

With the creation of the Federal Deposit Insurance Corporation,member banks of the Federal Reserve System ________ to purchase FDIC insurance for their depositors,while non-member commercial banks ________ to buy deposit insurance.

Accepted Answer

A) could choose;were required 
B) could choose;were given the option 
C) were required;could choose 
D) were required;were required 
A) could choose;were required 
B) could choose;were given the option 
C) were required;could choose 
D) were required;were required

Question 18

Prior to 2008,bank managers looked on reserve requirements

Accepted Answer

A) as a tax on deposits. 
B) as a subsidy on deposits. 
C) as a subsidy on loans. 
D) as a tax on loans. 
A) as a tax on deposits. 
B) as a subsidy on deposits. 
C) as a subsidy on loans. 
D) as a tax on loans.

Question 19

Bank consolidation will likely result in

Accepted Answer

A) less competition. 
B) the elimination of community banks. 
C) increased competition. 
D) a shift in assets from larger banks to smaller banks. 
A) less competition. 
B) the elimination of community banks. 
C) increased competition. 
D) a shift in assets from larger banks to smaller banks.

Question 20

Adjustable rate mortgages

Accepted Answer

A) protect households against higher mortgage payments when interest rates rise. 
B) keep financial institutions' earnings high even when interest rates are falling. 
C) benefit homeowners when interest rates are falling. 
D) generally have higher initial interest rates than on conventional fixed-rate mortgages. 
A) protect households against higher mortgage payments when interest rates rise. 
B) keep financial institutions' earnings high even when interest rates are falling. 
C) benefit homeowners when interest rates are falling. 
D) generally have higher initial interest rates than on conventional fixed-rate mortgages.

Exam 11: Banking Industry: Structure and Competition

The driving force behind the securitization of mortgages and automobile loans has been

Since 1980

If a foreign bank operates a subsidiary bank in the U.S. ,the subsidiary bank is

Although it has a population about half that of the United States,Japan has

Securitization is a process of asset transformation that involves a number of different financial institutions working together. These financial institutions are known collectively as the

The Federal Reserve Act of 1913 required all ________ banks to become members of the Federal Reserve System,while ________ banks could choose to become members of the system.

Newly-issued high-yield bonds rated below investment grade by the bond-rating agencies are frequently referred to as

Because of the abuses by state banks and the clear need for a central bank to help the federal government raise funds during the War of 1812,Congress created the

The legislation that separated investment banking from commercial banking until its repeal in 1999 is known as the

Under the Gramm-Leach-Bliley Act states retain regulatory authority over

The regulatory system that has evolved in the United States whereby banks are regulated at the state level,the national level,or both,is known as a

The decline in traditional banking internationally can be attributed to

The legislation that effectively prohibited banks from branching across state lines and forced all national banks to conform to the branching regulations in the state in which they reside is the

Allowing bank branching across state lines gives banks greater ability to coordinate bank operations. This makes it easier for them to receive the benefits of

Probably the most significant factor explaining the drastic drop in the number of bank failures since the Great Depression has been

The legislation overturning the Glass-Steagall Act is

With the creation of the Federal Deposit Insurance Corporation,member banks of the Federal Reserve System ________ to purchase FDIC insurance for their depositors,while non-member commercial banks ________ to buy deposit insurance.

Prior to 2008,bank managers looked on reserve requirements

Bank consolidation will likely result in

Adjustable rate mortgages

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

The Meaning of Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Financial Crises

Central Banks and the Federal Reserve System

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, inflation and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

Financial Crises in Emerging Market Economies

The ISLM Model

Filters

The Federal Reserve Act of 1913 required all banks to become members of the Federal Reserve System,while banks could choose to become members of the system.

With the creation of the Federal Deposit Insurance Corporation,member banks of the Federal Reserve System to purchase FDIC insurance for their depositors,while non-member commercial banks to buy deposit insurance.