Question 1

Financial innovations occur because of financial institutions search for

Accepted Answer

A) profits. 
B) fame. 
C) stability. 
D) recognition. 
A) profits. 
B) fame. 
C) stability. 
D) recognition.

Question 2

Since the passage of the International Banking Act of 1978,the competitive advantage enjoyed by foreign banks in the U.S.has been

Accepted Answer

A) reduced. 
B) mildly expanded. 
C) completely eliminated. 
D) greatly expanded. 
A) reduced. 
B) mildly expanded. 
C) completely eliminated. 
D) greatly expanded.

Question 3

The National Bank Act of 1863,and subsequent amendments to it

Accepted Answer

A) created a banking system of state-chartered banks. 
B) established the Office of the Comptroller of the Currency. 
C) broadened the regulatory powers of the Federal Reserve. 
D) created insurance on deposit accounts. 
A) created a banking system of state-chartered banks. 
B) established the Office of the Comptroller of the Currency. 
C) broadened the regulatory powers of the Federal Reserve. 
D) created insurance on deposit accounts.

Question 4

With the creation of the Federal Deposit Insurance Corporation

Accepted Answer

A) member banks of the Federal Reserve System were given the option to purchase FDIC insurance for their depositors,while non-member commercial banks were required to buy deposit insurance. 
B) member banks of the Federal Reserve System were required to purchase FDIC insurance for their depositors,while non-member commercial banks could choose to buy deposit insurance. 
C) both member and non-member banks of the Federal Reserve System were required to purchase FDIC insurance for their depositors. 
D) both member and non-member banks of the Federal Reserve System could choose,but were not required,to purchase FDIC insurance for their depositors. 
A) member banks of the Federal Reserve System were given the option to purchase FDIC insurance for their depositors,while non-member commercial banks were required to buy deposit insurance. 
B) member banks of the Federal Reserve System were required to purchase FDIC insurance for their depositors,while non-member commercial banks could choose to buy deposit insurance. 
C) both member and non-member banks of the Federal Reserve System were required to purchase FDIC insurance for their depositors. 
D) both member and non-member banks of the Federal Reserve System could choose,but were not required,to purchase FDIC insurance for their depositors.

Question 5

Which of the following is a TRUE statement concerning bank holding companies?

Accepted Answer

A) Bank holding companies own few large banks. 
B) Bank holding companies have experienced dramatic growth in the past three decades. 
C) The McFadden Act has prevented bank holding companies from establishing branch banks. 
D) Bank holding companies can own only banks. 
A) Bank holding companies own few large banks. 
B) Bank holding companies have experienced dramatic growth in the past three decades. 
C) The McFadden Act has prevented bank holding companies from establishing branch banks. 
D) Bank holding companies can own only banks.

Question 6

Today the United States has a dual banking system in which banks supervised by the ________ and by the ________ operate side by side.

Accepted Answer

A) federal government;municipalities 
B) state governments;municipalities 
C) federal government;states 
D) municipalities;states 
A) federal government;municipalities 
B) state governments;municipalities 
C) federal government;states 
D) municipalities;states

Question 7

A disadvantage of virtual banks (clicks)is that

Accepted Answer

A) their hours are more limited than physical banks. 
B) they are less convenient than physical banks. 
C) they are more costly to operate than physical banks. 
D) customers worry about the security of on-line transactions. 
A) their hours are more limited than physical banks. 
B) they are less convenient than physical banks. 
C) they are more costly to operate than physical banks. 
D) customers worry about the security of on-line transactions.

Question 8

What country is given credit for the birth of the Eurodollar market?

Accepted Answer

A) the United States 
B) England 
C) the Soviet Union 
D) Japan 
A) the United States 
B) England 
C) the Soviet Union 
D) Japan

Question 9

An instrument developed to help investors and institutions hedge interest-rate risk is

Accepted Answer

A) a debit card. 
B) a credit card. 
C) a financial derivative. 
D) a junk bond. 
A) a debit card. 
B) a credit card. 
C) a financial derivative. 
D) a junk bond.

Question 10

Which regulatory body charters national banks?

Accepted Answer

A) the Federal Reserve 
B) the FDIC 
C) the Comptroller of the Currency 
D) the U.S.Treasury 
A) the Federal Reserve 
B) the FDIC 
C) the Comptroller of the Currency 
D) the U.S.Treasury

Question 11

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 12

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 13

Bank holding companies that rival money center banks in size,but are not located in money center cities are

Accepted Answer

A) superregional banks. 
B) bank clearing houses. 
C) international banks. 
D) local banks. 
A) superregional banks. 
B) bank clearing houses. 
C) international banks. 
D) local banks.

Question 14

The presence of so many commercial banks in the United States is most likely the result of

Accepted Answer

A) consumers' strong desire for dealing with only local banks. 
B) adverse selection and moral hazard problems that give local banks a competitive advantage over larger banks. 
C) prior regulations that restricted the ability of these financial institutions to open branches. 
D) consumers' preference for state banks. 
A) consumers' strong desire for dealing with only local banks. 
B) adverse selection and moral hazard problems that give local banks a competitive advantage over larger banks. 
C) prior regulations that restricted the ability of these financial institutions to open branches. 
D) consumers' preference for state banks.

Question 15

The Glass-Steagall Act,before its repeal in 1999,prohibited commercial banks from

Accepted Answer

A) issuing equity to finance bank expansion. 
B) engaging in underwriting and dealing of corporate securities. 
C) selling new issues of government securities. 
D) purchasing any debt securities. 
A) issuing equity to finance bank expansion. 
B) engaging in underwriting and dealing of corporate securities. 
C) selling new issues of government securities. 
D) purchasing any debt securities.

Question 16

The process of transforming otherwise illiquid financial assets into marketable capital market instruments is known as

Accepted Answer

A) securitization. 
B) internationalization. 
C) arbitrage. 
D) program trading. 
A) securitization. 
B) internationalization. 
C) arbitrage. 
D) program trading.

Question 17

The declining cost of computer technology has made ________ a reality.

Accepted Answer

A) brick and mortar banking 
B) commercial banking 
C) virtual banking 
D) investment banking 
A) brick and mortar banking 
B) commercial banking 
C) virtual banking 
D) investment banking

Exam 11: Banking Industry: Structure and Competition

Financial innovations occur because of financial institutions search for

Since the passage of the International Banking Act of 1978,the competitive advantage enjoyed by foreign banks in the U.S.has been

The National Bank Act of 1863,and subsequent amendments to it

With the creation of the Federal Deposit Insurance Corporation

Which of the following is a TRUE statement concerning bank holding companies?

Today the United States has a dual banking system in which banks supervised by the ________ and by the ________ operate side by side.

A disadvantage of virtual banks (clicks)is that

What country is given credit for the birth of the Eurodollar market?

An instrument developed to help investors and institutions hedge interest-rate risk is

Which regulatory body charters national banks?

Prior to 2008,bank managers looked on reserve requirements

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

Bank holding companies that rival money center banks in size,but are not located in money center cities are

The presence of so many commercial banks in the United States is most likely the result of

The Glass-Steagall Act,before its repeal in 1999,prohibited commercial banks from

The process of transforming otherwise illiquid financial assets into marketable capital market instruments is known as

The declining cost of computer technology has made ________ a reality.

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

Web 1:financial Crises in Emerging Market Economies

Web 2:the Islm Model

Web 3:nonbank Finance

Web 4:financial Derivatives

Web 5:conflicts of Interest in the Financial Services Industry

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