Question 1

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 2

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 3

The spectacular growth in international banking can be explained by

Accepted Answer

A)  the rapid growth in international trade. 
B)  the 1988 Basel Agreement. 
C)  the desire for U.S. banks to escape burdensome domestic regulations. 
D)  the creation of the World Trade Organization. 
A)  the rapid growth in international trade. 
B)  the 1988 Basel Agreement. 
C)  the desire for U.S. banks to escape burdensome domestic regulations. 
D)  the creation of the World Trade Organization.

Question 4

As the banking system in the United States evolves,it is expected that

Accepted Answer

A)  the number and importance of small banks will increase. 
B)  the number and importance of large banks will decrease. 
C)  small banks will grow at the expense of large banks. 
D)  the number and importance of large banks will increase. 
A)  the number and importance of small banks will increase. 
B)  the number and importance of large banks will decrease. 
C)  small banks will grow at the expense of large banks. 
D)  the number and importance of large banks will increase.

Question 5

The entry of AT&T and GM into the credit card business is an indication of

Accepted Answer

A)  government's efforts to deregulate the provision of financial services. 
B)  the rising profitability of credit card operations. 
C)  the reduction in costs of credit card operations since 1990. 
D)  the sale of unprofitable operations by Bank of America and Citicorp. 
A)  government's efforts to deregulate the provision of financial services. 
B)  the rising profitability of credit card operations. 
C)  the reduction in costs of credit card operations since 1990. 
D)  the sale of unprofitable operations by Bank of America and Citicorp.

Question 6

The experience of disintermediation in the banking industry illustrates that

Accepted Answer

A)  more regulation of financial markets may avoid such problems in the future. 
B)  banks are unable to remain competitive with other financial intermediaries. 
C)  consumers no longer desire the services that banks provide. 
D)  markets invent alternatives to costly regulations. 
A)  more regulation of financial markets may avoid such problems in the future. 
B)  banks are unable to remain competitive with other financial intermediaries. 
C)  consumers no longer desire the services that banks provide. 
D)  markets invent alternatives to costly regulations.

Question 7

________ is creating a marketable capital market instrument by bundling a portfolio of mortgage or auto loans.

Accepted Answer

A)  diversification. 
B)  arbitrage. 
C)  computerization. 
D)  securitization. 
A)  diversification. 
B)  arbitrage. 
C)  computerization. 
D)  securitization.

Question 8

The most important source of the changes in supply conditions that stimulate financial innovation has been the

Accepted Answer

A)  deregulation of financial institutions. 
B)  dramatic increase in the volatility of interest rates. 
C)  improvement in computer and telecommunications technology. 
D)  dramatic increase in competition from foreign banks. 
A)  deregulation of financial institutions. 
B)  dramatic increase in the volatility of interest rates. 
C)  improvement in computer and telecommunications technology. 
D)  dramatic increase in competition from foreign banks.

Question 9

In the 1950s the interest rate on three-month Treasury bills fluctuated between 1 percent and 3.5 percent; in the 1980s it fluctuated between ________ percent and ________ percent.

Accepted Answer

A)  5; 15 
B)  4; 11.5 
C)  4; 18 
D)  5; 10 
A)  5; 15 
B)  4; 11.5 
C)  4; 18 
D)  5; 10

Question 10

Experts predict that the future structure of the U.S.banking industry will have

Accepted Answer

A)  an increased number of banks. 
B)  as few as ten banks. 
C)  several thousand banks. 
D)  a few hundred banks. 
A)  an increased number of banks. 
B)  as few as ten banks. 
C)  several thousand banks. 
D)  a few hundred banks.

Question 11

In 1977,he pioneered the concept of selling new public issues of junk bonds for companies that had not yet achieved investment-grade status.

Accepted Answer

A)  Michael Milken 
B)  Roger Milliken 
C)  Ivan Boskey 
D)  Carl Ichan 
A)  Michael Milken 
B)  Roger Milliken 
C)  Ivan Boskey 
D)  Carl Ichan

Question 12

The primary reason for the recent reduction in the number of banks is

Accepted Answer

A)  bank failures. 
B)  re-regulation of banking. 
C)  restrictions on interstate branching. 
D)  mergers and acquisitions. 
A)  bank failures. 
B)  re-regulation of banking. 
C)  restrictions on interstate branching. 
D)  mergers and acquisitions.

Question 13

________ within the U.S.can make loans to foreigners but cannot make loans to domestic residents.

Accepted Answer

A)  Edge Act corporations 
B)  International Banking Facilities 
C)  Universal banks 
D)  Euro banks 
A)  Edge Act corporations 
B)  International Banking Facilities 
C)  Universal banks 
D)  Euro banks

Question 14

U)S.banks have most of their branches in

Accepted Answer

A)  Latin America, the Far East, the Caribbean, and London. 
B)  Latin America, the Middle East, the Caribbean, and London. 
C)  Mexico, the Middle East, the Caribbean, and London. 
D)  South America, the Middle East, the Caribbean, and Canada. 
A)  Latin America, the Far East, the Caribbean, and London. 
B)  Latin America, the Middle East, the Caribbean, and London. 
C)  Mexico, the Middle East, the Caribbean, and London. 
D)  South America, the Middle East, the Caribbean, and Canada.

Question 15

State banking authorities have sole jurisdiction over state banks

Accepted Answer

A)  without FDIC insurance. 
B)  that are not members of the Federal Reserve System. 
C)  operating as bank holding companies. 
D)  chartered in the 21st century. 
A)  without FDIC insurance. 
B)  that are not members of the Federal Reserve System. 
C)  operating as bank holding companies. 
D)  chartered in the 21st century.

Question 16

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 17

A major controversy involving the banking industry in its early years was

Accepted Answer

A)  whether banks should both accept deposits and make loans or whether these functions should be separated into different institutions. 
B)  whether the federal government or the states should charter banks. 
C)  what percent of deposits banks should hold as fractional reserves. 
D)  whether banks should be allowed to issue their own bank notes. 
A)  whether banks should both accept deposits and make loans or whether these functions should be separated into different institutions. 
B)  whether the federal government or the states should charter banks. 
C)  what percent of deposits banks should hold as fractional reserves. 
D)  whether banks should be allowed to issue their own bank notes.

Question 18

The legislation that overturned the prohibition on interstate banking is

Accepted Answer

A)  the McFadden Act. 
B)  the Gramm-Leach-Bliley Act. 
C)  the Glass-Steagall Act 
D)  the Riegle-Neal Act 
A)  the McFadden Act. 
B)  the Gramm-Leach-Bliley Act. 
C)  the Glass-Steagall Act 
D)  the Riegle-Neal Act

Question 19

Money market mutual funds

Accepted Answer

A)  function as interest-earning checking accounts. 
B)  are legally deposits. 
C)  are subject to reserve requirements. 
D)  have an interest-rate ceiling. 
A)  function as interest-earning checking accounts. 
B)  are legally deposits. 
C)  are subject to reserve requirements. 
D)  have an interest-rate ceiling.

Question 20

The belief that bank failures were regularly caused by fraud or the lack of sufficient bank capital explains,in part,the passage of

Accepted Answer

A)  the National Bank Charter Amendments of 1918. 
B)  the Garn-St. Germain Act of 1982. 
C)  the National Bank Act of 1863. 
D)  Federal Reserve Act of 1913. 
A)  the National Bank Charter Amendments of 1918. 
B)  the Garn-St. Germain Act of 1982. 
C)  the National Bank Act of 1863. 
D)  Federal Reserve Act of 1913.

Exam 12: Banking Industry: Structure and Competition

Prior to 2008,bank managers looked on reserve requirements

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

The spectacular growth in international banking can be explained by

As the banking system in the United States evolves,it is expected that

The entry of AT&T and GM into the credit card business is an indication of

The experience of disintermediation in the banking industry illustrates that

________ is creating a marketable capital market instrument by bundling a portfolio of mortgage or auto loans.

The most important source of the changes in supply conditions that stimulate financial innovation has been the

In the 1950s the interest rate on three-month Treasury bills fluctuated between 1 percent and 3.5 percent; in the 1980s it fluctuated between ________ percent and ________ percent.

Experts predict that the future structure of the U.S.banking industry will have

In 1977,he pioneered the concept of selling new public issues of junk bonds for companies that had not yet achieved investment-grade status.

The primary reason for the recent reduction in the number of banks is

________ within the U.S.can make loans to foreigners but cannot make loans to domestic residents.

U)S.banks have most of their branches in

State banking authorities have sole jurisdiction over state banks

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

A major controversy involving the banking industry in its early years was

The legislation that overturned the prohibition on interstate banking is

Money market mutual funds

The belief that bank failures were regularly caused by fraud or the lack of sufficient bank capital explains,in part,the passage of

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

Understanding 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

Financial Crises

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

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

The ISLM Model

Filters

In the 1950s the interest rate on three-month Treasury bills fluctuated between 1 percent and 3.5 percent; in the 1980s it fluctuated between percent and percent.