Question 1

Financial instruments whose payoffs are linked to previously issued securities are called ________.

Accepted Answer

A)  grandfathered bonds 
B)  financial derivatives 
C)  hedge securities 
D)  reversible bonds 
A)  grandfathered bonds 
B)  financial derivatives 
C)  hedge securities 
D)  reversible bonds

Question 2

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 3

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 4

The U.S.banking system is considered to be a dual system because ________.

Accepted Answer

A)  banks offer both chequing and savings accounts 
B)  it actually includes both banks and thrift institutions 
C)  it is regulated by both state and federal governments 
D)  it was established before the Civil War, requiring separate regulatory bodies for the North and South 
A)  banks offer both chequing and savings accounts 
B)  it actually includes both banks and thrift institutions 
C)  it is regulated by both state and federal governments 
D)  it was established before the Civil War, requiring separate regulatory bodies for the North and South

Question 5

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 6

Describe how was the Eurocurrencies market created.

Accepted Answer

The most important of the Eurocurrencies

Question 7

Loophole mining refers to financial innovation designed to ________.

Accepted Answer

A)  hide transactions from the CRA 
B)  conceal transactions from the Bank of Canada 
C)  get around regulations 
D)  conceal transactions from the Department of Finance 
A)  hide transactions from the CRA 
B)  conceal transactions from the Bank of Canada 
C)  get around regulations 
D)  conceal transactions from the Department of Finance

Question 8

Describe the characteristics of cooperative banks: credit unions and caisses populaires.

Accepted Answer

- They are small lending institutions.
-

Question 9

New computer technology has ________.

Accepted Answer

A)  increased the cost of financial innovation 
B)  increased the demand for financial innovation 
C)  reduced the cost of financial innovation 
D)  reduced the demand for financial innovation 
A)  increased the cost of financial innovation 
B)  increased the demand for financial innovation 
C)  reduced the cost of financial innovation 
D)  reduced the demand for financial innovation

Question 10

The most significant change in the economic environment that changed the demand for financial products in recent years has been ________.

Accepted Answer

A)  the aging of the baby-boomer generation 
B)  the dramatic increase in the volatility of interest rates 
C)  the dramatic increase in competition from foreign banks 
D)  the deregulation of financial institutions 
A)  the aging of the baby-boomer generation 
B)  the dramatic increase in the volatility of interest rates 
C)  the dramatic increase in competition from foreign banks 
D)  the deregulation of financial institutions

Question 11

The agreement to provide a standardized commodity to a buyer on a specific date at a specific future price is ________.

Accepted Answer

A)  a put option 
B)  a call option 
C)  a futures contract 
D)  a mortgage-backed security 
A)  a put option 
B)  a call option 
C)  a futures contract 
D)  a mortgage-backed security

Question 12

Credit cards date back to ________.

Accepted Answer

A)  prior to the second World War 
B)  just after the second World War 
C)  the early 1950s 
D)  the late 1950s 
A)  prior to the second World War 
B)  just after the second World War 
C)  the early 1950s 
D)  the late 1950s

Question 13

Describe some of the major implications of the 2001 Bank Act Reform.

Accepted Answer

A bank holding company structure,new own

Question 14

The ability to use one resource to provide different products and services is ________.

Accepted Answer

A)  economies of scale 
B)  economies of scope 
C)  diversification 
D)  vertical integration 
A)  economies of scale 
B)  economies of scope 
C)  diversification 
D)  vertical integration

Question 15

The separation of the banking and other financial services industries was known as ________.

Accepted Answer

A)  convergence 
B)  consolidation 
C)  the four-pillar approach 
D)  underwriting 
A)  convergence 
B)  consolidation 
C)  the four-pillar approach 
D)  underwriting

Question 16

Which of the following are true statements?

Accepted Answer

A)  Schedule I banks have more powers than Schedule II banks. 
B)  A Schedule II bank may enter the Canadian banking industry only as a Schedule II bank. 
C)  A Schedule II bank may have a significant shareholder (more than 10 percent) for up to 10 years after chartering. 
D)  A foreign bank may enter the Canadian banking industry only as a Schedule III bank. 
A)  Schedule I banks have more powers than Schedule II banks. 
B)  A Schedule II bank may enter the Canadian banking industry only as a Schedule II bank. 
C)  A Schedule II bank may have a significant shareholder (more than 10 percent) for up to 10 years after chartering. 
D)  A foreign bank may enter the Canadian banking industry only as a Schedule III bank.

Question 17

How banks suffered a decline in income advantages on uses of funds (assets)due to financial innovation?

Accepted Answer

a.The commercial paper market: informati

Question 18

Which of the following are true statements?

Accepted Answer

A)  Schedule I banks have more powers than Schedule II banks. 
B)  Widely held foreign banks can own 50 percent of a Canadian bank subsidiary. 
C)  A Schedule II bank may have a significant shareholder (more than 10 percent) for up to 10 years after chartering. 
D)  A Schedule III bank is a foreign bank is not allowed to branch directly into Canada. 
A)  Schedule I banks have more powers than Schedule II banks. 
B)  Widely held foreign banks can own 50 percent of a Canadian bank subsidiary. 
C)  A Schedule II bank may have a significant shareholder (more than 10 percent) for up to 10 years after chartering. 
D)  A Schedule III bank is a foreign bank is not allowed to branch directly into Canada.

Question 19

In the 1950s the interest rate on three-month Treasury bills fluctuated between 1 percent and 5.5 percent; in the 1980s it fluctuated between ________ percent and ________ percent.

Accepted Answer

A)  7; 20 
B)  4; 11.5 
C)  4; 18 
D)  5; 10 
A)  7; 20 
B)  4; 11.5 
C)  4; 18 
D)  5; 10

Question 20

The four-pillars were identified as ________.

Accepted Answer

A)  banking, brokerage, trusts, and mutual funds 
B)  banking, brokerage, credit unions, and mutual funds 
C)  banking, brokerage, credit unions, and insurance 
D)  banking, brokerage, trusts, and insurance 
A)  banking, brokerage, trusts, and mutual funds 
B)  banking, brokerage, credit unions, and mutual funds 
C)  banking, brokerage, credit unions, and insurance 
D)  banking, brokerage, trusts, and insurance

Exam 11: Banking Industry: Structure and Competition

Financial instruments whose payoffs are linked to previously issued securities are called ________.

The decline in traditional banking internationally can be attributed to ________.

Financial innovations occur because of financial institutions search for ________.

The U.S.banking system is considered to be a dual system because ________.

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

Describe how was the Eurocurrencies market created.

Loophole mining refers to financial innovation designed to ________.

Describe the characteristics of cooperative banks: credit unions and caisses populaires.

New computer technology has ________.

The most significant change in the economic environment that changed the demand for financial products in recent years has been ________.

The agreement to provide a standardized commodity to a buyer on a specific date at a specific future price is ________.

Credit cards date back to ________.

Describe some of the major implications of the 2001 Bank Act Reform.

The ability to use one resource to provide different products and services is ________.

The separation of the banking and other financial services industries was known as ________.

Which of the following are true statements?

How banks suffered a decline in income advantages on uses of funds (assets)due to financial innovation?

Which of the following are true statements?

In the 1950s the interest rate on three-month Treasury bills fluctuated between 1 percent and 5.5 percent; in the 1980s it fluctuated between ________ percent and ________ percent.

The four-pillars were identified as ________.

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

Understanding Interest Rates

The Behaviour 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

Economic Analysis of Financial Regulation

Nonbank Finance

Banking and the Management of Financial Institutions

Risk Management With Financial Derivatives

Central Banks and the Bank of Canada

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 5.5 percent; in the 1980s it fluctuated between percent and percent.