Question 1

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 2

One factor contributing to the rapid growth of the commercial paper market since 1970 is ________.

Accepted Answer

A)  the fact that commercial paper has no default risk 
B)  improved information technology making it easier to screen credit risks 
C)  government regulation 
D)  FDIC insurance for commercial paper 
A)  the fact that commercial paper has no default risk 
B)  improved information technology making it easier to screen credit risks 
C)  government regulation 
D)  FDIC insurance for commercial paper

Question 3

Describe the financial innovations that were stimulated as a response to branching restrictions in the U.S.?

Accepted Answer

Bank holding companies: a bank holding c

Question 4

The entry of GM and Walmart 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 5

In a ________ banking system,commercial banks engage in securities underwriting,but legal subsidiaries conduct the different activities.Also,banking and insurance are not typically undertaken together in this system.

Accepted Answer

A)  universal 
B)  British-style universal 
C)  short-fence 
D)  compartmentalized 
A)  universal 
B)  British-style universal 
C)  short-fence 
D)  compartmentalized

Question 6

According to Edward Kane,because the banking industry is one of the most ________ industries in America,it is an industry in which ________ is especially likely to occur.

Accepted Answer

A)  competitive; loophole mining 
B)  competitive; innovation 
C)  regulated; loophole mining 
D)  regulated; innovation 
A)  competitive; loophole mining 
B)  competitive; innovation 
C)  regulated; loophole mining 
D)  regulated; innovation

Question 7

What is the international experience on the separation of banking and other financial services industries throughout the world? What are the main frameworks ?

Accepted Answer

Canada and the U.S.: Not many other coun

Question 8

The primary reason for the recent reduction in the number of financial institutions is ________.

Accepted Answer

A)  financial failures 
B)  re-regulation of banking 
C)  restrictions on branching 
D)  financial consolidation 
A)  financial failures 
B)  re-regulation of banking 
C)  restrictions on branching 
D)  financial consolidation

Question 9

The six largest chartered banks in Canada together hold ________ of the assets in the industry.

Accepted Answer

A)  over 90 percent 
B)  nearly 75 percent 
C)  just over 50 percent 
D)  25 percent 
A)  over 90 percent 
B)  nearly 75 percent 
C)  just over 50 percent 
D)  25 percent

Question 10

Money market mutual funds ________.

Accepted Answer

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

Question 11

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 are an important advantage to circumvent restrictive branching regulations. 
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 are an important advantage to circumvent restrictive branching regulations. 
C)  The McFadden Act has prevented bank holding companies from establishing branch banks. 
D)  Bank holding companies can own only banks.

Question 12

An essential characteristic of credit unions is that ________.

Accepted Answer

A)  they are typically large 
B)  branching is prohibited 
C)  their lending is primarily for mortgage loans 
D)  they are organized for individuals with a common bond 
A)  they are typically large 
B)  branching is prohibited 
C)  their lending is primarily for mortgage loans 
D)  they are organized for individuals with a common bond

Question 13

Banking consolidation in Canada will result in ________.

Accepted Answer

A)  an increased number of small banks 
B)  an increase in bank size 
C)  a reduction in bank size 
D)  elimination of small banks 
A)  an increased number of small banks 
B)  an increase in bank size 
C)  a reduction in bank size 
D)  elimination of small banks

Question 14

Sweep accounts which were created to avoid reserve requirements became possible because of a change in ________.

Accepted Answer

A)  demand conditions 
B)  supply conditions 
C)  government rules 
D)  bank mergers 
A)  demand conditions 
B)  supply conditions 
C)  government rules 
D)  bank mergers

Question 15

The 2001 Bank Act Reform legislation provides ________.

Accepted Answer

A)  greater flexibility for bank involvement in the IT area 
B)  a list of restricted activities 
C)  details on why banks cannot expand their use of information technology 
D)  less ability for banks to join strategic alliances and joint ventures 
A)  greater flexibility for bank involvement in the IT area 
B)  a list of restricted activities 
C)  details on why banks cannot expand their use of information technology 
D)  less ability for banks to join strategic alliances and joint ventures

Question 16

In a ________ banking system,commercial banks provide a full range of banking,securities,and insurance services,all within a single legal entity.

Accepted Answer

A)  universal 
B)  severable 
C)  barrier-free 
D)  dividerless 
A)  universal 
B)  severable 
C)  barrier-free 
D)  dividerless

Question 17

Financial innovation has caused ________.

Accepted Answer

A)  banks to suffer declines in their cost advantages in acquiring funds, although it has not caused a decline in income advantages 
B)  banks to suffer a simultaneous decline of cost and income advantages 
C)  banks to suffer declines in their income advantages in acquiring funds, although it has not caused a decline in cost advantages 
D)  banks to achieve competitive advantages in both costs and income 
A)  banks to suffer declines in their cost advantages in acquiring funds, although it has not caused a decline in income advantages 
B)  banks to suffer a simultaneous decline of cost and income advantages 
C)  banks to suffer declines in their income advantages in acquiring funds, although it has not caused a decline in cost advantages 
D)  banks to achieve competitive advantages in both costs and income

Question 18

What bonds are commonly called "junk bonds"? Why innovations in computer technology helped the "junk bonds" market?

Accepted Answer

Junk bonds are the bonds whose credit ra

Question 19

The development of money market mutual funds contributed to the growth of ________ since the money market mutual funds need to hold liquid,high-quality,short-terms assets.

Accepted Answer

A)  the commercial paper market 
B)  the municipal bond market 
C)  the corporate bond market 
D)  the junk bond market 
A)  the commercial paper market 
B)  the municipal bond market 
C)  the corporate bond market 
D)  the junk bond market

Question 20

________ 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

Exam 11: Banking Industry: Structure and Competition

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

One factor contributing to the rapid growth of the commercial paper market since 1970 is ________.

Describe the financial innovations that were stimulated as a response to branching restrictions in the U.S.?

The entry of GM and Walmart into the credit card business is an indication of ________.

In a ________ banking system,commercial banks engage in securities underwriting,but legal subsidiaries conduct the different activities.Also,banking and insurance are not typically undertaken together in this system.

According to Edward Kane,because the banking industry is one of the most ________ industries in America,it is an industry in which ________ is especially likely to occur.

What is the international experience on the separation of banking and other financial services industries throughout the world? What are the main frameworks ?

The primary reason for the recent reduction in the number of financial institutions is ________.

The six largest chartered banks in Canada together hold ________ of the assets in the industry.

Money market mutual funds ________.

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

An essential characteristic of credit unions is that ________.

Banking consolidation in Canada will result in ________.

Sweep accounts which were created to avoid reserve requirements became possible because of a change in ________.

The 2001 Bank Act Reform legislation provides ________.

In a ________ banking system,commercial banks provide a full range of banking,securities,and insurance services,all within a single legal entity.

Financial innovation has caused ________.

What bonds are commonly called "junk bonds"? Why innovations in computer technology helped the "junk bonds" market?

The development of money market mutual funds contributed to the growth of ________ since the money market mutual funds need to hold liquid,high-quality,short-terms assets.

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

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

According to Edward Kane,because the banking industry is one of the most industries in America,it is an industry in which is especially likely to occur.