Question 1

In general, savings institutions are larger than commercial banks.

Accepted Answer

A) True 
 B)False  False

Question 2

The ____ acts as a temporary lender to credit unions

Accepted Answer

A)  World Bank 
B)  Central Liquidity Facility 
C)  Federal Home Loan Bank 
D)  National Credit Union Administration 
A)  World Bank 
B)  Central Liquidity Facility 
C)  Federal Home Loan Bank 
D)  National Credit Union Administration B

Question 3

When savings institutions are unable to attract sufficient deposits, they can

Accepted Answer

A)  borrow in the federal funds market. 
B)  borrow from the Federal Reserve. 
C)  borrow through a repurchase agreement. 
D)  all of the above 
A)  borrow in the federal funds market. 
B)  borrow from the Federal Reserve. 
C)  borrow through a repurchase agreement. 
D)  all of the above D

Question 4

Savings institutions obtain most of their funds from

Accepted Answer

A)  savings and time deposits. 
B)  loans. 
C)  mortgages. 
D)  repurchase agreements. 
A)  savings and time deposits. 
B)  loans. 
C)  mortgages. 
D)  repurchase agreements.

Question 5

Credit unions obtain most of their funds by borrowing from the U.S. government.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a deposit source of funds for savings institutions?

Accepted Answer

A)  passbook savings 
B)  retail CDs 
C)  money market deposit accounts 
D)  negotiable order of withdrawal (NOW) accounts 
E)  All of the above are deposit sources of funds for savings institutions. 
A)  passbook savings 
B)  retail CDs 
C)  money market deposit accounts 
D)  negotiable order of withdrawal (NOW) accounts 
E)  All of the above are deposit sources of funds for savings institutions.

Question 7

____ are the primary asset of savings institutions.

Accepted Answer

A)  Mortgages 
B)  Cash balances 
C)  Investment securities 
D)  Business loans 
A)  Mortgages 
B)  Cash balances 
C)  Investment securities 
D)  Business loans

Question 8

The National Credit Union Share Insurance Fund (NCUSIF) requires all

Accepted Answer

A)  federally chartered credit unions to obtain insurance from the NCUSIF. 
B)  state-chartered credit unions to obtain insurance from the NCUSIF. 
C)  credit unions to pay a supplemental insurance premium each year. 
D)  depository institutions to pay a supplemental insurance premium each year. 
A)  federally chartered credit unions to obtain insurance from the NCUSIF. 
B)  state-chartered credit unions to obtain insurance from the NCUSIF. 
C)  credit unions to pay a supplemental insurance premium each year. 
D)  depository institutions to pay a supplemental insurance premium each year.

Question 9

The maximum insurance per depositor provided by the National Credit Union Share Insurance Fund is

Accepted Answer

A)  $250,000. 
B)  $50,000. 
C)  $40,000. 
D)  $25,000. 
A)  $250,000. 
B)  $50,000. 
C)  $40,000. 
D)  $25,000.

Question 10

Which of the following statements is incorrect?

Accepted Answer

A)  A mutual-to-stock conversion allows savings institutions to obtain additional capital by issuing stock. 
B)  Because of their ownership structure, mutual savings institutions are more susceptible to unfriendly takeovers. 
C)  When a mutual savings institution is involved in an acquisition, it first converts to a stock-owned savings institution. 
D)  Consolidation and acquisitions have caused the number of mutual and stock savings institutions to decline consistently over the years. 
A)  A mutual-to-stock conversion allows savings institutions to obtain additional capital by issuing stock. 
B)  Because of their ownership structure, mutual savings institutions are more susceptible to unfriendly takeovers. 
C)  When a mutual savings institution is involved in an acquisition, it first converts to a stock-owned savings institution. 
D)  Consolidation and acquisitions have caused the number of mutual and stock savings institutions to decline consistently over the years.

Question 11

Which of the following is not an advantage of credit unions?

Accepted Answer

A)  They can offer attractive rates to their member savers and borrowers because they are nonprofit and therefore are not taxed. 
B)  Their noninterest expenses are relatively low, because their labor, office, and furniture are often donated or provided at a very low cost through the affiliation of their members. 
C)  Their large membership allows them to effectively diversify geographically. 
D)  All of the above are advantages of credit unions. 
A)  They can offer attractive rates to their member savers and borrowers because they are nonprofit and therefore are not taxed. 
B)  Their noninterest expenses are relatively low, because their labor, office, and furniture are often donated or provided at a very low cost through the affiliation of their members. 
C)  Their large membership allows them to effectively diversify geographically. 
D)  All of the above are advantages of credit unions.

Question 12

Adjustable-rate mortgages ____ the adverse impact of rising interest rates on a typical savings institution's spread. They ____ the favorable impact of declining interest rates on the spread.

Accepted Answer

A)  reduce; reduce 
B)  reduce; increase 
C)  increase; increase 
D)  increase; reduce 
A)  reduce; reduce 
B)  reduce; increase 
C)  increase; increase 
D)  increase; reduce

Question 13

Federally chartered savings institutions are regulated by the

Accepted Answer

A)  Securities and Exchange Commission (SE
C) . 
B)  National Credit Union Administration. 
C)  Comptroller of the Currency and the Federal Reserve. 
D)  U.S. Treasury. 
A)  Securities and Exchange Commission (SE
C) . 
B)  National Credit Union Administration. 
C)  Comptroller of the Currency and the Federal Reserve. 
D)  U.S. Treasury.

Question 14

The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) prohibited savings institutions from

Accepted Answer

A)  merging 
B)  offering mortgage loans . 
C)  investing in junk bonds. 
D)  making loans to foreign governments. 
A)  merging 
B)  offering mortgage loans . 
C)  investing in junk bonds. 
D)  making loans to foreign governments.

Question 15

An interest rate swap reduces the favorable impact of declining interest rates.

Accepted Answer

A) True 
 B)False

Question 16

To manage interest rate risk, a savings institution could use

Accepted Answer

A)  fixed-rate mortgages. 
B)  currency options. 
C)  interest rate futures contracts. 
D)  letters of credit. 
A)  fixed-rate mortgages. 
B)  currency options. 
C)  interest rate futures contracts. 
D)  letters of credit.

Question 17

____ do not represent an asset of credit unions.

Accepted Answer

A)  Mortgage-backed securities 
B)  Home equity loans 
C)  Automobile loans 
D)  Stocks 
A)  Mortgage-backed securities 
B)  Home equity loans 
C)  Automobile loans 
D)  Stocks

Question 18

Which of the following is not an asset of savings institutions?

Accepted Answer

A)  loans 
B)  mortgages 
C)  NOW accounts 
D)  mortgage-backed securities 
A)  loans 
B)  mortgages 
C)  NOW accounts 
D)  mortgage-backed securities

Question 19

To measure ____ risk, some savings institutions measure the duration of their respective assets and liabilities.

Accepted Answer

A)  credit 
B)  interest rate 
C)  liquidity 
D)  none of the above 
A)  credit 
B)  interest rate 
C)  liquidity 
D)  none of the above

Question 20

Savings institutions commonly ____ to reduce their risk.

Accepted Answer

A)  purchase futures contracts on stock indexes 
B)  purchase futures contracts on Treasury bonds 
C)  sell futures contracts on stock indexes 
D)  sell futures contracts on Treasury bonds 
A)  purchase futures contracts on stock indexes 
B)  purchase futures contracts on Treasury bonds 
C)  sell futures contracts on stock indexes 
D)  sell futures contracts on Treasury bonds

Exam 21: Thrift Operations

In general, savings institutions are larger than commercial banks.

The ____ acts as a temporary lender to credit unions

When savings institutions are unable to attract sufficient deposits, they can

Savings institutions obtain most of their funds from

Credit unions obtain most of their funds by borrowing from the U.S. government.

Which of the following is not a deposit source of funds for savings institutions?

____ are the primary asset of savings institutions.

The National Credit Union Share Insurance Fund (NCUSIF) requires all

The maximum insurance per depositor provided by the National Credit Union Share Insurance Fund is

Which of the following statements is incorrect?

Which of the following is not an advantage of credit unions?

Adjustable-rate mortgages ____ the adverse impact of rising interest rates on a typical savings institution's spread. They ____ the favorable impact of declining interest rates on the spread.

Federally chartered savings institutions are regulated by the

The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) prohibited savings institutions from

An interest rate swap reduces the favorable impact of declining interest rates.

To manage interest rate risk, a savings institution could use

____ do not represent an asset of credit unions.

Which of the following is not an asset of savings institutions?

To measure ____ risk, some savings institutions measure the duration of their respective assets and liabilities.

Savings institutions commonly ____ to reduce their risk.

Role of Financial Markets and Institutions

Determination of Interest Rates

Structure of Interest Rates

Functions of the Fed

Monetary Policy

Money Markets

Bond Markets

Bond Valuation and Risk

Mortgage Markets

Stock Offerings and Investor Monitoring

Stock Valuation and Risk

Market Microstructure and Strategies

Financial Futures Markets

Options Markets

Swap Markets

Foreign Exchange Derivative Markets

Commercial Bank Operations

Bank Regulation

Bank Management

Bank Performance

Finance Company Operations

Mutual Fund Operations

Securities Operations

Insurance Operations

Pension Fund Operations

Filters

Adjustable-rate mortgages the adverse impact of rising interest rates on a typical savings institution's spread. They the favorable impact of declining interest rates on the spread.