Question 1

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 A

Question 2

Adjustable rate mortgages ________.

Accepted Answer

A) protect households against higher mortgage payments when interest rates rise 
B) keep financial institutions' earnings high even when interest rates are falling 
C) benefit homeowners when interest rates are falling 
D) generally have higher initial interest rates than on conventional fixed-rate mortgages 
A) protect households against higher mortgage payments when interest rates rise 
B) keep financial institutions' earnings high even when interest rates are falling 
C) benefit homeowners when interest rates are falling 
D) generally have higher initial interest rates than on conventional fixed-rate mortgages C

Question 3

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 C

Question 4

Reasons for holding Eurodollars include ________.

Accepted Answer

A) the fact that Eurodollar deposits are insured by the FDIC 
B) the fact that dollars are widely used to conduct international transactions 
C) the fact that minimum transaction sizes are very low, making Eurodollars an attractive savings instrument for consumers 
D) the fact that Eurodollar deposits are heavily regulated 
A) the fact that Eurodollar deposits are insured by the FDIC 
B) the fact that dollars are widely used to conduct international transactions 
C) the fact that minimum transaction sizes are very low, making Eurodollars an attractive savings instrument for consumers 
D) the fact that Eurodollar deposits are heavily regulated

Question 5

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 6

Both ________ and ________ were financial innovations that occurred because of interest rate risk volatility.

Accepted Answer

A) adjustable-rate mortgages; commercial paper 
B) adjustable-rate mortgages; financial derivatives 
C) sweep accounts; financial derivatives 
D) sweep accounts; commercial paper 
A) adjustable-rate mortgages; commercial paper 
B) adjustable-rate mortgages; financial derivatives 
C) sweep accounts; financial derivatives 
D) sweep accounts; commercial paper

Question 7

Canadian banks have most of their foreign branches in ________.

Accepted Answer

A) the U.S., Mexico, South America, Europe, and Asia 
B) Latin America, the Middle East, Mexico, and Europe 
C) Mexico, the Middle East, the Caribbean, and London 
D) South America, the Middle East, and the Caribbean 
A) the U.S., Mexico, South America, Europe, and Asia 
B) Latin America, the Middle East, Mexico, and Europe 
C) Mexico, the Middle East, the Caribbean, and London 
D) South America, the Middle East, and the Caribbean

Question 8

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 9

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

Accepted Answer

A bank holding company structure, new ow

Question 10

The large number of banks in the United States is an indication of ________.

Accepted Answer

A) vigorous competition within the banking industry 
B) lack of competition within the banking industry 
C) regulations that restrict branch operations 
D) consumer preference for local banks 
A) vigorous competition within the banking industry 
B) lack of competition within the banking industry 
C) regulations that restrict branch operations 
D) consumer preference for local banks

Question 11

Which of the following are true statements?

Accepted Answer

A) Schedule I and Schedule II banks have different powers. 
B) Widely held foreign banks can own 50 percent of a Canadian bank subsidiary. 
C) Any widely held and regulated Canadian financial institution, other than a bank, may own 100 percent of a bank. 
D) Schedule I banks have the same powers than Schedule II banks. 
A) Schedule I and Schedule II banks have different powers. 
B) Widely held foreign banks can own 50 percent of a Canadian bank subsidiary. 
C) Any widely held and regulated Canadian financial institution, other than a bank, may own 100 percent of a bank. 
D) Schedule I banks have the same powers than Schedule II banks.

Question 12

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

Accepted Answer

a. The commercial paper market: informat

Question 13

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 14

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 15

The driving force behind the securitization of mortgages and automobile loans has been ________.

Accepted Answer

A) the rising regulatory constraints on substitute financial instruments 
B) the desire of mortgage and auto lenders to exit this field of lending 
C) the improvement in computer technology 
D) the relaxation of regulatory restrictions on credit card operations 
A) the rising regulatory constraints on substitute financial instruments 
B) the desire of mortgage and auto lenders to exit this field of lending 
C) the improvement in computer technology 
D) the relaxation of regulatory restrictions on credit card operations

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

Describe how was the Eurocurrencies market created.

Accepted Answer

The most important of the Eurocurrencies

Question 18

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 19

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 20

Prior to 2008, a U.S. bank's cost of holding reserves equaled ________.

Accepted Answer

A) the interest paid on deposits times the amount of reserves 
B) the interest paid on deposits times the amount of deposits 
C) the interest earned on loans times the amount of loans 
D) the interest earned on loans times the amount on reserves 
A) the interest paid on deposits times the amount of reserves 
B) the interest paid on deposits times the amount of deposits 
C) the interest earned on loans times the amount of loans 
D) the interest earned on loans times the amount on reserves

Exam 11: Banking Industry: Structure and Competition

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

Adjustable rate mortgages ________.

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

Reasons for holding Eurodollars include ________.

Which of the following are true statements?

Both ________ and ________ were financial innovations that occurred because of interest rate risk volatility.

Canadian banks have most of their foreign branches in ________.

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

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

The large number of banks in the United States is an indication of ________.

Which of the following are true statements?

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

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.

The experience of disintermediation in the banking industry illustrates that ________.

The driving force behind the securitization of mortgages and automobile loans has been ________.

Which of the following are true statements?

Describe how was the Eurocurrencies market created.

New computer technology has ________.

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

Prior to 2008, a U.S. bank's cost of holding reserves equaled ________.

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

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

Financial Crises in Emerging Markets

The ISLM Model

Non-Bank Finance

Filters

Both and were financial innovations that occurred because of interest rate risk volatility.