Question 1

Which statement is not true about life insurance companies?

Accepted Answer

A)  They have relatively predictable inflows and outflows. 
B)  Their liabilities are long-term in nature. 
C)  They invest heavily in short-term highly marketable securities. 
D)  They sell contracts that offer financial protection against premature death. 
E)  All of the above. 
A)  They have relatively predictable inflows and outflows. 
B)  Their liabilities are long-term in nature. 
C)  They invest heavily in short-term highly marketable securities. 
D)  They sell contracts that offer financial protection against premature death. 
E)  All of the above. C

Question 2

Which of the following is not a major provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010?

Accepted Answer

A)  New organizations to protect and inform consumers will be created 
B)  greater transparency for trading exotic securities will be required 
C)  stockholders will be permitted to have a say on corporate governance,including executive compensation,through nonbinding votes 
D)  Fannie Mae and Freddie Mac will be liquidated 
A)  New organizations to protect and inform consumers will be created 
B)  greater transparency for trading exotic securities will be required 
C)  stockholders will be permitted to have a say on corporate governance,including executive compensation,through nonbinding votes 
D)  Fannie Mae and Freddie Mac will be liquidated D

Question 3

Most of the largest banks in the world are based in

Accepted Answer

A)  the United States. 
B)  Japan. 
C)  the Cayman Islands. 
D)  Europe. 
E)  Bermuda. 
A)  the United States. 
B)  Japan. 
C)  the Cayman Islands. 
D)  Europe. 
E)  Bermuda. D

Question 4

Suppose the reserve requirement for transaction deposits is 10% and it is 5% for nontransaction deposits.What is the total reserve requirement for a bank with total deposits equal to $800 million,if $600 million of these deposits are classified as transaction deposits?

Accepted Answer

A)  $80 million 
B)  $60 million 
C)  $70 million 
D)  $100 million 
E)  None of the above. 
A)  $80 million 
B)  $60 million 
C)  $70 million 
D)  $100 million 
E)  None of the above.

Question 5

What is the maximum change in total deposits at financial institutions if the Fed sells $120 billion of government securities to dealers,and the reserve requirement applicable to all deposits is 10%?

Accepted Answer

A)  $1.20 trillion decrease 
B)  $133 billion increase 
C)  $1.08 trillion increase 
D)  $1.08 trillion decrease 
E)  None of the above. 
A)  $1.20 trillion decrease 
B)  $133 billion increase 
C)  $1.08 trillion increase 
D)  $1.08 trillion decrease 
E)  None of the above.

Question 6

Early goldsmiths began to function as modern banks when they began to operate under a fractional reserve policy and

Accepted Answer

A)  loaned gold. 
B)  issued receipts for gold deposited. 
C)  issued deposit receipts to borrowers in return for a note (loan). 
D)  when they received a banking charter from the government. 
E)  All of the above. 
A)  loaned gold. 
B)  issued receipts for gold deposited. 
C)  issued deposit receipts to borrowers in return for a note (loan). 
D)  when they received a banking charter from the government. 
E)  All of the above.

Question 7

If the federal reserve purchases $100 million worth of government securities in open market operations,what is the maximum amount of change in the money supply if the reserve requirement is 8% and banks hold no excess reserves?

Accepted Answer

A)  Decrease by $1.25 billion 
B)  Increase by $1.25 billion 
C)  Decrease by $1.15 billion 
D)  Increase by $1.15 billion 
A)  Decrease by $1.25 billion 
B)  Increase by $1.25 billion 
C)  Decrease by $1.15 billion 
D)  Increase by $1.15 billion

Question 8

The primary function of the Federal Reserve is economic stabilization through control of the level and growth of the money supply.

Accepted Answer

A) True 
 B)False

Question 9

Goldsmiths became banks when they began to hold fractional reserves and make loans.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a reason for the rapid expansion of U.S.banks overseas?

Accepted Answer

A)  the establishment of the Edge Act 
B)  overall expansion of U.S.world trade 
C)  the growth of multinational corporations 
D)  the International Bank Act of 1978 
E)  None of the above. 
A)  the establishment of the Edge Act 
B)  overall expansion of U.S.world trade 
C)  the growth of multinational corporations 
D)  the International Bank Act of 1978 
E)  None of the above.

Question 11

Until the passage of the International Bank Act of 1978,foreign banks enjoyed substantial operating advantages over domestic banks.

Accepted Answer

A) True 
 B)False

Question 12

The Federal Reserve System established

Accepted Answer

A)  a system for federal chartering of banks. 
B)  a system for controlling bank note issuance. 
C)  a source of liquidity for the banking system. 
D)  the beginning of demand deposit accounts. 
E)  None of the above. 
A)  a system for federal chartering of banks. 
B)  a system for controlling bank note issuance. 
C)  a source of liquidity for the banking system. 
D)  the beginning of demand deposit accounts. 
E)  None of the above.

Question 13

All but which of the following financial institutions would you expect to be able to get federal deposit insurance for their customers?

Accepted Answer

A)  bank holding companies 
B)  credit unions 
C)  commercial banks 
D)  savings and loan associations 
E)  None of the above. 
A)  bank holding companies 
B)  credit unions 
C)  commercial banks 
D)  savings and loan associations 
E)  None of the above.

Question 14

A small state bank currently has reserves equal to $300,000.If the state reserve requirement is 20%,but the bank currently maintains a 30% reserve,what amount of reserves would the bank need if it met the reserve requirements exactly?

Accepted Answer

A)  $200,000 
B)  $100,000 
C)  $300,000 
D)  $1,000,000 
E)  None of the above. 
A)  $200,000 
B)  $100,000 
C)  $300,000 
D)  $1,000,000 
E)  None of the above.

Question 15

The Edge Act of 1919 permitted U.S.banks to create banking facilities in foreign countries that were regulated by the foreign government,not by the Federal Reserve.

Accepted Answer

A) True 
 B)False

Question 16

Suppose the Federal Reserve increases deposits at financial institutions by $50 billion through its open market operations.If the reserve requirement for all deposits is 8%,what is the maximum impact the Fed's actions can have on total deposits?

Accepted Answer

A)  $575 billion increase 
B)  $54.3 billion increase 
C)  $625 billion increase 
D)  An increase greater than $1 trillion 
E)  Total deposits would decrease,but there is not enough information to compute the amount. 
A)  $575 billion increase 
B)  $54.3 billion increase 
C)  $625 billion increase 
D)  An increase greater than $1 trillion 
E)  Total deposits would decrease,but there is not enough information to compute the amount.

Question 17

The international banking market,in terms of size,is dominated by banks from

Accepted Answer

A)  the United States. 
B)  Europe. 
C)  Bermuda. 
D)  Asia. 
E)  Canada. 
A)  the United States. 
B)  Europe. 
C)  Bermuda. 
D)  Asia. 
E)  Canada.

Question 18

Which of the following is not an asset of a bank?

Accepted Answer

A)  business deposits 
B)  consumer loans 
C)  deposits in other banks 
D)  government securities 
E)  All of the above are bank assets. 
A)  business deposits 
B)  consumer loans 
C)  deposits in other banks 
D)  government securities 
E)  All of the above are bank assets.

Question 19

Because life insurance companies are able to invest in corporate bonds and stocks,they provide an important source of long-term funds for companies.

Accepted Answer

A) True 
 B)False

Question 20

A small state bank currently has reserves equal to $300,000.If the state reserve requirement is 20%,but the bank feels more comfortable with maintaining a 30% reserve,what amount of deposits does the bank currently have?

Accepted Answer

A)  $1,500,000 
B)  $600,000 
C)  $1,000,000 
D)  $300,000 
E)  None of the above. 
A)  $1,500,000 
B)  $600,000 
C)  $1,000,000 
D)  $300,000 
E)  None of the above.

Which statement is not true about life insurance companies?

Which of the following is not a major provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010?

Most of the largest banks in the world are based in

Suppose the reserve requirement for transaction deposits is 10% and it is 5% for nontransaction deposits.What is the total reserve requirement for a bank with total deposits equal to $800 million,if $600 million of these deposits are classified as transaction deposits?

What is the maximum change in total deposits at financial institutions if the Fed sells $120 billion of government securities to dealers,and the reserve requirement applicable to all deposits is 10%?

Early goldsmiths began to function as modern banks when they began to operate under a fractional reserve policy and

If the federal reserve purchases $100 million worth of government securities in open market operations,what is the maximum amount of change in the money supply if the reserve requirement is 8% and banks hold no excess reserves?

The primary function of the Federal Reserve is economic stabilization through control of the level and growth of the money supply.

Goldsmiths became banks when they began to hold fractional reserves and make loans.

Which of the following is not a reason for the rapid expansion of U.S.banks overseas?

Until the passage of the International Bank Act of 1978,foreign banks enjoyed substantial operating advantages over domestic banks.

The Federal Reserve System established

All but which of the following financial institutions would you expect to be able to get federal deposit insurance for their customers?

A small state bank currently has reserves equal to $300,000.If the state reserve requirement is 20%,but the bank currently maintains a 30% reserve,what amount of reserves would the bank need if it met the reserve requirements exactly?

The Edge Act of 1919 permitted U.S.banks to create banking facilities in foreign countries that were regulated by the foreign government,not by the Federal Reserve.

Suppose the Federal Reserve increases deposits at financial institutions by $50 billion through its open market operations.If the reserve requirement for all deposits is 8%,what is the maximum impact the Fed's actions can have on total deposits?

The international banking market,in terms of size,is dominated by banks from

Which of the following is not an asset of a bank?

Because life insurance companies are able to invest in corporate bonds and stocks,they provide an important source of long-term funds for companies.

A small state bank currently has reserves equal to $300,000.If the state reserve requirement is 20%,but the bank feels more comfortable with maintaining a 30% reserve,what amount of deposits does the bank currently have?

An Overview of Finance

Financial Assets Instruments

Financial Markets and the Investment Banking Process

The Cost of Money Interest Rates

Business Organizations and the Tax Environment

Analysis of Financial Statements

Financial Planning and Control

Time Value of Money

Valuation Concepts

Risk and Rates of Return

The Cost of Capital

Capital Budgeting

Capital Structure and Dividend Policy Decisions

Working Capital Management

Investment and Securities

Investment Analysis and Valuation Techniques

Filters

Exam 4: Financial Intermediaries and the Banking System

Which statement is not true about life insurance companies?

Which of the following is not a major provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010?

Most of the largest banks in the world are based in

Suppose the reserve requirement for transaction deposits is 10% and it is 5% for nontransaction deposits.What is the total reserve requirement for a bank with total deposits equal to $800 million,if $600 million of these deposits are classified as transaction deposits?

What is the maximum change in total deposits at financial institutions if the Fed sells $120 billion of government securities to dealers,and the reserve requirement applicable to all deposits is 10%?

Early goldsmiths began to function as modern banks when they began to operate under a fractional reserve policy and

If the federal reserve purchases $100 million worth of government securities in open market operations,what is the maximum amount of change in the money supply if the reserve requirement is 8% and banks hold no excess reserves?

The primary function of the Federal Reserve is economic stabilization through control of the level and growth of the money supply.

Goldsmiths became banks when they began to hold fractional reserves and make loans.

Which of the following is not a reason for the rapid expansion of U.S.banks overseas?

Until the passage of the International Bank Act of 1978,foreign banks enjoyed substantial operating advantages over domestic banks.

The Federal Reserve System established

All but which of the following financial institutions would you expect to be able to get federal deposit insurance for their customers?

A small state bank currently has reserves equal to $300,000.If the state reserve requirement is 20%,but the bank currently maintains a 30% reserve,what amount of reserves would the bank need if it met the reserve requirements exactly?

The Edge Act of 1919 permitted U.S.banks to create banking facilities in foreign countries that were regulated by the foreign government,not by the Federal Reserve.

Suppose the Federal Reserve increases deposits at financial institutions by $50 billion through its open market operations.If the reserve requirement for all deposits is 8%,what is the maximum impact the Fed's actions can have on total deposits?

The international banking market,in terms of size,is dominated by banks from

Which of the following is not an asset of a bank?

Because life insurance companies are able to invest in corporate bonds and stocks,they provide an important source of long-term funds for companies.

A small state bank currently has reserves equal to $300,000.If the state reserve requirement is 20%,but the bank feels more comfortable with maintaining a 30% reserve,what amount of deposits does the bank currently have?

An Overview of Finance

Financial Assets Instruments

Financial Markets and the Investment Banking Process

The Cost of Money Interest Rates

Business Organizations and the Tax Environment

Analysis of Financial Statements

Financial Planning and Control

Time Value of Money

Valuation Concepts

Risk and Rates of Return

The Cost of Capital

Capital Budgeting

Capital Structure and Dividend Policy Decisions

Working Capital Management

Investment and Securities

Investment Analysis and Valuation Techniques

Filters