Question 1

Savings and loan associations were established to provide commercial real estate financing.

Accepted Answer

A) True 
 B)False

Question 2

Social Security is a fully funded insurance program.

Accepted Answer

A) True 
 B)False

Question 3

If the reserve requirement for banks is fixed at 10% and the Fed wishes to decrease the money supply by $500 billion,what type of open market operation should the Fed undertake?

Accepted Answer

A)  Sell $55.56 billion in government securities 
B)  Purchase $55.56 billion in government securities 
C)  Sell $50.00 billion in government securities 
D)  Purchase $50.00 billion in government securities 
A)  Sell $55.56 billion in government securities 
B)  Purchase $55.56 billion in government securities 
C)  Sell $50.00 billion in government securities 
D)  Purchase $50.00 billion in government securities

Question 4

All else equal,the money supply should decrease when

Accepted Answer

A)  banks withdraw currency from the Fed. 
B)  the Fed makes loans at the discount window. 
C)  the Fed sells securities on the open market. 
D)  the Fed buys securities on the open market. 
E)  None of the above 
A)  banks withdraw currency from the Fed. 
B)  the Fed makes loans at the discount window. 
C)  the Fed sells securities on the open market. 
D)  the Fed buys securities on the open market. 
E)  None of the above

Question 5

The Federal Reserve is an independently funded federal agency of Congress,thus is independent of the political processes of Washington.

Accepted Answer

A) True 
 B)False

Question 6

The Federal Reserve has decided it wants to increase interest rates by decreasing the money supply through deposits held at financial intermediaries.All else equal,if the reserve requirement is 10% for all deposits,and the Fed wants to decrease deposits by $100 million,which of the following actions should be taken? Assume no excess reserves exist in the banking system.

Accepted Answer

A)  Buy government securities from dealers totaling $1 billion. 
B)  Sell government securities to dealers totaling $111 million. 
C)  Buy government securities from dealers totaling $11.1 million. 
D)  Sell government securities to dealers totaling $11.1 million. 
E)  None of the above. 
A)  Buy government securities from dealers totaling $1 billion. 
B)  Sell government securities to dealers totaling $111 million. 
C)  Buy government securities from dealers totaling $11.1 million. 
D)  Sell government securities to dealers totaling $11.1 million. 
E)  None of the above.

Question 7

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,how much are the excess reserves the bank currently has?

Accepted Answer

A)  $200,000 
B)  $100,000 
C)  $300,000 
D)  $500,000 
E)  None of the above. 
A)  $200,000 
B)  $100,000 
C)  $300,000 
D)  $500,000 
E)  None of the above.

Question 8

Which of the following financial institutions is most likely to be the cheapest source of funds for individual borrowers?

Accepted Answer

A)  credit unions 
B)  savings and loans 
C)  commercial bank 
D)  insurance company 
E)  finance company 
A)  credit unions 
B)  savings and loans 
C)  commercial bank 
D)  insurance company 
E)  finance company

Question 9

Financial intermediaries allow savers to provide the funds directly to the borrowers.

Accepted Answer

A) True 
 B)False

Question 10

If bank managers lobby to maintain America's traditional "dual banking" structure,they want

Accepted Answer

A)  an option of either federal or state bank chartering. 
B)  to maintain the right to make loans and take deposits. 
C)  the right to fight competition. 
D)  the option of remaining a bank or a bank holding company. 
E)  All of the above. 
A)  an option of either federal or state bank chartering. 
B)  to maintain the right to make loans and take deposits. 
C)  the right to fight competition. 
D)  the option of remaining a bank or a bank holding company. 
E)  All of the above.

Question 11

All else equal,the nation's money supply increases when the Federal Reserve purchases U.S.Treasury securities.

Accepted Answer

A) True 
 B)False

Question 12

When the Federal Reserve sells an asset to the private sector,the money supply declines.

Accepted Answer

A) True 
 B)False

Question 13

In the Basel III Accord,27 countries agreed to increase their banks' capital requirements in an effort to reduce the risk that mega bank failures will cause future financial crises.

Accepted Answer

A) True 
 B)False

Question 14

Individuals have greater expertise than financial intermediaries when it comes to gathering,verifying,and evaluating information concerning borrowers.

Accepted Answer

A) True 
 B)False

Question 15

The Federal Reserve can change the level of member bank reserves as well as reserve requirements.

Accepted Answer

A) True 
 B)False

Question 16

The major regulator of investment companies is the

Accepted Answer

A)  state in which they are incorporated. 
B)  bank holding companies that own them. 
C)  Securities and Exchange Commission. 
D)  Federal Reserve System. 
E)  U.S.Treasury. 
A)  state in which they are incorporated. 
B)  bank holding companies that own them. 
C)  Securities and Exchange Commission. 
D)  Federal Reserve System. 
E)  U.S.Treasury.

Question 17

The asset of Federal Reserve banks associated with open market operations is

Accepted Answer

A)  Federal Reserve notes. 
B)  U.S.government securities. 
C)  loans to member banks. 
D)  float. 
E)  None of the above. 
A)  Federal Reserve notes. 
B)  U.S.government securities. 
C)  loans to member banks. 
D)  float. 
E)  None of the above.

Question 18

In general,cash and marketable securities make up the largest percentage of commercial bank assets.

Accepted Answer

A) True 
 B)False

Question 19

An increase in the money supply does not affect the supply of loanable funds.

Accepted Answer

A) True 
 B)False

Question 20

While the Treasury collects most of its receipts through commercial banks,its expenditures (checks)are drawn upon

Accepted Answer

A)  the Federal Reserve Board of Governors. 
B)  national banks. 
C)  Federal Reserve banks. 
D)  federal financing banks. 
E)  None of the above. 
A)  the Federal Reserve Board of Governors. 
B)  national banks. 
C)  Federal Reserve banks. 
D)  federal financing banks. 
E)  None of the above.

Savings and loan associations were established to provide commercial real estate financing.

Social Security is a fully funded insurance program.

If the reserve requirement for banks is fixed at 10% and the Fed wishes to decrease the money supply by $500 billion,what type of open market operation should the Fed undertake?

All else equal,the money supply should decrease when

The Federal Reserve is an independently funded federal agency of Congress,thus is independent of the political processes of Washington.

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,how much are the excess reserves the bank currently has?

Which of the following financial institutions is most likely to be the cheapest source of funds for individual borrowers?

Financial intermediaries allow savers to provide the funds directly to the borrowers.

If bank managers lobby to maintain America's traditional "dual banking" structure,they want

All else equal,the nation's money supply increases when the Federal Reserve purchases U.S.Treasury securities.

When the Federal Reserve sells an asset to the private sector,the money supply declines.

In the Basel III Accord,27 countries agreed to increase their banks' capital requirements in an effort to reduce the risk that mega bank failures will cause future financial crises.

Individuals have greater expertise than financial intermediaries when it comes to gathering,verifying,and evaluating information concerning borrowers.

The Federal Reserve can change the level of member bank reserves as well as reserve requirements.

The major regulator of investment companies is the

The asset of Federal Reserve banks associated with open market operations is

In general,cash and marketable securities make up the largest percentage of commercial bank assets.

An increase in the money supply does not affect the supply of loanable funds.

While the Treasury collects most of its receipts through commercial banks,its expenditures (checks)are drawn upon

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

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Exam 4: Financial Intermediaries and the Banking System

Savings and loan associations were established to provide commercial real estate financing.

Social Security is a fully funded insurance program.

If the reserve requirement for banks is fixed at 10% and the Fed wishes to decrease the money supply by $500 billion,what type of open market operation should the Fed undertake?

All else equal,the money supply should decrease when

The Federal Reserve is an independently funded federal agency of Congress,thus is independent of the political processes of Washington.

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,how much are the excess reserves the bank currently has?

Which of the following financial institutions is most likely to be the cheapest source of funds for individual borrowers?

Financial intermediaries allow savers to provide the funds directly to the borrowers.

If bank managers lobby to maintain America's traditional "dual banking" structure,they want

All else equal,the nation's money supply increases when the Federal Reserve purchases U.S.Treasury securities.

When the Federal Reserve sells an asset to the private sector,the money supply declines.

In the Basel III Accord,27 countries agreed to increase their banks' capital requirements in an effort to reduce the risk that mega bank failures will cause future financial crises.

Individuals have greater expertise than financial intermediaries when it comes to gathering,verifying,and evaluating information concerning borrowers.

The Federal Reserve can change the level of member bank reserves as well as reserve requirements.

The major regulator of investment companies is the

The asset of Federal Reserve banks associated with open market operations is

In general,cash and marketable securities make up the largest percentage of commercial bank assets.

An increase in the money supply does not affect the supply of loanable funds.

While the Treasury collects most of its receipts through commercial banks,its expenditures (checks)are drawn upon

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