Question 1

Federal deposit insurance has prevented the failure of depository institutions.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following powers or tools of Federal Reserve monetary policy has the greatest impact on the money supply?

Accepted Answer

A)  discount rate 
B)  Regulation Q 
C)  open market operations 
D)  bank examination 
E)  All of the above have about the same impact. 
A)  discount rate 
B)  Regulation Q 
C)  open market operations 
D)  bank examination 
E)  All of the above have about the same impact.

Question 3

Financial intermediaries are the end users of the funds that they get from those who wish save money for the future.

Accepted Answer

A) True 
 B)False

Question 4

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 increased from 8% to 10% at the same time the Fed increases deposits,what is the maximum impact the Fed's actions can have on total deposits?

Accepted Answer

A)  $575 billion increase 
B)  $450 billion increase 
C)  $2.5 trillion increase 
D)  Actually,deposits would decrease,but there is not enough information to determine by what amount. 
E)  None of the above. 
A)  $575 billion increase 
B)  $450 billion increase 
C)  $2.5 trillion increase 
D)  Actually,deposits would decrease,but there is not enough information to determine by what amount. 
E)  None of the above.

Question 5

The major federal regulator of mutual funds is the

Accepted Answer

A)  Federal Deposit Insurance Corporation. 
B)  Federal Trade Commission. 
C)  Federal Reserve System. 
D)  Securities and Exchange Commission. 
E)  None of the above. 
A)  Federal Deposit Insurance Corporation. 
B)  Federal Trade Commission. 
C)  Federal Reserve System. 
D)  Securities and Exchange Commission. 
E)  None of the above.

Question 6

An increase in depository institutions' reserves will cause

Accepted Answer

A)  the Fed Funds rate to rise. 
B)  planned inventory investment to fall. 
C)  depository institutions to lend more freely. 
D)  foreign investors to buy more T-Bills. 
E)  None of the above. 
A)  the Fed Funds rate to rise. 
B)  planned inventory investment to fall. 
C)  depository institutions to lend more freely. 
D)  foreign investors to buy more T-Bills. 
E)  None of the above.

Question 7

All of the following are reasons to regulate depository institutions except

Accepted Answer

A)  to promote safety and soundness. 
B)  to affect the structure of banking. 
C)  to make sure banks' earnings are competitive with other financial institutions. 
D)  to protect the interest of consumers. 
E)  None of the above. 
A)  to promote safety and soundness. 
B)  to affect the structure of banking. 
C)  to make sure banks' earnings are competitive with other financial institutions. 
D)  to protect the interest of consumers. 
E)  None of the above.

Question 8

The largest amount of pension assets are associated with

Accepted Answer

A)  private pension funds. 
B)  social security. 
C)  government-administered pension funds. 
D)  insured pension plans with life insurance companies. 
E)  None of the above. 
A)  private pension funds. 
B)  social security. 
C)  government-administered pension funds. 
D)  insured pension plans with life insurance companies. 
E)  None of the above.

Question 9

Federal deposit insurance has prevented widespread bank failures and panics.

Accepted Answer

A) True 
 B)False

Question 10

The percentage of financial assets held by individuals located in banks has doubled over the past thirty-five years.

Accepted Answer

A) True 
 B)False

Question 11

The maximum change in the money supply created by a fractional reserve banking system decreases whenever reserve requirements are increased.

Accepted Answer

A) True 
 B)False

Question 12

Banks are regulated because they provide several important services to their local and national economies.

Accepted Answer

A) True 
 B)False

Question 13

Mutual funds that invest primarily in instruments that generate fairly constant annual cash flows such as bonds and preferred stocks are ____.

Accepted Answer

A)  income funds 
B)  growth funds 
C)  value funds 
D)  money market funds 
E)  social funds 
A)  income funds 
B)  growth funds 
C)  value funds 
D)  money market funds 
E)  social funds

Question 14

Pension funds whose contributions are not large enough to actually cover the benefits to be paid out when all employees retire are termed

Accepted Answer

A)  divested. 
B)  vested. 
C)  unfunded,or underfunded. 
D)  funded. 
E)  None of the above. 
A)  divested. 
B)  vested. 
C)  unfunded,or underfunded. 
D)  funded. 
E)  None of the above.

Question 15

Which of the following is not a benefit associated with financial intermediaries?

Accepted Answer

A)  reduced costs 
B)  fund indivisibility 
C)  financial flexibility 
D)  diversification of risk 
A)  reduced costs 
B)  fund indivisibility 
C)  financial flexibility 
D)  diversification of risk

Question 16

The Federal Open Market Committee basically establishes our nation's monetary policy.

Accepted Answer

A) True 
 B)False

Question 17

A fractional reserve banking system might be in trouble if

Accepted Answer

A)  one depositor wanted his (her)money returned. 
B)  one borrowing customer paid off the loan. 
C)  all borrowing customers paid off their loans. 
D)  all deposit customers wanted to withdraw their money. 
E)  None of the above. 
A)  one depositor wanted his (her)money returned. 
B)  one borrowing customer paid off the loan. 
C)  all borrowing customers paid off their loans. 
D)  all deposit customers wanted to withdraw their money. 
E)  None of the above.

Question 18

U.S.bank regulators allow U.S.banks overseas to engage in all banking activities allowed by the host country.

Accepted Answer

A) True 
 B)False

Question 19

Each of the following is classified as a thrift financial institution,except

Accepted Answer

A)  commercial bank. 
B)  savings and loan association. 
C)  savings bank. 
D)  credit union. 
E)  All of the above are thrift institutions. 
A)  commercial bank. 
B)  savings and loan association. 
C)  savings bank. 
D)  credit union. 
E)  All of the above are thrift institutions.

Question 20

The major asset of savings and loans is

Accepted Answer

A)  mortgage-backed securities. 
B)  construction loans. 
C)  residential (home)mortgages. 
D)  cash and investment accounts. 
E)  government securities. 
A)  mortgage-backed securities. 
B)  construction loans. 
C)  residential (home)mortgages. 
D)  cash and investment accounts. 
E)  government securities.

Federal deposit insurance has prevented the failure of depository institutions.

Which of the following powers or tools of Federal Reserve monetary policy has the greatest impact on the money supply?

Financial intermediaries are the end users of the funds that they get from those who wish save money for the future.

The major federal regulator of mutual funds is the

An increase in depository institutions' reserves will cause

All of the following are reasons to regulate depository institutions except

The largest amount of pension assets are associated with

Federal deposit insurance has prevented widespread bank failures and panics.

The percentage of financial assets held by individuals located in banks has doubled over the past thirty-five years.

The maximum change in the money supply created by a fractional reserve banking system decreases whenever reserve requirements are increased.

Banks are regulated because they provide several important services to their local and national economies.

Mutual funds that invest primarily in instruments that generate fairly constant annual cash flows such as bonds and preferred stocks are ____.

Pension funds whose contributions are not large enough to actually cover the benefits to be paid out when all employees retire are termed

Which of the following is not a benefit associated with financial intermediaries?

The Federal Open Market Committee basically establishes our nation's monetary policy.

A fractional reserve banking system might be in trouble if

U.S.bank regulators allow U.S.banks overseas to engage in all banking activities allowed by the host country.

Each of the following is classified as a thrift financial institution,except

The major asset of savings and loans is

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

Federal deposit insurance has prevented the failure of depository institutions.

Which of the following powers or tools of Federal Reserve monetary policy has the greatest impact on the money supply?

Financial intermediaries are the end users of the funds that they get from those who wish save money for the future.

The major federal regulator of mutual funds is the

An increase in depository institutions' reserves will cause

All of the following are reasons to regulate depository institutions except

The largest amount of pension assets are associated with

Federal deposit insurance has prevented widespread bank failures and panics.

The percentage of financial assets held by individuals located in banks has doubled over the past thirty-five years.

The maximum change in the money supply created by a fractional reserve banking system decreases whenever reserve requirements are increased.

Banks are regulated because they provide several important services to their local and national economies.

Mutual funds that invest primarily in instruments that generate fairly constant annual cash flows such as bonds and preferred stocks are ____.

Pension funds whose contributions are not large enough to actually cover the benefits to be paid out when all employees retire are termed

Which of the following is not a benefit associated with financial intermediaries?

The Federal Open Market Committee basically establishes our nation's monetary policy.

A fractional reserve banking system might be in trouble if

U.S.bank regulators allow U.S.banks overseas to engage in all banking activities allowed by the host country.

Each of the following is classified as a thrift financial institution,except

The major asset of savings and loans is

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