Question 1

Most finance companies specialize in one of three loan types.Which of the following is not one of those three types?

Accepted Answer

A) Consumer loans for purchases such as appliances 
B) Margin loans for buying stock 
C) Sales loans for purchases such as cars 
D) Business loans for firms to use to buy new equipment 
A) Consumer loans for purchases such as appliances 
B) Margin loans for buying stock 
C) Sales loans for purchases such as cars 
D) Business loans for firms to use to buy new equipment

Question 2

The main difference between sales finance and consumer finance is:

Accepted Answer

A) the type of borrower. 
B) the size of the purchase involved. 
C) the length of time until the loan has to be repaid. 
D) one deals with equipment leasing and the other does not. 
A) the type of borrower. 
B) the size of the purchase involved. 
C) the length of time until the loan has to be repaid. 
D) one deals with equipment leasing and the other does not.

Question 3

Finance companies perform all of the following functions, except:

Accepted Answer

A) issue commercial paper and securities. 
B) take deposits. 
C) make loans. 
D) lease equipment to firms. 
A) issue commercial paper and securities. 
B) take deposits. 
C) make loans. 
D) lease equipment to firms.

Question 4

Why does the United States have more banks than most other highly industrialized countries?

Accepted Answer

The United States, for many ye

Question 5

Which of the following statements most accurately describes the state of banking in the U.S.?

Accepted Answer

A) A large number of large banks and a small number of small banks 
B) A large number of large and small banks 
C) A small number of large and small banks 
D) A large number of small banks and a small number of large banks 
A) A large number of large banks and a small number of small banks 
B) A large number of large and small banks 
C) A small number of large and small banks 
D) A large number of small banks and a small number of large banks

Question 6

Which of the following statements is false?

Accepted Answer

A) Pension plans and life insurance are often both offered by the same institution. 
B) Life insurance companies hold more in stocks than pension funds do. 
C) Life insurance pays off when you die while the pension plan pays off if you don't. 
D) They are both vehicles for saving. 
A) Pension plans and life insurance are often both offered by the same institution. 
B) Life insurance companies hold more in stocks than pension funds do. 
C) Life insurance pays off when you die while the pension plan pays off if you don't. 
D) They are both vehicles for saving.

Question 7

Explain why a large equipment provider that sells to many of its commercial customers on account may use a finance company.

Accepted Answer

A large equipment provider may use a fin

Question 8

Because most insurance companies insure many people, they do not have to worry about the problem of:

Accepted Answer

A) moral hazard. 
B) adverse selection. 
C) spreading of risk. 
D) information asymmetry. 
A) moral hazard. 
B) adverse selection. 
C) spreading of risk. 
D) information asymmetry.

Question 9

The financial crisis in the United States in 2007-2009 brought about all but which of the following changes:

Accepted Answer

A) a rise in the number of unit banks. 
B) an increase in the deposit share of the top four U.S.commercial banks. 
C) the placement of the two government-sponsored enterprises for housing finance into conservatorship. 
D) a run on money-market mutual funds. 
A) a rise in the number of unit banks. 
B) an increase in the deposit share of the top four U.S.commercial banks. 
C) the placement of the two government-sponsored enterprises for housing finance into conservatorship. 
D) a run on money-market mutual funds.

Question 10

The Glass-Steagall Act of 1933:

Accepted Answer

A) required commercial banks to sell off their investment banking operations. 
B) eliminated the FDIC. 
C) required federally chartered banks to meet the branching restrictions of the states. 
D) required all state banks to get federal charters. 
A) required commercial banks to sell off their investment banking operations. 
B) eliminated the FDIC. 
C) required federally chartered banks to meet the branching restrictions of the states. 
D) required all state banks to get federal charters.

Question 11

Which of the following statements best completes the following statement: "Over the past 40 years, the percentage(s) of assets for all financial intermediaries…"?

Accepted Answer

A) controlled by banks has increased while the percentage for mutual funds has decreased. 
B) controlled by banks has decreased as has the percentage for mutual funds while insurance companies have increased their percentage. 
C) controlled by insurance companies and mutual funds has decreased and the percentage controlled by banks has increased. 
D) controlled by banks has decreased while the percentage for mutual funds has increased. 
A) controlled by banks has increased while the percentage for mutual funds has decreased. 
B) controlled by banks has decreased as has the percentage for mutual funds while insurance companies have increased their percentage. 
C) controlled by insurance companies and mutual funds has decreased and the percentage controlled by banks has increased. 
D) controlled by banks has decreased while the percentage for mutual funds has increased.

Question 12

The category of financial intermediaries called securities firms includes each of the following, except:

Accepted Answer

A) mutual funds. 
B) brokerages. 
C) investment banks. 
D) credit unions. 
A) mutual funds. 
B) brokerages. 
C) investment banks. 
D) credit unions.

Question 13

Congress chartered Sallie Mae to make loans to:

Accepted Answer

A) homeowners. 
B) customers of securities brokers. 
C) small business owners. 
D) students. 
A) homeowners. 
B) customers of securities brokers. 
C) small business owners. 
D) students.

Question 14

When compared to Canada or Japan, the U.S.is unusual in that it has:

Accepted Answer

A) far fewer banks than either of those countries. 
B) fewer banks than Japan but more than Canada. 
C) more banks than Japan but fewer than Canada. 
D) more banks than either Japan or Canada. 
A) far fewer banks than either of those countries. 
B) fewer banks than Japan but more than Canada. 
C) more banks than Japan but fewer than Canada. 
D) more banks than either Japan or Canada.

Question 15

Explain why the decoding of the human genome has interesting implications for the life insurance industry.

Accepted Answer

The decoding of the human genome will ma

Question 16

Why did it take almost 100 years before the United States had its own national currency?

Accepted Answer

The writers of the U.S.Constitution fear

Question 17

Hedge funds:

Accepted Answer

A) are strictly for millionaires. 
B) are heavily regulated. 
C) issue commercial paper and bonds. 
D) always employ diversification techniques called "hedging." 
A) are strictly for millionaires. 
B) are heavily regulated. 
C) issue commercial paper and bonds. 
D) always employ diversification techniques called "hedging."

Question 18

The growth of internet banking seems to be on the rise.Discuss what the continued growth of internet banking should do to both the economies of scale and scope of banking.

Accepted Answer

Internet banking allows a bank to avoid

Question 19

Evaluate the pros and cons of the repeal of the Glass-Steagall Act of 1933.

Accepted Answer

The Glass-Steagall Act was enacted by Co

Question 20

Citigroup is an example of:

Accepted Answer

A) an Edge Act corporation. 
B) a foreign bank. 
C) a financial holding company. 
D) a unit bank. 
A) an Edge Act corporation. 
B) a foreign bank. 
C) a financial holding company. 
D) a unit bank.

Exam 13: Financial Industry Structure

Most finance companies specialize in one of three loan types.Which of the following is not one of those three types?

The main difference between sales finance and consumer finance is:

Finance companies perform all of the following functions, except:

Why does the United States have more banks than most other highly industrialized countries?

Which of the following statements most accurately describes the state of banking in the U.S.?

Which of the following statements is false?

Explain why a large equipment provider that sells to many of its commercial customers on account may use a finance company.

Because most insurance companies insure many people, they do not have to worry about the problem of:

The financial crisis in the United States in 2007-2009 brought about all but which of the following changes:

The Glass-Steagall Act of 1933:

Which of the following statements best completes the following statement: "Over the past 40 years, the percentage(s) of assets for all financial intermediaries…"?

The category of financial intermediaries called securities firms includes each of the following, except:

Congress chartered Sallie Mae to make loans to:

When compared to Canada or Japan, the U.S.is unusual in that it has:

Explain why the decoding of the human genome has interesting implications for the life insurance industry.

Why did it take almost 100 years before the United States had its own national currency?

Hedge funds:

The growth of internet banking seems to be on the rise.Discuss what the continued growth of internet banking should do to both the economies of scale and scope of banking.

Evaluate the pros and cons of the repeal of the Glass-Steagall Act of 1933.

Citigroup is an example of:

An Introduction to Money and the Financial System

Money and the Payments System

Financial Instruments, Financial Markets, and Financial Institutions

Future Value, Present Value, and Interest Rates

Understanding Risk

Bonds, Bond Prices, and the Determination of Interest Rates

The Risk and Term Structure of Interest Rates

Stocks, Stock Markets, and Market Efficiency

Derivatives: Futures, Options, and Swaps

Foreign Exchange

The Economics of Financial Intermediation

Depository Institutions: Banks and Bank Management

Regulating the Financial System

Central Banks in the World Today

The Structure of Central Banks: The Federal Reserve and the European Central Bank

The Central Bank Balance Sheet and the Money Supply Process

Monetary Policy: Stabilizing the Domestic Economy

Exchange-Rate Policy and the Central Bank

Money Growth, Money Demand, and Modern Monetary Policy

Output, Inflation, and Monetary Policy

Understanding Business Cycle Fluctuations

Modern Monetary Policy and the Challenges Facing Central Bankers

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