Question 1

Credit risk is the risk that

Accepted Answer

A) an insufficient number of borrowers will apply for loans or credit. 
B) interest rates will rise after a loan has been granted. 
C) interest rates will fall after a loan has been granted. 
D) borrowers might default on their loans. 
A) an insufficient number of borrowers will apply for loans or credit. 
B) interest rates will rise after a loan has been granted. 
C) interest rates will fall after a loan has been granted. 
D) borrowers might default on their loans.

Question 2

On a bank's balance sheet, "borrowings" are

Accepted Answer

A) loans to households. 
B) loans to businesses. 
C) nondeposit liabilities. 
D) U)S. Treasury securities. 
A) loans to households. 
B) loans to businesses. 
C) nondeposit liabilities. 
D) U)S. Treasury securities.

Question 3

Which of the following is the source of funds for bank loans?

Accepted Answer

A) marketable securities 
B) required reserves 
C) excess reserves 
D) bank capital 
A) marketable securities 
B) required reserves 
C) excess reserves 
D) bank capital

Question 4

Which of the following is NOT a nontransaction deposit?

Accepted Answer

A) a money market deposit account 
B) a certificate of deposit 
C) a savings account 
D) a NOW account 
A) a money market deposit account 
B) a certificate of deposit 
C) a savings account 
D) a NOW account

Question 5

All of the following are examples of borrowings by a bank EXCEPT

Accepted Answer

A) federal funds. 
B) repurchase agreements. 
C) discount loans. 
D) commercial loans. 
A) federal funds. 
B) repurchase agreements. 
C) discount loans. 
D) commercial loans.

Question 6

Banks have responded to new regulations resulting from the Dodd-Frank Act in all of the following ways EXCEPT:

Accepted Answer

A) raising minimum balances on free checking accounts 
B) closing branches in low-income neighborhoods 
C) raising overdraft fees 
D) increased marketing of securities and financial advice to high-income customers 
A) raising minimum balances on free checking accounts 
B) closing branches in low-income neighborhoods 
C) raising overdraft fees 
D) increased marketing of securities and financial advice to high-income customers

Question 7

Which of the following is NOT a bank liability?

Accepted Answer

A) checkable deposits 
B) CDs 
C) mortgage loans 
D) borrowings from the Federal Reserve 
A) checkable deposits 
B) CDs 
C) mortgage loans 
D) borrowings from the Federal Reserve

Question 8

If you deposit $300 in your bank and the required reserve ratio is 10%, your bank will have

Accepted Answer

A) an increase in required reserves of $300. 
B) an increase in required reserves of $270. 
C) an increase in required reserves of $3000. 
D) an increase in required reserves of $30 and an increase in excess reserves of $270. 
A) an increase in required reserves of $300. 
B) an increase in required reserves of $270. 
C) an increase in required reserves of $3000. 
D) an increase in required reserves of $30 and an increase in excess reserves of $270.

Question 9

What percentage of bank assets were in security holdings in 2012?

Accepted Answer

A) 5% 
B) 13% 
C) 22% 
D) 37% 
A) 5% 
B) 13% 
C) 22% 
D) 37%

Question 10

During a banking panic, a lender of last resort will

Accepted Answer

A) purchase banks which are having difficulty but appear sound. 
B) make loans to solvent but temporality illiquid banks. 
C) make loans to insolvent but liquid banks. 
D) make loans to any banks which request them. 
A) purchase banks which are having difficulty but appear sound. 
B) make loans to solvent but temporality illiquid banks. 
C) make loans to insolvent but liquid banks. 
D) make loans to any banks which request them.

Question 11

Which of the following is NOT considered a cash item by banks?

Accepted Answer

A) U)S. Treasury bills 
B) deposits at other banks 
C) deposits at the Federal Reserve 
D) vault cash 
A) U)S. Treasury bills 
B) deposits at other banks 
C) deposits at the Federal Reserve 
D) vault cash

Question 12

Any reserves beyond what is required are called

Accepted Answer

A) required reserves. 
B) excess reserves. 
C) secondary reserves. 
D) bank capital. 
A) required reserves. 
B) excess reserves. 
C) secondary reserves. 
D) bank capital.

Question 13

In which of the following assets are commercial banks in the United States NOT allowed to invest checkable deposits?

Accepted Answer

A) home mortgages 
B) corporate bonds 
C) municipal bonds 
D) U)S. Treasury bonds 
A) home mortgages 
B) corporate bonds 
C) municipal bonds 
D) U)S. Treasury bonds

Question 14

Securitization refers to

Accepted Answer

A) changing the mix in a financial portfolio away from stocks and toward bonds. 
B) selling directly to investors loans or securities that were formerly held by financial intermediaries. 
C) banks insisting that collateral be supplied on previously unsecured loans. 
D) reducing the exposure of a bank's portfolio to interest rate risk. 
A) changing the mix in a financial portfolio away from stocks and toward bonds. 
B) selling directly to investors loans or securities that were formerly held by financial intermediaries. 
C) banks insisting that collateral be supplied on previously unsecured loans. 
D) reducing the exposure of a bank's portfolio to interest rate risk.

Question 15

What are federally chartered banks called?

Accepted Answer

A) federal banks 
B) Federal Reserve banks 
C) national banks 
D) central banks 
A) federal banks 
B) Federal Reserve banks 
C) national banks 
D) central banks

Question 16

Banks use credit rationing rather than simply raising the interest rate charged borrowers with higher default risks because

Accepted Answer

A) of fear of adverse selection problems. 
B) of interest rate ceilings in many states. 
C) of fear of offending the loan applicants. 
D) use of credit rationing is encouraged by the Federal Reserve. 
A) of fear of adverse selection problems. 
B) of interest rate ceilings in many states. 
C) of fear of offending the loan applicants. 
D) use of credit rationing is encouraged by the Federal Reserve.

Question 17

Bank borrowing from the Fed is referred to as:

Accepted Answer

A) federal funds 
B) discount loans 
C) repurchase agreements 
D) reverse repurchase agreements 
A) federal funds 
B) discount loans 
C) repurchase agreements 
D) reverse repurchase agreements

Question 18

What is an important difference between certificates of deposits (CDs)worth less than $100,000 compared to those worth $100,000 or more?

Accepted Answer

CDs of $100,000 or more are ne

Question 19

What are the different forms of bank borrowings?

Accepted Answer

Borrowings include short-term

Question 20

As of 2012, the bank portion of TARP:

Accepted Answer

A) earned a profit of $21 billion 
B) earned a profit of $245 billion 
C) cost $266 billion 
D) cost $700 billion 
A) earned a profit of $21 billion 
B) earned a profit of $245 billion 
C) cost $266 billion 
D) cost $700 billion

Credit risk is the risk that

On a bank's balance sheet, "borrowings" are

Which of the following is the source of funds for bank loans?

Which of the following is NOT a nontransaction deposit?

All of the following are examples of borrowings by a bank EXCEPT

Banks have responded to new regulations resulting from the Dodd-Frank Act in all of the following ways EXCEPT:

Which of the following is NOT a bank liability?

If you deposit $300 in your bank and the required reserve ratio is 10%, your bank will have

What percentage of bank assets were in security holdings in 2012?

During a banking panic, a lender of last resort will

Which of the following is NOT considered a cash item by banks?

Any reserves beyond what is required are called

In which of the following assets are commercial banks in the United States NOT allowed to invest checkable deposits?

Securitization refers to

What are federally chartered banks called?

Banks use credit rationing rather than simply raising the interest rate charged borrowers with higher default risks because

Bank borrowing from the Fed is referred to as:

What is an important difference between certificates of deposits (CDs)worth less than $100,000 compared to those worth $100,000 or more?

What are the different forms of bank borrowings?

As of 2012, the bank portion of TARP:

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, Information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, Asymmetric Information, and the Structure of the Financial System

Investment Banks, Mutual Funds, Hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I: The Aggregate Demand and Aggregate Supply Model

Monetary Theory II: The IS-MP Model

Filters

Exam 10: The Economics of Banking

Credit risk is the risk that

On a bank's balance sheet, "borrowings" are

Which of the following is the source of funds for bank loans?

Which of the following is NOT a nontransaction deposit?

All of the following are examples of borrowings by a bank EXCEPT

Banks have responded to new regulations resulting from the Dodd-Frank Act in all of the following ways EXCEPT:

Which of the following is NOT a bank liability?

If you deposit $300 in your bank and the required reserve ratio is 10%, your bank will have

What percentage of bank assets were in security holdings in 2012?

During a banking panic, a lender of last resort will

Which of the following is NOT considered a cash item by banks?

Any reserves beyond what is required are called

In which of the following assets are commercial banks in the United States NOT allowed to invest checkable deposits?

Securitization refers to

What are federally chartered banks called?

Banks use credit rationing rather than simply raising the interest rate charged borrowers with higher default risks because

Bank borrowing from the Fed is referred to as:

What is an important difference between certificates of deposits (CDs)worth less than $100,000 compared to those worth $100,000 or more?

What are the different forms of bank borrowings?

As of 2012, the bank portion of TARP:

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, Information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, Asymmetric Information, and the Structure of the Financial System

Investment Banks, Mutual Funds, Hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I: The Aggregate Demand and Aggregate Supply Model

Monetary Theory II: The IS-MP Model

Filters