Question 1

The part of the money supply directly produced by the government or central bank is called:

Accepted Answer

A)  inside money. 
B)  outside money. 
C)  direct money. 
D)  indirect money. 
A)  inside money. 
B)  outside money. 
C)  direct money. 
D)  indirect money.

Question 2

Which of the following statements is true?

Accepted Answer

A)  FI losses are borne by equity holders last; hence they are junior claimants to an FI's assets. 
B)  FI losses are borne by equity holders last; hence they are senior claimants to an FI's assets. 
C)  FI losses are borne by equity holders first; hence they are junior claimants to an FI's assets. 
D)  FI losses are borne by equity holders first; hence they are senior claimants to an FI's assets. 
A)  FI losses are borne by equity holders last; hence they are junior claimants to an FI's assets. 
B)  FI losses are borne by equity holders last; hence they are senior claimants to an FI's assets. 
C)  FI losses are borne by equity holders first; hence they are junior claimants to an FI's assets. 
D)  FI losses are borne by equity holders first; hence they are senior claimants to an FI's assets.

Question 3

Negative externalities exist in the depository sector when:

Accepted Answer

A)  the fear of DI insolvency leads to bank deposit runs. 
B)  lending activity is impaired or constrained. 
C)  there are delays in disbursements from insolvent DIs. 
D)  All of the listed options are correct. 
A)  the fear of DI insolvency leads to bank deposit runs. 
B)  lending activity is impaired or constrained. 
C)  there are delays in disbursements from insolvent DIs. 
D)  All of the listed options are correct.

Question 4

Why is the failure of a large bank more detrimental to the economy than the failure of a large steel manufacturer?

Accepted Answer

A)  The bank failure usually leads to a government bailout. 
B)  There are fewer steel manufacturers than there are banks. 
C)  The large bank failure reduces credit availability throughout the economy. 
D)  Since the steel company's assets are tangible, they are more easily reallocated than the intangible bank assets. 
A)  The bank failure usually leads to a government bailout. 
B)  There are fewer steel manufacturers than there are banks. 
C)  The large bank failure reduces credit availability throughout the economy. 
D)  Since the steel company's assets are tangible, they are more easily reallocated than the intangible bank assets.

Question 5

Which of the following statements is true?

Accepted Answer

A)  In a world without financial intermediaries the level of fund flows between household savers and the corporate sector is likely to be as high as it is with financial intermediaries. 
B)  In a world without financial intermediaries funds would directly flow from surplus units to deficit units. 
C)  In a world without financial intermediaries lenders (household) would need to monitor the actions of the firms to which they have lent their funds. 
D)  In a world without financial intermediaries funds would directly flow from surplus units to deficit units and lenders (household) would need to monitor the actions of the firms to which they have lent their funds. 
A)  In a world without financial intermediaries the level of fund flows between household savers and the corporate sector is likely to be as high as it is with financial intermediaries. 
B)  In a world without financial intermediaries funds would directly flow from surplus units to deficit units. 
C)  In a world without financial intermediaries lenders (household) would need to monitor the actions of the firms to which they have lent their funds. 
D)  In a world without financial intermediaries funds would directly flow from surplus units to deficit units and lenders (household) would need to monitor the actions of the firms to which they have lent their funds.

Question 6

The part of the money supply produced by the private banking system is called:

Accepted Answer

A)  inside money. 
B)  outside money. 
C)  indirect money. 
D)  The private banking system does not produce part of the money supply. 
A)  inside money. 
B)  outside money. 
C)  indirect money. 
D)  The private banking system does not produce part of the money supply.

Question 7

FIs perform their intermediary function in two ways:

Accepted Answer

A)  They specialise as brokers between savers and users. 
B)  They serve as asset transformers by purchasing primary securities and issuing secondary securities. 
C)  They serve as asset transformers by purchasing secondary securities and issuing primary securities. 
D)  They specialise as brokers between savers and users and they serve as asset transformers by purchasing primary securities and issuing secondary securities. 
A)  They specialise as brokers between savers and users. 
B)  They serve as asset transformers by purchasing primary securities and issuing secondary securities. 
C)  They serve as asset transformers by purchasing secondary securities and issuing primary securities. 
D)  They specialise as brokers between savers and users and they serve as asset transformers by purchasing primary securities and issuing secondary securities.

The part of the money supply directly produced by the government or central bank is called:

Which of the following statements is true?

Negative externalities exist in the depository sector when:

Why is the failure of a large bank more detrimental to the economy than the failure of a large steel manufacturer?

Which of the following statements is true?

The part of the money supply produced by the private banking system is called:

FIs perform their intermediary function in two ways:

The Financial Services Industry: Depository Institutions

The Financial Services Industry: Other Financial Institutions

Risk of Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: the Duration Model

Managing Interest Rate Risk Using Off Balance Sheet Instruments

Credit Risk I: Individual Loan Risk

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Sovereign Risk

Foreign Exchange Risk

Liquidity Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Technology and Other Operational Risk

Capital Management and Adequacy

Filters

Exam 1: Why Are Financial Institutions Special

The part of the money supply directly produced by the government or central bank is called:

Which of the following statements is true?

Negative externalities exist in the depository sector when:

Why is the failure of a large bank more detrimental to the economy than the failure of a large steel manufacturer?

Which of the following statements is true?

The part of the money supply produced by the private banking system is called:

FIs perform their intermediary function in two ways:

The Financial Services Industry: Depository Institutions

The Financial Services Industry: Other Financial Institutions

Risk of Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: the Duration Model

Managing Interest Rate Risk Using Off Balance Sheet Instruments

Credit Risk I: Individual Loan Risk

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Sovereign Risk

Foreign Exchange Risk

Liquidity Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Technology and Other Operational Risk

Capital Management and Adequacy

Filters