Question 1

Reasons for holding Eurodollars include

Accepted Answer

A) the fact that Eurodollar deposits are insured by the FDIC. 
B) the fact that dollars are widely used to conduct international transactions. 
C) the fact that minimum transaction sizes are very low,making Eurodollars an attractive savings instrument for consumers. 
D) the fact that Eurodollar deposits are heavily regulated. 
A) the fact that Eurodollar deposits are insured by the FDIC. 
B) the fact that dollars are widely used to conduct international transactions. 
C) the fact that minimum transaction sizes are very low,making Eurodollars an attractive savings instrument for consumers. 
D) the fact that Eurodollar deposits are heavily regulated.

Question 2

The belief that bank failures were regularly caused by fraud or the lack of sufficient bank capital explains,in part,the passage of

Accepted Answer

A) the National Bank Charter Amendments of 1918. 
B) the Garn-St.Germain Act of 1982. 
C) the National Bank Act of 1863. 
D) Federal Reserve Act of 1913. 
A) the National Bank Charter Amendments of 1918. 
B) the Garn-St.Germain Act of 1982. 
C) the National Bank Act of 1863. 
D) Federal Reserve Act of 1913.

Question 3

In September 2008,the Reserve Primary Fund,a money market mutual fund,found itself in the situation know as "breaking the buck." This means that

Accepted Answer

A) they could no longer afford to redeem shares at the par value of $1. 
B) they required shareholders to contribute a dollar more in fees each month. 
C) shareholders were able to redeem shares for more than a $1. 
D) shares earned more than a dollar in interest. 
A) they could no longer afford to redeem shares at the par value of $1. 
B) they required shareholders to contribute a dollar more in fees each month. 
C) shareholders were able to redeem shares for more than a $1. 
D) shares earned more than a dollar in interest.

Question 4

One factor contributing to the rapid growth of the commercial paper market since 1970 is

Accepted Answer

A) the fact that commercial paper has no default risk. 
B) improved information technology making it easier to screen credit risks. 
C) government regulation. 
D) FDIC insurance for commercial paper. 
A) the fact that commercial paper has no default risk. 
B) improved information technology making it easier to screen credit risks. 
C) government regulation. 
D) FDIC insurance for commercial paper.

Question 5

The process of transforming otherwise illiquid financial assets into marketable capital market instruments is know as

Accepted Answer

A) securitization. 
B) internationalization. 
C) arbitrage. 
D) program trading. 
A) securitization. 
B) internationalization. 
C) arbitrage. 
D) program trading.

Question 6

The declining cost of computer technology has made ________ a reality.

Accepted Answer

A) brick and mortar banking 
B) commercial banking 
C) virtual banking 
D) investment banking 
A) brick and mortar banking 
B) commercial banking 
C) virtual banking 
D) investment banking

Question 7

The most important source of the changes in supply conditions that stimulate financial innovation has been the

Accepted Answer

A) deregulation of financial institutions. 
B) dramatic increase in the volatility of interest rates. 
C) improvement in computer and telecommunications technology. 
D) dramatic increase in competition from foreign banks. 
A) deregulation of financial institutions. 
B) dramatic increase in the volatility of interest rates. 
C) improvement in computer and telecommunications technology. 
D) dramatic increase in competition from foreign banks.

Question 8

Unlike banks,________ have been allowed to branch statewide since 1980.

Accepted Answer

A) federally-chartered S&Ls 
B) state-chartered S&Ls 
C) financially troubled S&Ls 
D) technically insolvent S&Ls 
A) federally-chartered S&Ls 
B) state-chartered S&Ls 
C) financially troubled S&Ls 
D) technically insolvent S&Ls

Question 9

The presence of so many commercial banks in the United States is most likely the result of

Accepted Answer

A) consumers' strong desire for dealing with only local banks. 
B) adverse selection and moral hazard problems that give local banks a competitive advantage over larger banks. 
C) prior regulations that restrict the ability of these financial institutions to open branches. 
D) consumers' preference for state banks. 
A) consumers' strong desire for dealing with only local banks. 
B) adverse selection and moral hazard problems that give local banks a competitive advantage over larger banks. 
C) prior regulations that restrict the ability of these financial institutions to open branches. 
D) consumers' preference for state banks.

Question 10

Bank consolidation will likely result in

Accepted Answer

A) less competition. 
B) the elimination of community banks. 
C) increased competition. 
D) a shift in assets from larger banks to smaller banks. 
A) less competition. 
B) the elimination of community banks. 
C) increased competition. 
D) a shift in assets from larger banks to smaller banks.

Question 11

With the creation of the Federal Deposit Insurance Corporation,member banks of the Federal Reserve System ________ to purchase FDIC insurance for their depositors,while non-member commercial banks ________ to buy deposit insurance.

Accepted Answer

A) could choose; were required 
B) could choose; were given the option 
C) were required,could choose 
D) were required; were required 
A) could choose; were required 
B) could choose; were given the option 
C) were required,could choose 
D) were required; were required

Question 12

The most important developments that have reduced banks income advantages in the past thirty years include:

Accepted Answer

A) the increase in off-balance sheet activities. 
B) the growth of securitization. 
C) the elimination of Regulation Q ceilings. 
D) the competition from money market mutual funds. 
A) the increase in off-balance sheet activities. 
B) the growth of securitization. 
C) the elimination of Regulation Q ceilings. 
D) the competition from money market mutual funds.

Question 13

Although it has a population about half that of the United States,Japan has

Accepted Answer

A) many more banks. 
B) about 25 percent of the number of banks. 
C) more than 5000 commercial banks. 
D) fewer than 100 commercial banks. 
A) many more banks. 
B) about 25 percent of the number of banks. 
C) more than 5000 commercial banks. 
D) fewer than 100 commercial banks.

Question 14

Credit cards date back to

Accepted Answer

A) prior to the second World War. 
B) just after the second World War. 
C) the early 1950s. 
D) the late 1950s. 
A) prior to the second World War. 
B) just after the second World War. 
C) the early 1950s. 
D) the late 1950s.

Question 15

State banks that are not members of the Federal Reserve System are most likely to be examined by the

Accepted Answer

A) Federal Reserve System. 
B) FDIC. 
C) FHLBS. 
D) Comptroller of the Currency. 
A) Federal Reserve System. 
B) FDIC. 
C) FHLBS. 
D) Comptroller of the Currency.

Question 16

The Second Bank of the United States was denied a new charter by

Accepted Answer

A) President Andrew Jackson. 
B) Vice President John Calhoun. 
C) President Benjamin Harrison. 
D) President John Q.Adams. 
A) President Andrew Jackson. 
B) Vice President John Calhoun. 
C) President Benjamin Harrison. 
D) President John Q.Adams.

Question 17

Probably the most significant factor explaining the drastic drop in the number of bank failures since the Great Depression has been

Accepted Answer

A) the creation of the FDIC. 
B) rapid economic growth since 1941. 
C) the employment of new procedures by the Federal Reserve. 
D) better bank management. 
A) the creation of the FDIC. 
B) rapid economic growth since 1941. 
C) the employment of new procedures by the Federal Reserve. 
D) better bank management.

Question 18

According to Edward Kane,because the banking industry is one of the most ________ industries in America,it is an industry in which ________ is especially likely to occur.

Accepted Answer

A) competitive; loophole mining 
B) competitive; innovation 
C) regulated; loophole mining 
D) regulated; innovation 
A) competitive; loophole mining 
B) competitive; innovation 
C) regulated; loophole mining 
D) regulated; innovation

Question 19

To eliminate the abuses of the state-chartered banks,the ________ created a new banking system of federally chartered banks,supervised by the ________.

Accepted Answer

A) National Bank Act of 1863; Office of the Comptroller of the Currency 
B) Federal Reserve Act of 1863; Office of the Comptroller of the Currency 
C) National Bank Act of 1863; Office of Thrift Supervision 
D) Federal Reserve Act of 1863; Office of Thrift Supervision 
A) National Bank Act of 1863; Office of the Comptroller of the Currency 
B) Federal Reserve Act of 1863; Office of the Comptroller of the Currency 
C) National Bank Act of 1863; Office of Thrift Supervision 
D) Federal Reserve Act of 1863; Office of Thrift Supervision

Question 20

As the banking system in the United States evolves,it is expected that

Accepted Answer

A) the number and importance of small banks will increase. 
B) the number and importance of large banks will decrease. 
C) small banks will grow at the expense of large banks. 
D) the number and importance of large banks will increase. 
A) the number and importance of small banks will increase. 
B) the number and importance of large banks will decrease. 
C) small banks will grow at the expense of large banks. 
D) the number and importance of large banks will increase.

Exam 12: Banking Industry: Structure and Competition

Reasons for holding Eurodollars include

The belief that bank failures were regularly caused by fraud or the lack of sufficient bank capital explains,in part,the passage of

In September 2008,the Reserve Primary Fund,a money market mutual fund,found itself in the situation know as "breaking the buck." This means that

One factor contributing to the rapid growth of the commercial paper market since 1970 is

The process of transforming otherwise illiquid financial assets into marketable capital market instruments is know as

The declining cost of computer technology has made ________ a reality.

The most important source of the changes in supply conditions that stimulate financial innovation has been the

Unlike banks,________ have been allowed to branch statewide since 1980.

The presence of so many commercial banks in the United States is most likely the result of

Bank consolidation will likely result in

With the creation of the Federal Deposit Insurance Corporation,member banks of the Federal Reserve System ________ to purchase FDIC insurance for their depositors,while non-member commercial banks ________ to buy deposit insurance.

The most important developments that have reduced banks income advantages in the past thirty years include:

Although it has a population about half that of the United States,Japan has

Credit cards date back to

State banks that are not members of the Federal Reserve System are most likely to be examined by the

The Second Bank of the United States was denied a new charter by

Probably the most significant factor explaining the drastic drop in the number of bank failures since the Great Depression has been

According to Edward Kane,because the banking industry is one of the most ________ industries in America,it is an industry in which ________ is especially likely to occur.

To eliminate the abuses of the state-chartered banks,the ________ created a new banking system of federally chartered banks,supervised by the ________.

As the banking system in the United States evolves,it is expected that

Why Study Money, Banking, and Financial Markets

An Overview of the Financial System

What Is Money

Understanding Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Financial Crises and the Subprime Meltdown

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Central Banks and the Federal Reserve System

The Money Supply Process

Tools for Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

The Demand for Money

The Islm Model

Monetary and Fiscal Policy in the ISLM Model

Aggregate Demand and Supply Analysis

Transmission Mechanisms of Monetary Policy: The Evidence

Money and Inflation

Rational Expectations: Implications for Policy

Filters

With the creation of the Federal Deposit Insurance Corporation,member banks of the Federal Reserve System to purchase FDIC insurance for their depositors,while non-member commercial banks to buy deposit insurance.

According to Edward Kane,because the banking industry is one of the most industries in America,it is an industry in which is especially likely to occur.

To eliminate the abuses of the state-chartered banks,the created a new banking system of federally chartered banks,supervised by the .