Question 1

In recent years the U.S.banking structure has changed in such a way that there are now:

Accepted Answer

A) More banks 
B) Fewer branches 
C) Fewer banks but more banks with branches 
D) Fewer banks and fewer banks with branches 
A) More banks 
B) Fewer branches 
C) Fewer banks but more banks with branches 
D) Fewer banks and fewer banks with branches

Question 2

Whole life insurance differs from term life in which of the following ways?

Accepted Answer

A) Whole life has a variable premium over the life of the policy, increasing as the policyholder gets older.Term life has a fixed premium forever 
B) Term life has a savings component whole life is pure insurance 
C) Term life is usually more expensive than whole life 
D) Whole life is a combination of term life insurance and a savings account 
A) Whole life has a variable premium over the life of the policy, increasing as the policyholder gets older.Term life has a fixed premium forever 
B) Term life has a savings component whole life is pure insurance 
C) Term life is usually more expensive than whole life 
D) Whole life is a combination of term life insurance and a savings account

Question 3

One of the results of the Reigel-Neal Interstate Banking and Branching Efficiency Act of 1994 was:

Accepted Answer

A) A reversal of the branching restrictions of the McFadden Act 
B) An increase in the number of banks in the U.S. 
C) A decrease in the average size of banks 
D) A decrease in commercial banks but an increase in the number of savings and loans and savings banks 
A) A reversal of the branching restrictions of the McFadden Act 
B) An increase in the number of banks in the U.S. 
C) A decrease in the average size of banks 
D) A decrease in commercial banks but an increase in the number of savings and loans and savings banks

Question 4

The gap between LIBOR and the expected Federal Reserve policy interest rate provides a key measure of which of the following:

Accepted Answer

A) the direction of movement of the Euro relative to the US dollar on the foreign exchange market 
B) the persistence and intensity of the liquidity crisis 
C) the expected length of a coming global recession 
D) the movement of the US stock market 
A) the direction of movement of the Euro relative to the US dollar on the foreign exchange market 
B) the persistence and intensity of the liquidity crisis 
C) the expected length of a coming global recession 
D) the movement of the US stock market

Question 5

One result of the Reigel-Neal Interstate Banking and Branching Efficiency Act was that:

Accepted Answer

A) Banking system efficiency decreased 
B) Banks became less geographically diversified 
C) Banking system efficiency increased 
D) Banks became less geographically diversified and banking system efficiency decreased 
A) Banking system efficiency decreased 
B) Banks became less geographically diversified 
C) Banking system efficiency increased 
D) Banks became less geographically diversified and banking system efficiency decreased

Question 6

It has been argued that the laws that prohibited branch banking were needed to protect consumers from large monopoly banks.Does that argument hold up to close scrutiny? Explain.

Accepted Answer

Actually, the laws may have created more

Question 7

Banks exert some control over who will regulate them because banks:

Accepted Answer

A) Spend a lot of money contributing to political campaigns 
B) Can switch their charter from state to federal and vice versa 
C) Have the right to decide on which regulator will oversee their bank 
D) Pay the salary of the regulator 
A) Spend a lot of money contributing to political campaigns 
B) Can switch their charter from state to federal and vice versa 
C) Have the right to decide on which regulator will oversee their bank 
D) Pay the salary of the regulator

Question 8

Within the insurance industry a common saying is that insurance works because of the "law of large numbers".What do you think is meant by this?

Accepted Answer

The law of large numbers means that insu

Question 9

It has been argued that regulations can often be the source of innovation.Provide an example of this in the banking industry.

Accepted Answer

A good example of regulations leading to

Question 10

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 11

Bank holding companies developed:

Accepted Answer

A) To get around the limitations on bank branching 
B) So foreign banks could open branches in the U.S. 
C) To circumvent the regulation by the Office of the Comptroller of the Currency 
D) So that unit banks could combine into larger banks 
A) To get around the limitations on bank branching 
B) So foreign banks could open branches in the U.S. 
C) To circumvent the regulation by the Office of the Comptroller of the Currency 
D) So that unit banks could combine into larger banks

Question 12

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

Accepted Answer

A) a fall in the number of unit banks 
B) an increase in the deposit share of the top four US 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 fall in the number of unit banks 
B) an increase in the deposit share of the top four US 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 13

A young father needing to provide his family with financial security would be better off purchasing:

Accepted Answer

A) A whole life insurance policy 
B) A term life insurance policy 
C) As much life insurance as they can afford 
D) No life insurance; instead he should focus on saving 
A) A whole life insurance policy 
B) A term life insurance policy 
C) As much life insurance as they can afford 
D) No life insurance; instead he should focus on saving

Question 14

Why do you think most health insurance policies require the first $100 or so of every claim and a percentage of the bill after that to be paid by the insured?

Accepted Answer

This is to treat the moral hazard proble

Question 15

Which of the following statements best completes the following statement: "Over the past 30 years, the percentage(s) of assets for all financial intermediaries¼"?

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 16

The spate of pension plan failures and investment setbacks in the financial crisis of 2007-2009 doubled the Pension Benefit Guaranty Corporation's (PBGC) deficit to:

Accepted Answer

A) $10 billion 
B) $156 million 
C) $22 billion 
D) $76 billion 
A) $10 billion 
B) $156 million 
C) $22 billion 
D) $76 billion

Question 17

The bank failures that occurred during the early years of the Great Depression:

Accepted Answer

A) Hurt large depositors the most since it was the large money center banks that failed 
B) Hurt small depositors the most since it was mainly small banks that failed 
C) Hurt the government insurance funds since FDIC covered most of the losses of depositors 
D) Totaled about 30% of total bank customer deposits 
A) Hurt large depositors the most since it was the large money center banks that failed 
B) Hurt small depositors the most since it was mainly small banks that failed 
C) Hurt the government insurance funds since FDIC covered most of the losses of depositors 
D) Totaled about 30% of total bank customer deposits

Question 18

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 19

A unit bank is a bank that:

Accepted Answer

A) Only makes one type of loan (i.e.; home mortgages.) 
B) Only offers savings accounts 
C) Provides a myriad of financial services, so customers get all or most of their financial needs taken care of at the bank 
D) Has no branches 
A) Only makes one type of loan (i.e.; home mortgages.) 
B) Only offers savings accounts 
C) Provides a myriad of financial services, so customers get all or most of their financial needs taken care of at the bank 
D) Has no branches

Question 20

The Gramm-Leach-Bliley Act:

Accepted Answer

A) Repealed the Reigle-Neal Interstate Banking and Branching Efficiency Act 
B) Repealed the Glass-Steagall Act's prohibition of mergers between commercial banks and insurance or securities firms 
C) Repealed the McFadden Act's restriction on bank branching 
D) Reinforced the Glass-Steagall Act's limitation on commercial banks' availability to merge with insurance or securities firms by increasing the penalties for doing so 
A) Repealed the Reigle-Neal Interstate Banking and Branching Efficiency Act 
B) Repealed the Glass-Steagall Act's prohibition of mergers between commercial banks and insurance or securities firms 
C) Repealed the McFadden Act's restriction on bank branching 
D) Reinforced the Glass-Steagall Act's limitation on commercial banks' availability to merge with insurance or securities firms by increasing the penalties for doing so

Exam 13: Financial Industry Structure

In recent years the U.S.banking structure has changed in such a way that there are now:

Whole life insurance differs from term life in which of the following ways?

One of the results of the Reigel-Neal Interstate Banking and Branching Efficiency Act of 1994 was:

The gap between LIBOR and the expected Federal Reserve policy interest rate provides a key measure of which of the following:

One result of the Reigel-Neal Interstate Banking and Branching Efficiency Act was that:

It has been argued that the laws that prohibited branch banking were needed to protect consumers from large monopoly banks.Does that argument hold up to close scrutiny? Explain.

Banks exert some control over who will regulate them because banks:

Within the insurance industry a common saying is that insurance works because of the "law of large numbers".What do you think is meant by this?

It has been argued that regulations can often be the source of innovation.Provide an example of this in the banking industry.

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

Bank holding companies developed:

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

A young father needing to provide his family with financial security would be better off purchasing:

Why do you think most health insurance policies require the first $100 or so of every claim and a percentage of the bill after that to be paid by the insured?

Which of the following statements best completes the following statement: "Over the past 30 years, the percentage(s) of assets for all financial intermediaries¼"?

The spate of pension plan failures and investment setbacks in the financial crisis of 2007-2009 doubled the Pension Benefit Guaranty Corporation's (PBGC) deficit to:

The bank failures that occurred during the early years of the Great Depression:

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

A unit bank is a bank that:

The Gramm-Leach-Bliley Act:

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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