Question 1

Choose among the following services provided by modern FIs.

Accepted Answer

The answer of Choose among the following services provided by...

Question 2

Consider the following two FIs: Company A has $500 million in total assets and total costs equal to $200 million. Company B has $60 million in total assets and total costs equal to $24 million
-What can you conclude about the cost structure of the market consisting of the two FIs?

Accepted Answer

A)  There are significant economies of scale because both companies A and B coexist in the industry. 
B)  There are no significant economies of scale because company A is much larger than company B. 
C)  There are no significant economies of scale because the unit costs are constant. 
D)  There are significant economies of scale because the unit costs decline as size increases. 
E)  There are no significant economies of scale because the unit costs increase as size increases. 
A)  There are significant economies of scale because both companies A and B coexist in the industry. 
B)  There are no significant economies of scale because company A is much larger than company B. 
C)  There are no significant economies of scale because the unit costs are constant. 
D)  There are significant economies of scale because the unit costs decline as size increases. 
E)  There are no significant economies of scale because the unit costs increase as size increases.

Question 3

Funds transferred on CHIPS are settled at the end of the day.

Accepted Answer

A) True 
 B)False

Question 4

The "flash crash" on the NYSE in May 2010 was directly attributable to the manipulation of LIBOR by Barclays PLC.

Accepted Answer

A) True 
 B)False

Question 5

Wholesale cash management services allow corporate customers to minimize cash balances and to monitor quickly cash transactions and balances.

Accepted Answer

A) True 
 B)False

Question 6

Recent evidence strongly suggests that economies of scope exist for both asset and liability products, but not for off-balance-sheet products.

Accepted Answer

A) True 
 B)False

Question 7

As banks have increased the use of technology over the past 20 years,

Accepted Answer

A) noninterest income as a percent of total operating income has approximately doubled. 
B) there has been a decrease in the importance of both Fedwire and CHIPS. 
C) there has been an increase in negative net present value because of the speed in which rivals can replicate innovations. 
D) banks no longer need to consolidate because they can access customers worldwide through internet services. 
E) noninterest expense as a percent of total operating income has decreased as supporting branch banking has decreased in importance. 
A) noninterest income as a percent of total operating income has approximately doubled. 
B) there has been a decrease in the importance of both Fedwire and CHIPS. 
C) there has been an increase in negative net present value because of the speed in which rivals can replicate innovations. 
D) banks no longer need to consolidate because they can access customers worldwide through internet services. 
E) noninterest expense as a percent of total operating income has decreased as supporting branch banking has decreased in importance.

Question 8

Which of the following occurs if the costs of joint production of FI services are higher than they would be if they were produced independently?

Accepted Answer

A) Economies of scale. 
B) Diseconomies of scale. 
C) Economies of scope. 
D) Diseconomies of scope. 
E) Constant returns to scale. 
A) Economies of scale. 
B) Diseconomies of scale. 
C) Economies of scope. 
D) Diseconomies of scope. 
E) Constant returns to scale.

Choose among the following services provided by modern FIs.

Consider the following two FIs: Company A has $500 million in total assets and total costs equal to $200 million. Company B has $60 million in total assets and total costs equal to $24 million -What can you conclude about the cost structure of the market consisting of the two FIs?

Funds transferred on CHIPS are settled at the end of the day.

The "flash crash" on the NYSE in May 2010 was directly attributable to the manipulation of LIBOR by Barclays PLC.

Wholesale cash management services allow corporate customers to minimize cash balances and to monitor quickly cash transactions and balances.

Recent evidence strongly suggests that economies of scope exist for both asset and liability products, but not for off-balance-sheet products.

As banks have increased the use of technology over the past 20 years,

Which of the following occurs if the costs of joint production of FI services are higher than they would be if they were produced independently?

Why Are Financial Institutions Special

Financial Services: Depository Institutions

Financial Services: Finance Companies

Financial Services: Securities Brokerage and Investment Banking

Financial Services: Mutual Funds and Hedge Funds

Financial Services: Insurance

Risks of Financial Institutions

Interest Rate Risk I

Interest Rate Risk II

Credit Risk: Individual Loan Risk

Credit Risk: Loan Portfolio and Concentration Risk

Liquidity Risk

Foreign Exchange Risk

Sovereign Risk

Market Risk

Off-Balance-Sheet Risk

Liability and Liquidity Management

Deposit Insurance and Other Liability Guarantees

Capital Adequacy

Product and Geographic Expansion

Futures and Forwards

Options, Caps, Floors, and Collars

Swaps

Loan Sales

Securitization

Filters

Exam 17: Technology and Other Operational Risks

Choose among the following services provided by modern FIs.

Consider the following two FIs: Company A has $500 million in total assets and total costs equal to $200 million. Company B has $60 million in total assets and total costs equal to $24 million -What can you conclude about the cost structure of the market consisting of the two FIs?

Funds transferred on CHIPS are settled at the end of the day.

The "flash crash" on the NYSE in May 2010 was directly attributable to the manipulation of LIBOR by Barclays PLC.

Wholesale cash management services allow corporate customers to minimize cash balances and to monitor quickly cash transactions and balances.

Recent evidence strongly suggests that economies of scope exist for both asset and liability products, but not for off-balance-sheet products.

As banks have increased the use of technology over the past 20 years,

Which of the following occurs if the costs of joint production of FI services are higher than they would be if they were produced independently?

Why Are Financial Institutions Special

Financial Services: Depository Institutions

Financial Services: Finance Companies

Financial Services: Securities Brokerage and Investment Banking

Financial Services: Mutual Funds and Hedge Funds

Financial Services: Insurance

Risks of Financial Institutions

Interest Rate Risk I

Interest Rate Risk II

Credit Risk: Individual Loan Risk

Credit Risk: Loan Portfolio and Concentration Risk

Liquidity Risk

Foreign Exchange Risk

Sovereign Risk

Market Risk

Off-Balance-Sheet Risk

Liability and Liquidity Management

Deposit Insurance and Other Liability Guarantees

Capital Adequacy

Product and Geographic Expansion

Futures and Forwards

Options, Caps, Floors, and Collars

Swaps

Loan Sales

Securitization

Filters