Question 1

It now appears that the predominant delivery system for banking services in the future will be

Accepted Answer

A) Internet-only banks. 
B) traditional banks. 
C) traditional banks supplemented with online services. 
D) none of the above. 
A) Internet-only banks. 
B) traditional banks. 
C) traditional banks supplemented with online services. 
D) none of the above.

Question 2

Which of the following is not a reason for the disappointing revenue growth and profits of Internet-only banks?

Accepted Answer

A) high cost per transaction 
B) security concerns 
C) customer preferences 
D) technical problems 
A) high cost per transaction 
B) security concerns 
C) customer preferences 
D) technical problems

Question 3

The Federal Reserve Act of 1913 required that

Accepted Answer

A) state banks be subject to the same regulations as national banks. 
B) national banks establish branches in the cities containing Federal Reserve banks. 
C) national banks join the Federal Reserve System. 
D) all of the above be done. 
A) state banks be subject to the same regulations as national banks. 
B) national banks establish branches in the cities containing Federal Reserve banks. 
C) national banks join the Federal Reserve System. 
D) all of the above be done.

Question 4

A major controversy involving the U.S. banking industry in its early years was

Accepted Answer

A) whether banks should both accept deposits and make loans or whether these functions should be separated into different institutions. 
B) whether the federal government or the states should charter banks. 
C) what percent of deposits banks should hold as fractional reserves. 
D) whether banks should be allowed to issue their own bank notes. 
A) whether banks should both accept deposits and make loans or whether these functions should be separated into different institutions. 
B) whether the federal government or the states should charter banks. 
C) what percent of deposits banks should hold as fractional reserves. 
D) whether banks should be allowed to issue their own bank notes.

Question 5

A form of electronic money used on the Internet to pay for goods and services is

Accepted Answer

A) e-money. 
B) e-cash. 
C) a smart card. 
D) a virtual bank. 
A) e-money. 
B) e-cash. 
C) a smart card. 
D) a virtual bank.

Question 6

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 Glass-St. Germain Act of 1982. 
C) the National Bank Act of 1863. 
D) none of the above. 
A) the National Bank Charter Amendments of 1918. 
B) the Glass-St. Germain Act of 1982. 
C) the National Bank Act of 1863. 
D) none of the above.

Question 7

Even when an ATM is owned by a bank, states typically have special provisions that allow wider establishment of ATMs than is permissible for traditional "brick and mortar" branches.

Accepted Answer

A) True 
 B)False

Question 8

Eurodollars are created when deposits in accounts in the United States are transferred to a bank outside the country and are kept in the form of dollars.

Accepted Answer

A) True 
 B)False

Question 9

What financial innovations are best explained as attempts to avoid regulations?

Accepted Answer

The answer of What financial innovations are best explained as...

Question 10

Disintermediation occurs when funds are deposited into banks and lent to borrowers.

Accepted Answer

A) True 
 B)False

Question 11

What new forms of banking have been spawned by the advances in information technology of the past two decades? Is it likely that traditional banks will disappear as a result of these innovations? Why?

Accepted Answer

The advances in information technology o

Question 12

Large fluctuations in interest rates lead to

Accepted Answer

A) substantial capital gains and losses to owners of securities. 
B) greater uncertainty about returns on investments. 
C) greater interest-rate risk. 
D) all of the above. 
A) substantial capital gains and losses to owners of securities. 
B) greater uncertainty about returns on investments. 
C) greater interest-rate risk. 
D) all of the above.

Question 13

Which of the following statements concerning bank regulation in the United States are true?

Accepted Answer

A) The Office of the Comptroller of the Currency has the primary responsibility for state banks that are members of the Federal Reserve System. 
B) The Federal Reserve and the state banking authorities jointly have responsibility for state banks that are members of the Federal Reserve System. 
C) The Office of the Comptroller of the Currency has sole regulatory responsibility over bank holding companies. 
D) All of the above are true. 
E) Only A and B of the above are true. 
A) The Office of the Comptroller of the Currency has the primary responsibility for state banks that are members of the Federal Reserve System. 
B) The Federal Reserve and the state banking authorities jointly have responsibility for state banks that are members of the Federal Reserve System. 
C) The Office of the Comptroller of the Currency has sole regulatory responsibility over bank holding companies. 
D) All of the above are true. 
E) Only A and B of the above are true.

Question 14

Which of the following statements concerning bank regulation in the United States is true?

Accepted Answer

A) The Office of the Comptroller of the Currency has the primary responsibility for national banks. 
B) The Federal Reserve and the state banking authorities jointly have responsibility for state banks that are members of the Federal Reserve System. 
C) The Fed has sole regulatory responsibility over bank holding companies. 
D) All of the above are true. 
E) Only A and B of the above are true. 
A) The Office of the Comptroller of the Currency has the primary responsibility for national banks. 
B) The Federal Reserve and the state banking authorities jointly have responsibility for state banks that are members of the Federal Reserve System. 
C) The Fed has sole regulatory responsibility over bank holding companies. 
D) All of the above are true. 
E) Only A and B of the above are true.

Question 15

The National Banking Act of 1863, and subsequent amendments to it,

Accepted Answer

A) created a banking system of federally chartered banks. 
B) established the Office of the Comptroller of the Currency. 
C) broadened the regulatory powers of the Federal Reserve. 
D) did all of the above. 
E) did only A and B of the above. 
A) created a banking system of federally chartered banks. 
B) established the Office of the Comptroller of the Currency. 
C) broadened the regulatory powers of the Federal Reserve. 
D) did all of the above. 
E) did only A and B of the above.

Question 16

With the creation of the Federal Deposit Insurance Corporation, member banks of the Federal Reserve System ________ to purchase FDIC insurance for their depositors, while nonmember 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 17

Before 1863,

Accepted Answer

A) federally chartered banks had regulatory advantages not granted to state-chartered banks. 
B) the number of federally chartered banks grew at a much faster rate than at any other time since the end of the Civil War. 
C) banks acquired funds by issuing banknotes. 
D) the Federal Reserve System regulated only federally chartered banks. 
E) the Comptroller of the Currency regulated both state and federally chartered banks. 
A) federally chartered banks had regulatory advantages not granted to state-chartered banks. 
B) the number of federally chartered banks grew at a much faster rate than at any other time since the end of the Civil War. 
C) banks acquired funds by issuing banknotes. 
D) the Federal Reserve System regulated only federally chartered banks. 
E) the Comptroller of the Currency regulated both state and federally chartered banks.

Question 18

Which of the following is not a financial innovation stimulated by information technology?

Accepted Answer

A) credit card 
B) debit card 
C) adjustable-rate mortgage 
D) electronic banking 
A) credit card 
B) debit card 
C) adjustable-rate mortgage 
D) electronic banking

Question 19

There are approximately how many commerical banks in the United States currently?

Accepted Answer

A) 5,000 
B) 7,500 
C) 1,000 
D) 1,250 
A) 5,000 
B) 7,500 
C) 1,000 
D) 1,250

Question 20

In 1977, ________ pioneered the concept of selling new public issues of junk bonds for companies that had not yet achieved investment-grade status.

Accepted Answer

A) Michael Milken 
B) Roger Milliken 
C) Ivan Boesky 
D) Carl Ichan 
A) Michael Milken 
B) Roger Milliken 
C) Ivan Boesky 
D) Carl Ichan

Exam 19: Banking Industry: Structure and Competition

It now appears that the predominant delivery system for banking services in the future will be

Which of the following is not a reason for the disappointing revenue growth and profits of Internet-only banks?

The Federal Reserve Act of 1913 required that

A major controversy involving the U.S. banking industry in its early years was

A form of electronic money used on the Internet to pay for goods and services is

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

Even when an ATM is owned by a bank, states typically have special provisions that allow wider establishment of ATMs than is permissible for traditional "brick and mortar" branches.

Eurodollars are created when deposits in accounts in the United States are transferred to a bank outside the country and are kept in the form of dollars.

What financial innovations are best explained as attempts to avoid regulations?

Disintermediation occurs when funds are deposited into banks and lent to borrowers.

What new forms of banking have been spawned by the advances in information technology of the past two decades? Is it likely that traditional banks will disappear as a result of these innovations? Why?

Large fluctuations in interest rates lead to

Which of the following statements concerning bank regulation in the United States are true?

Which of the following statements concerning bank regulation in the United States is true?

The National Banking Act of 1863, and subsequent amendments to it,

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

Before 1863,

Which of the following is not a financial innovation stimulated by information technology?

There are approximately how many commerical banks in the United States currently?

In 1977, ________ pioneered the concept of selling new public issues of junk bonds for companies that had not yet achieved investment-grade status.

Why Study Financial Markets and Institutions

Overview of the Financial System

What Do Interest Rates Mean and What Is Their Role in Valuation

Why Do Interest Rates Change

How Do Risk and Term Structure Affect Interest Rates

Are Financial Markets Efficient

Why Do Financial Institutions Exist

Why Do Financial Crises Occur and Why Are They so Damaging to the Economy

Central Banks and the Federal Reserve System

Conduct of Monetary Policy: Tools, Goals, Strategy, and Tactics

The Money Markets

The Bond Market

The Stock Market

The Mortgage Markets

The Foreign Exchange Market

The International Financial System

Banking and the Management of Financial Institutions

Financial Regulation

The Mutual Fund Industry

Insurance Companies and Pension Funds

Investment Banks, Security Brokers and Dealers, and Venture Capital Firms

Risk Management in Financial Institutions

Hedging With Financial Derivatives

Savings Associations and Credit Unions

Finance Companies

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 nonmember commercial banks to buy deposit insurance.