Question 1

Which of the following statements concerning the mutual form of ownership of savings banks are true?

Accepted Answer

A) The mutual form of ownership accentuates the principal-agent problem that exists in corporations. 
B) More capital is available, contributing to the safety of mutual savings banks compared to other banking organizations. 
C) Managers of mutual savings banks are more risk averse than in the corporate form, because the value of their ownership does not increase if the firm does well. 
D) All of the above are true. 
E) Only A and B of the above are true. 
A) The mutual form of ownership accentuates the principal-agent problem that exists in corporations. 
B) More capital is available, contributing to the safety of mutual savings banks compared to other banking organizations. 
C) Managers of mutual savings banks are more risk averse than in the corporate form, because the value of their ownership does not increase if the firm does well. 
D) All of the above are true. 
E) Only A and B of the above are true.

Question 2

The policy of regulatory forbearance

Accepted Answer

A) meant delaying the closing of "zombie S&Ls" as their losses mounted during the 1980s. 
B) benefited "zombie S&Ls" at the expense of healthy S&Ls, as healthy institutions lost deposits to insolvent institutions. 
C) contributed to declining profitability in the S&L industry and an increase in the number of "zombie S&Ls." 
D) did all of the above. 
E) did only A and B of the above. 
A) meant delaying the closing of "zombie S&Ls" as their losses mounted during the 1980s. 
B) benefited "zombie S&Ls" at the expense of healthy S&Ls, as healthy institutions lost deposits to insolvent institutions. 
C) contributed to declining profitability in the S&L industry and an increase in the number of "zombie S&Ls." 
D) did all of the above. 
E) did only A and B of the above.

Question 3

(I)S&Ls' net worth ratio is about the same as that of commercial banks. (II)Goodwill accounts for a majority of S&Ls' capital.

Accepted Answer

A) (I)is true, (II)false. 
B) (I)is false, (II)true. 
C) Both are true. 
D) Both are false. 
A) (I)is true, (II)false. 
B) (I)is false, (II)true. 
C) Both are true. 
D) Both are false.

Question 4

The major provisions of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 included

Accepted Answer

A) transferring the regulatory role of the Federal Home Loan Bank Board to the Office of Thrift Supervision, a bureau within the U.S. Treasury Department. 
B) expanding the responsibilities of the FDIC, which is now the sole administrator of the federal deposit insurance system. 
C) establishing the Resolution Trust Corporation to manage and resolve insolvent thrifts placed in conservatorship or receivership. 
D) all of the above. 
E) only A and B of the above. 
A) transferring the regulatory role of the Federal Home Loan Bank Board to the Office of Thrift Supervision, a bureau within the U.S. Treasury Department. 
B) expanding the responsibilities of the FDIC, which is now the sole administrator of the federal deposit insurance system. 
C) establishing the Resolution Trust Corporation to manage and resolve insolvent thrifts placed in conservatorship or receivership. 
D) all of the above. 
E) only A and B of the above.

Question 5

In the early stages of the banking crisis in the 1980s, financial institutions were especially hurt by

Accepted Answer

A) the sharp increases in interest rates from late 1979 until 1981. 
B) the severe recession in 1981-82. 
C) the sharp decline in the price level from mid-1980 to early 1983. 
D) all of the above. 
E) only A and B of the above. 
A) the sharp increases in interest rates from late 1979 until 1981. 
B) the severe recession in 1981-82. 
C) the sharp decline in the price level from mid-1980 to early 1983. 
D) all of the above. 
E) only A and B of the above.

Question 6

The major provisions of the Competitive Equality in Banking Act of 1987 included

Accepted Answer

A) expanding the responsibilities of the FDIC, which is now the sole administrator of the federal deposit insurance system. 
B) establishing the Resolution Trust Corporation to manage and resolve insolvent thrifts placed in conservatorship or receivership. 
C) directing the Federal Home Loan Bank Board to continue to pursue regulatory forbearance. 
D) all of the above. 
E) only A and B of the above. 
A) expanding the responsibilities of the FDIC, which is now the sole administrator of the federal deposit insurance system. 
B) establishing the Resolution Trust Corporation to manage and resolve insolvent thrifts placed in conservatorship or receivership. 
C) directing the Federal Home Loan Bank Board to continue to pursue regulatory forbearance. 
D) all of the above. 
E) only A and B of the above.

Question 7

Savings and loans lost a total of $10 billion in 1981-1982 due to a combination of rising interest rates in 1979-1981 and

Accepted Answer

A) the recession of 1981-1982 that reduced real estate prices enough to cause significant loan defaults. 
B) the regulatory restrictions enacted by Congress in 1981 and 1982. 
C) the loss of market share to commercial banks that were allowed to compete directly with thrifts in the real estate market. 
D) the acceleration of inflation in 1981-1982 that caused thrifts to lose additional funds to money market mutual funds. 
A) the recession of 1981-1982 that reduced real estate prices enough to cause significant loan defaults. 
B) the regulatory restrictions enacted by Congress in 1981 and 1982. 
C) the loss of market share to commercial banks that were allowed to compete directly with thrifts in the real estate market. 
D) the acceleration of inflation in 1981-1982 that caused thrifts to lose additional funds to money market mutual funds.

Which of the following statements concerning the mutual form of ownership of savings banks are true?

The policy of regulatory forbearance

(I)S&Ls' net worth ratio is about the same as that of commercial banks. (II)Goodwill accounts for a majority of S&Ls' capital.

The major provisions of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 included

In the early stages of the banking crisis in the 1980s, financial institutions were especially hurt by

The major provisions of the Competitive Equality in Banking Act of 1987 included

Savings and loans lost a total of $10 billion in 1981-1982 due to a combination of rising interest rates in 1979-1981 and

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

Banking Industry: Structure and Competition

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

Finance Companies

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Exam 25: Savings Associations and Credit Unions

Which of the following statements concerning the mutual form of ownership of savings banks are true?

The policy of regulatory forbearance

(I)S&Ls' net worth ratio is about the same as that of commercial banks. (II)Goodwill accounts for a majority of S&Ls' capital.

The major provisions of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 included

In the early stages of the banking crisis in the 1980s, financial institutions were especially hurt by

The major provisions of the Competitive Equality in Banking Act of 1987 included

Savings and loans lost a total of $10 billion in 1981-1982 due to a combination of rising interest rates in 1979-1981 and

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

Banking Industry: Structure and Competition

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

Finance Companies

Filters