Question 1

Commercial banks accept deposits and makes loans to individuals and businesses.

Accepted Answer

A) True 
 B)False

Question 2

Major types of financial institutions include all of the following EXCEPT:

Accepted Answer

A) commercial banks 
B) pension funds 
C) insurance companies 
D) all of the above are major financial institutions 
A) commercial banks 
B) pension funds 
C) insurance companies 
D) all of the above are major financial institutions

Question 3

The bank holding company may not engage in direct banking activities.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is false?

Accepted Answer

A) Thrift institutions are like commercial banks in that retained earnings and certificates of deposits add to fund sources. 
B) The larger the volume of assets and deposits in relation to the capital contribution of the stockholders, the larger the margin of safety for depositors. 
C) Capital funds include capital stock, surplus, and undivided profits. 
D) All the above statements are correct. 
A) Thrift institutions are like commercial banks in that retained earnings and certificates of deposits add to fund sources. 
B) The larger the volume of assets and deposits in relation to the capital contribution of the stockholders, the larger the margin of safety for depositors. 
C) Capital funds include capital stock, surplus, and undivided profits. 
D) All the above statements are correct.

Question 5

_______________ provide loans directly to consumers and businesses or aid individuals in obtaining financing of durable goods and homes, whereas ______________ originate mortgage loans on homes and other real property by bringing together borrowers and institutional investors.

Accepted Answer

A) thrift institutions, savings and loans 
B) thrift institutions, mortgage banking firms 
C) property brokers, savings and loans 
D) property brokers, mortgage banking firms 
E) none of the above 
A) thrift institutions, savings and loans 
B) thrift institutions, mortgage banking firms 
C) property brokers, savings and loans 
D) property brokers, mortgage banking firms 
E) none of the above

Question 6

The effective rate of interest is generally lower on a standard loan than an otherwise equivalent discount loan.

Accepted Answer

A) True 
 B)False

Question 7

__________________ collect premiums on insurance policies and employee/employer contributions from pension fund participants and provide retirement benefits and insurance against major financial losses.

Accepted Answer

A) Banks 
B) Personal service firms 
C) Investment banking firms 
D) Brokerage firms 
E) none of the above 
A) Banks 
B) Personal service firms 
C) Investment banking firms 
D) Brokerage firms 
E) none of the above

Question 8

Investment banks accept deposits and makes loans to individuals and businesses.

Accepted Answer

A) True 
 B)False

Question 9

Legislation that provided for the separation of commercial banking and investment banking activities in the United States is called

Accepted Answer

A) Garn-St.Germain Depository Institutions Act 
B) Glass-Steagall Act 
C) Hunt Commission legislation 
D) Depository Institutions Deregulation and Monetary Control Act 
A) Garn-St.Germain Depository Institutions Act 
B) Glass-Steagall Act 
C) Hunt Commission legislation 
D) Depository Institutions Deregulation and Monetary Control Act

Question 10

Early chartered banks included:

Accepted Answer

A) the Bank of North America 
B) the Bank of Massachusetts 
C) the Bank of New York 
D) All the above 
A) the Bank of North America 
B) the Bank of Massachusetts 
C) the Bank of New York 
D) All the above

Question 11

The Bank of North America:

Accepted Answer

A) was the first incorporated bank in the United States 
B) was patterned after the Central Bank of England 
C) was established to assist in financing the Civil War 
D) all the above 
E) none of the above 
A) was the first incorporated bank in the United States 
B) was patterned after the Central Bank of England 
C) was established to assist in financing the Civil War 
D) all the above 
E) none of the above

Question 12

Primary capital consists of owners' capital, preferred stock, debt convertible into common stock, and loan loss reserves.

Accepted Answer

A) True 
 B)False

Question 13

_______________ sell or market new securities issued by businesses to individual and institutional investors, whereas ______________ firms assist individuals who want to purchase new or existing securities issues or who want to sell previously purchased securities.

Accepted Answer

A) Brokerage firms, investment banks 
B) Investment banks, savings banks 
C) savings banks, investment banks 
D) Brokerage firms, savings banks 
E) none of the above 
A) Brokerage firms, investment banks 
B) Investment banks, savings banks 
C) savings banks, investment banks 
D) Brokerage firms, savings banks 
E) none of the above

Question 14

__________________ are the two important forms of contractual savings organizations.

Accepted Answer

A) Insurance companies and brokerage firms 
B) banks and insurance companies 
C) Investment banks and pension funds 
D) Pension funds and brokerage firms 
E) none of the above 
A) Insurance companies and brokerage firms 
B) banks and insurance companies 
C) Investment banks and pension funds 
D) Pension funds and brokerage firms 
E) none of the above

Question 15

A ________ which is a security backed by mortgage-backed securities could be "sliced and diced" into different "tranches" are parts such that the different parts would appeal to different investors.

Accepted Answer

A) MPO 
B) CDO 
C) MDS 
D) MDO 
E) none of the above 
A) MPO 
B) CDO 
C) MDS 
D) MDO 
E) none of the above

Question 16

Another name for an open-end investment company is a:

Accepted Answer

A) brokerage firm 
B) finance company 
C) mutual fund 
D) investment bank 
A) brokerage firm 
B) finance company 
C) mutual fund 
D) investment bank

Question 17

Capital notes:

Accepted Answer

A) are the prime assets of commercial banks 
B) reflect long-term of a bank for purposes of bolstering the equity of the bank 
C) current investments of a bank 
D) none of the above 
A) are the prime assets of commercial banks 
B) reflect long-term of a bank for purposes of bolstering the equity of the bank 
C) current investments of a bank 
D) none of the above

Question 18

The most basic functions of depository institutions are:

Accepted Answer

A) safekeeping for depositors 
B) record keeping for depositors 
C) efficient and economical transfer of payments 
D) accepting deposits and granting loans 
A) safekeeping for depositors 
B) record keeping for depositors 
C) efficient and economical transfer of payments 
D) accepting deposits and granting loans

Question 19

The prime rate of interest has been relatively stable during the past twenty-five years.

Accepted Answer

A) True 
 B)False

Question 20

Credit risk is the likelihood that a bank will be unable to meet depositor withdrawal demands and other liabilities when due.

Accepted Answer

A) True 
 B)False

Commercial banks accept deposits and makes loans to individuals and businesses.

Major types of financial institutions include all of the following EXCEPT:

The bank holding company may not engage in direct banking activities.

Which of the following statements is false?

_ provide loans directly to consumers and businesses or aid individuals in obtaining financing of durable goods and homes, whereas originate mortgage loans on homes and other real property by bringing together borrowers and institutional investors.

The effective rate of interest is generally lower on a standard loan than an otherwise equivalent discount loan.

__________________ collect premiums on insurance policies and employee/employer contributions from pension fund participants and provide retirement benefits and insurance against major financial losses.

Investment banks accept deposits and makes loans to individuals and businesses.

Legislation that provided for the separation of commercial banking and investment banking activities in the United States is called

Early chartered banks included:

The Bank of North America:

Primary capital consists of owners' capital, preferred stock, debt convertible into common stock, and loan loss reserves.

_ sell or market new securities issued by businesses to individual and institutional investors, whereas firms assist individuals who want to purchase new or existing securities issues or who want to sell previously purchased securities.

__________________ are the two important forms of contractual savings organizations.

A ________ which is a security backed by mortgage-backed securities could be "sliced and diced" into different "tranches" are parts such that the different parts would appeal to different investors.

Another name for an open-end investment company is a:

Capital notes:

The most basic functions of depository institutions are:

The prime rate of interest has been relatively stable during the past twenty-five years.

Credit risk is the likelihood that a bank will be unable to meet depositor withdrawal demands and other liabilities when due.

The Financial Environment

Money and the Monetary System

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 3: Banks and Other Financial Institutions

Commercial banks accept deposits and makes loans to individuals and businesses.

Major types of financial institutions include all of the following EXCEPT:

The bank holding company may not engage in direct banking activities.

Which of the following statements is false?

_______________ provide loans directly to consumers and businesses or aid individuals in obtaining financing of durable goods and homes, whereas ______________ originate mortgage loans on homes and other real property by bringing together borrowers and institutional investors.

The effective rate of interest is generally lower on a standard loan than an otherwise equivalent discount loan.

__________________ collect premiums on insurance policies and employee/employer contributions from pension fund participants and provide retirement benefits and insurance against major financial losses.

Investment banks accept deposits and makes loans to individuals and businesses.

Legislation that provided for the separation of commercial banking and investment banking activities in the United States is called

Early chartered banks included:

The Bank of North America:

Primary capital consists of owners' capital, preferred stock, debt convertible into common stock, and loan loss reserves.

_______________ sell or market new securities issued by businesses to individual and institutional investors, whereas ______________ firms assist individuals who want to purchase new or existing securities issues or who want to sell previously purchased securities.

__________________ are the two important forms of contractual savings organizations.

A ________ which is a security backed by mortgage-backed securities could be "sliced and diced" into different "tranches" are parts such that the different parts would appeal to different investors.

Another name for an open-end investment company is a:

Capital notes:

The most basic functions of depository institutions are:

The prime rate of interest has been relatively stable during the past twenty-five years.

Credit risk is the likelihood that a bank will be unable to meet depositor withdrawal demands and other liabilities when due.

The Financial Environment

Money and the Monetary System

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

_ provide loans directly to consumers and businesses or aid individuals in obtaining financing of durable goods and homes, whereas originate mortgage loans on homes and other real property by bringing together borrowers and institutional investors.

_ sell or market new securities issued by businesses to individual and institutional investors, whereas firms assist individuals who want to purchase new or existing securities issues or who want to sell previously purchased securities.