Question 1

The Glass-Steagall Act was repealed with the passage of the Gramm-Leach-Bliley Act of 1999.

Accepted Answer

A) True 
 B)False

Question 2

Credit unions are cooperative nonprofit organizations that exist primarily to provide member depositors with consumer credit.

Accepted Answer

A) True 
 B)False

Question 3

The first thrift institutions were:

Accepted Answer

A) The First and Second Banks of the United States 
B) savings banks and Savings and Loans 
C) credit unions 
D) all the above 
A) The First and Second Banks of the United States 
B) savings banks and Savings and Loans 
C) credit unions 
D) all the above

Question 4

Legislation that permits depository institutions to compete with money market mutual funds on an equal basis with respect to interest rates offered to investors is the:

Accepted Answer

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

Question 5

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

Accepted Answer

A) commercial banks 
B) pension funds 
C) insurance companies 
D) brokerage firms 
A) commercial banks 
B) pension funds 
C) insurance companies 
D) brokerage firms

Question 6

Which of the following is not an asset of depository institutions?

Accepted Answer

A) cash 
B) unsecured loans 
C) time deposits 
D) U.S.government securities 
A) cash 
B) unsecured loans 
C) time deposits 
D) U.S.government securities

Question 7

The principal assets of banks do not include:

Accepted Answer

A) cash 
B) loans 
C) time deposits 
D) securities owned 
A) cash 
B) loans 
C) time deposits 
D) securities owned

Question 8

Today, reserve requirements imposed by the Federal Reserve apply only to member banks.

Accepted Answer

A) True 
 B)False

Question 9

Mutual funds are open-end investment companies that can issue an unlimited number of shares to its investors and use the pooled proceeds to purchase corporate and government securities.

Accepted Answer

A) True 
 B)False

Question 10

A(n) _______________ mortgage is a home loan made to a borrower with a relatively low credit score indicating the likelihood that loan payments might be missed when due.

Accepted Answer

A) adjustable rate 
B) subprime 
C) credit swap 
D) high performance 
E) none of the above 
A) adjustable rate 
B) subprime 
C) credit swap 
D) high performance 
E) none of the above

Question 11

An organization that received contributions from employees and/or their employers and invests the proceeds on behalf of the employees for use during their retirement years is called a (n)

Accepted Answer

A) mutual fund 
B) savings bank 
C) pension fund 
D) retirement fund 
A) mutual fund 
B) savings bank 
C) pension fund 
D) retirement fund

Question 12

Credit risk is the chance of nonpayment or delayed payment of interest or principal.

Accepted Answer

A) True 
 B)False

Question 13

Bank solvency 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

Question 14

Bank solvency reflects the ability to meet depositor withdrawals and to pay off other liabilities when due.

Accepted Answer

A) True 
 B)False

Question 15

The Depository Institutions Deregulation and Monetary Control Act of 1980 did not:

Accepted Answer

A) eliminate all Regulation Q requirements 
B) allow all depository institutions to borrow from the Fed on the same basis 
C) increase federal deposit insurance 
D) amend the Home Owner's Loan Act of 1993 
A) eliminate all Regulation Q requirements 
B) allow all depository institutions to borrow from the Fed on the same basis 
C) increase federal deposit insurance 
D) amend the Home Owner's Loan Act of 1993

Question 16

Which of the following institutions is not part of the modern banking system?

Accepted Answer

A) credit unions 
B) savings and loan associations 
C) mutual funds 
D) mutual savings banks 
A) credit unions 
B) savings and loan associations 
C) mutual funds 
D) mutual savings banks

Question 17

The likelihood that borrowers are ill and would not be able to make interest and principal payments is an example of:

Accepted Answer

A) interest rate risk 
B) credit risk 
C) liquidity risk 
D) capital adequacy risk 
A) interest rate risk 
B) credit risk 
C) liquidity risk 
D) capital adequacy risk

Question 18

The item on the liabilities and equity section of a bank's balance sheet that represents the smallest proportion of bank's assets is:

Accepted Answer

A) deposits 
B) owner's capital 
C) securities 
D) federal funds 
A) deposits 
B) owner's capital 
C) securities 
D) federal funds

Question 19

The Garn-St.Germain Depository Institutions Act, among other things:

Accepted Answer

A) extended the Fed's control to thrift institutions and to commercial banks that are not members of the Fed 
B) enabled depository institutions to issue money market accounts with no regulated interest rate ceiling 
C) was designed to assist the investment banking industry 
D) all the above 
A) extended the Fed's control to thrift institutions and to commercial banks that are not members of the Fed 
B) enabled depository institutions to issue money market accounts with no regulated interest rate ceiling 
C) was designed to assist the investment banking industry 
D) all the above

Question 20

Which of the following statements is most correct?

Accepted Answer

A) FDIC membership is required only for banks having national charter. 
B) The First Bank of the United States was the first incorporated bank created along modern banking lines. 
C) Secured loans represent the single most important activity of the commercial bank. 
D) All the above statements are false. 
A) FDIC membership is required only for banks having national charter. 
B) The First Bank of the United States was the first incorporated bank created along modern banking lines. 
C) Secured loans represent the single most important activity of the commercial bank. 
D) All the above statements are false.

The Glass-Steagall Act was repealed with the passage of the Gramm-Leach-Bliley Act of 1999.

Credit unions are cooperative nonprofit organizations that exist primarily to provide member depositors with consumer credit.

The first thrift institutions were:

Legislation that permits depository institutions to compete with money market mutual funds on an equal basis with respect to interest rates offered to investors is the:

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

Which of the following is not an asset of depository institutions?

The principal assets of banks do not include:

Today, reserve requirements imposed by the Federal Reserve apply only to member banks.

Mutual funds are open-end investment companies that can issue an unlimited number of shares to its investors and use the pooled proceeds to purchase corporate and government securities.

A(n) _______________ mortgage is a home loan made to a borrower with a relatively low credit score indicating the likelihood that loan payments might be missed when due.

An organization that received contributions from employees and/or their employers and invests the proceeds on behalf of the employees for use during their retirement years is called a (n)

Credit risk is the chance of nonpayment or delayed payment of interest or principal.

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

Bank solvency reflects the ability to meet depositor withdrawals and to pay off other liabilities when due.

The Depository Institutions Deregulation and Monetary Control Act of 1980 did not:

Which of the following institutions is not part of the modern banking system?

The likelihood that borrowers are ill and would not be able to make interest and principal payments is an example of:

The item on the liabilities and equity section of a bank's balance sheet that represents the smallest proportion of bank's assets is:

The Garn-St.Germain Depository Institutions Act, among other things:

Which of the following statements is most correct?

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

The Glass-Steagall Act was repealed with the passage of the Gramm-Leach-Bliley Act of 1999.

Credit unions are cooperative nonprofit organizations that exist primarily to provide member depositors with consumer credit.

The first thrift institutions were:

Legislation that permits depository institutions to compete with money market mutual funds on an equal basis with respect to interest rates offered to investors is the:

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

Which of the following is not an asset of depository institutions?

The principal assets of banks do not include:

Today, reserve requirements imposed by the Federal Reserve apply only to member banks.

Mutual funds are open-end investment companies that can issue an unlimited number of shares to its investors and use the pooled proceeds to purchase corporate and government securities.

A(n) _______________ mortgage is a home loan made to a borrower with a relatively low credit score indicating the likelihood that loan payments might be missed when due.

An organization that received contributions from employees and/or their employers and invests the proceeds on behalf of the employees for use during their retirement years is called a (n)

Credit risk is the chance of nonpayment or delayed payment of interest or principal.

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

Bank solvency reflects the ability to meet depositor withdrawals and to pay off other liabilities when due.

The Depository Institutions Deregulation and Monetary Control Act of 1980 did not:

Which of the following institutions is not part of the modern banking system?

The likelihood that borrowers are ill and would not be able to make interest and principal payments is an example of:

The item on the liabilities and equity section of a bank's balance sheet that represents the smallest proportion of bank's assets is:

The Garn-St.Germain Depository Institutions Act, among other things:

Which of the following statements is most correct?

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