Question 1

Economies of scale refers fall in an FI's average costs of production as its output increases.

Accepted Answer

A) True 
 B)False

Question 2

To provide retail financial services, FIs need continuously update and integrate their technology infrastructure.Discuss the specific technological advances FIs must deal with.

Accepted Answer

1.Integration of online, mobile, and tab

Question 3

Which of the following sources of operational risk are internally controllable by FI management?

Accepted Answer

A) technology 
B) employees 
C) customer relationships 
D) All of the listed options are correct. 
A) technology 
B) employees 
C) customer relationships 
D) All of the listed options are correct.

Question 4

Losses on technological innovations and new technology could weaken an FI because scarce capital resources were invested in value-decreasing projects.

Accepted Answer

A) True 
 B)False

Question 5

To offset costs arising from operational risks, FI managers spend considerable efforts on the following:

Accepted Answer

A) loss prevention, loss control, loss financing and loss insulation 
B) loss prevention, loss control, loss investment and loss insulation 
C) loss provisioning, loss control, loss financing and loss insulation 
D) loss prevention, loss control, loss financing and loss creation 
A) loss prevention, loss control, loss financing and loss insulation 
B) loss prevention, loss control, loss investment and loss insulation 
C) loss provisioning, loss control, loss financing and loss insulation 
D) loss prevention, loss control, loss financing and loss creation

Question 6

Which of the following observations concerning the production approach is true?

Accepted Answer

A) It views FIs' outputs of services as having three underlying inputs. 
B) Labour and capital are the only inputs. 
C) It views the output as being produced by labour, capital and the funds used to produce intermediated services. 
D) Deposit costs are viewed as an input in the banking and non-banking deposit institutions. 
A) It views FIs' outputs of services as having three underlying inputs. 
B) Labour and capital are the only inputs. 
C) It views the output as being produced by labour, capital and the funds used to produce intermediated services. 
D) Deposit costs are viewed as an input in the banking and non-banking deposit institutions.

Question 7

Diseconomies of scale refers to the:

Accepted Answer

A) fall in an FI's average costs of production as its output decreases 
B) fall in an FI's average costs of production as its output increases 
C) fall in an FI's average costs of production as its output remains stable 
D) increase in an FI's average costs of production as its output increases 
A) fall in an FI's average costs of production as its output decreases 
B) fall in an FI's average costs of production as its output increases 
C) fall in an FI's average costs of production as its output remains stable 
D) increase in an FI's average costs of production as its output increases

Question 8

Which of the following statements is false?

Accepted Answer

A) Regulations can affect the profitability of technological innovations. 
B) Regulations can hinder the rate and types of innovations. 
C) Typical regulations include caps on loan rates such as usury ceilings. 
D) Regulations are predominantly implemented to enhance FIs' profitability. 
A) Regulations can affect the profitability of technological innovations. 
B) Regulations can hinder the rate and types of innovations. 
C) Typical regulations include caps on loan rates such as usury ceilings. 
D) Regulations are predominantly implemented to enhance FIs' profitability.

Question 9

Cost inefficiencies related to managerial performance and other hard-to-quantify factors are also called X-inefficiencies.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is consistent with economies of scope? The subscript 'b' refers to a banking firm, 's' for a securities firm, 'AC' is average costs and 'TC' is total costs.

Accepted Answer

A) ACb+s > ACb + ACs 
B) ACb+s = ACb + ACs 
C) ACb+s b + ACs 
D) TCb+s b + TCs 
A) ACb+s > ACb + ACs 
B) ACb+s = ACb + ACs 
C) ACb+s b + ACs 
D) TCb+s b + TCs

Question 11

The term daylight overdraft refers to a situation in which an FI's reserve account at the central bank is negative at the end of a banking day.

Accepted Answer

A) True 
 B)False

Question 12

The term daylight overdraft refers to a situation in which an FI's:

Accepted Answer

A) reserve account at the central bank is negative at the end of a banking day 
B) reserve account at the central bank is negative at the beginning of a banking day 
C) reserve account at the central bank becomes negative within the banking day 
D) account with another FI becomes negative within the banking day 
A) reserve account at the central bank is negative at the end of a banking day 
B) reserve account at the central bank is negative at the beginning of a banking day 
C) reserve account at the central bank becomes negative within the banking day 
D) account with another FI becomes negative within the banking day

Question 13

Which of the following statements is true?

Accepted Answer

A) The profitability of any product innovation is negatively related to the size of the stream of expected net cash flows from selling the services. 
B) The profitability of any product innovation is positively related to the size of the stream of expected net cash flows from selling the services. 
C) The profitability of any product innovation is unrelated to the size of the stream of expected net cash flows from selling the services. 
D) The relationship depends on the FI's individual situation. 
A) The profitability of any product innovation is negatively related to the size of the stream of expected net cash flows from selling the services. 
B) The profitability of any product innovation is positively related to the size of the stream of expected net cash flows from selling the services. 
C) The profitability of any product innovation is unrelated to the size of the stream of expected net cash flows from selling the services. 
D) The relationship depends on the FI's individual situation.

Question 14

Which of the following observations concerning the intermediation approach is true?

Accepted Answer

A) The intermediation approach views FIs' outputs of services as having two underlying inputs. 
B) Labour and capital are the only inputs. 
C) The intermediation approach views the output as being produced by labour, capital and the funds used to produce intermediated services. 
D) Premiums or reserves are viewed as an input in the banking and thrift industries. 
A) The intermediation approach views FIs' outputs of services as having two underlying inputs. 
B) Labour and capital are the only inputs. 
C) The intermediation approach views the output as being produced by labour, capital and the funds used to produce intermediated services. 
D) Premiums or reserves are viewed as an input in the banking and thrift industries.

Question 15

Smart cards allow customers to:

Accepted Answer

A) spend money for various transactions, whereby the transaction value will be directly debited from the customer's account 
B) store and spend money for various transactions using a card that has a chip-storage device 
C) spend money for various transactions without having to pay the balance until a pre-set due date 
D) access their funds overseas 
A) spend money for various transactions, whereby the transaction value will be directly debited from the customer's account 
B) store and spend money for various transactions using a card that has a chip-storage device 
C) spend money for various transactions without having to pay the balance until a pre-set due date 
D) access their funds overseas

Question 16

Which of the following statements is true?

Accepted Answer

A) Exchange settlement accounts allow each FI to have settlement for transactions that occur by the adjustment of credit balances held with the central bank. 
B) The central bank acts purely as a settlement agent. 
C) The central bank is not exposed to any credit risk. 
D) All of the listed options are correct. 
A) Exchange settlement accounts allow each FI to have settlement for transactions that occur by the adjustment of credit balances held with the central bank. 
B) The central bank acts purely as a settlement agent. 
C) The central bank is not exposed to any credit risk. 
D) All of the listed options are correct.

Question 17

Inputs such as capital and labour cannot be jointly used by FIs.

Accepted Answer

A) True 
 B)False

Economies of scale refers fall in an FI's average costs of production as its output increases.

To provide retail financial services, FIs need continuously update and integrate their technology infrastructure.Discuss the specific technological advances FIs must deal with.

Which of the following sources of operational risk are internally controllable by FI management?

Losses on technological innovations and new technology could weaken an FI because scarce capital resources were invested in value-decreasing projects.

To offset costs arising from operational risks, FI managers spend considerable efforts on the following:

Which of the following observations concerning the production approach is true?

Diseconomies of scale refers to the:

Which of the following statements is false?

Cost inefficiencies related to managerial performance and other hard-to-quantify factors are also called X-inefficiencies.

Which of the following is consistent with economies of scope? The subscript 'b' refers to a banking firm, 's' for a securities firm, 'AC' is average costs and 'TC' is total costs.

The term daylight overdraft refers to a situation in which an FI's reserve account at the central bank is negative at the end of a banking day.

The term daylight overdraft refers to a situation in which an FI's:

Which of the following statements is true?

Which of the following observations concerning the intermediation approach is true?

Smart cards allow customers to:

Which of the following statements is true?

Inputs such as capital and labour cannot be jointly used by FIs.

Why Are Financial Institutions Special

The Financial Service Industry: Depository Institutions

The Financial Service Industry: Other Financial Institutions

Risks of Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: the Duration Model

Managing Interest Rate Risk Using Off-Balance-Sheet Instruments

Managing Interest Rate Risk Using Securitisation

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Sovereign Risk

Foreign Exchange Risk

Liquidity Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Capital Management and Adequacy

Filters

Exam 17: Technology and Other Operational Risks

Economies of scale refers fall in an FI's average costs of production as its output increases.

To provide retail financial services, FIs need continuously update and integrate their technology infrastructure.Discuss the specific technological advances FIs must deal with.

Which of the following sources of operational risk are internally controllable by FI management?

Losses on technological innovations and new technology could weaken an FI because scarce capital resources were invested in value-decreasing projects.

To offset costs arising from operational risks, FI managers spend considerable efforts on the following:

Which of the following observations concerning the production approach is true?

Diseconomies of scale refers to the:

Which of the following statements is false?

Cost inefficiencies related to managerial performance and other hard-to-quantify factors are also called X-inefficiencies.

Which of the following is consistent with economies of scope? The subscript 'b' refers to a banking firm, 's' for a securities firm, 'AC' is average costs and 'TC' is total costs.

The term daylight overdraft refers to a situation in which an FI's reserve account at the central bank is negative at the end of a banking day.

The term daylight overdraft refers to a situation in which an FI's:

Which of the following statements is true?

Which of the following observations concerning the intermediation approach is true?

Smart cards allow customers to:

Which of the following statements is true?

Inputs such as capital and labour cannot be jointly used by FIs.

Why Are Financial Institutions Special

The Financial Service Industry: Depository Institutions

The Financial Service Industry: Other Financial Institutions

Risks of Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: the Duration Model

Managing Interest Rate Risk Using Off-Balance-Sheet Instruments

Managing Interest Rate Risk Using Securitisation

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Sovereign Risk

Foreign Exchange Risk

Liquidity Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Capital Management and Adequacy

Filters