Question 1

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

Question 2

What financial innovations helped banks to get around the bank branching restrictions of the McFadden Act?

Accepted Answer

The answer of What financial innovations helped banks to get...

Question 3

Nationwide banking might reduce bank failures due to

Accepted Answer

A)  reduced competition. 
B)  reduced lending to small businesses. 
C)  diversification of loan portfolios across state lines. 
D)  elimination of community banks.

Question 4

The most significant change in the economic environment that changed the demand for financial products in recent years has been

Accepted Answer

A)  the aging of the baby-boomer generation. 
B)  the dramatic increase in the volatility of interest rates. 
C)  the dramatic increase in competition from foreign banks. 
D)  the deregulation of financial institutions.

Question 5

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

Accepted Answer

A)  created a banking system of state-chartered banks. 
B)  established the Office of the Comptroller of the Currency. 
C)  broadened the regulatory powers of the Federal Reserve. 
D)  created insurance on deposit accounts.

Question 6

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 state banks that are members of the Federal Reserve System. 
B)  The Federal Reserve and the state banking authorities jointly have responsibility for the 900 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)  The state banking authorities have sole regulatory responsibility for all state banks.

Question 7

Eurodollars are

Accepted Answer

A)  dollar-dominated deposits held in banks outside the United States. 
B)  deposits held by U.S. banks in Europe. 
C)  deposits held by U.S. banks in foreign countries. 
D)  dollar-dominated deposits held in U.S. banks by Europeans.

Question 8

In a ________ banking system,commercial banks engage in securities underwriting,but legal subsidiaries conduct the different activities.Also,banking and insurance are not typically undertaken together in this system.

Accepted Answer

A)  universal 
B)  British-style universal 
C)  short-fence 
D)  compartmentalized

Question 9

With the creation of the Federal Deposit Insurance Corporation,

Accepted Answer

A)  member banks of the Federal Reserve System were given the option to purchase FDIC insurance for their depositors, while non-member commercial banks were required to buy deposit insurance. 
B)  member banks of the Federal Reserve System were required to purchase FDIC insurance for their depositors, while non-member commercial banks could choose to buy deposit insurance. 
C)  both member and non-member banks of the Federal Reserve System were required to purchase FDIC insurance for their depositors. 
D)  both member and non-member banks of the Federal Reserve System could choose, but were not required, to purchase FDIC insurance for their depositors.

Question 10

Under the Gramm-Leach-Bliley Act states retain regulatory authority over

Accepted Answer

A)  bank holding companies. 
B)  securities activities. 
C)  insurance activities. 
D)  bank subsidiaries engaged in securities underwriting.

Question 11

Prior to 1980,the Fed set an interest rate ________,a maximum limit,on the interest rate that could be paid on time deposits.

Accepted Answer

A)  floor 
B)  ceiling 
C)  wall 
D)  window

Question 12

The process in which people take their funds out of the banking system seeking higher-yielding securities is called

Accepted Answer

A)  capital mobility. 
B)  loophole mining. 
C)  disintermediation. 
D)  deposit jumping.

Question 13

A disadvantage of virtual banks (clicks)is that

Accepted Answer

A)  their hours are more limited than physical banks. 
B)  they are less convenient than physical banks. 
C)  they are more costly to operate than physical banks. 
D)  customers worry about the security of on-line transactions.

Question 14

Automated teller machines

Accepted Answer

A)  are more costly to use than human tellers, so banks discourage their use by charging more for use of ATMs. 
B)  cost about the same to use as human tellers in banks, so banks discourage their use by charging more for use of ATMs. 
C)  cost less than human tellers, so banks may encourage their use by charging less for using ATMs. 
D)  cost nothing to use, so banks provide their services free of charge.

Exam 12: Banking Industry: Structure and Competition

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