Question 1

Which of the following is a key factor that organizers of a proposed new bank use in evaluating their investment opportunity?

Accepted Answer

A) The level and growth of economic activity 
B) The need for a new financial firm 
C) Management quality 
D) Pledging of capital required to cover all costs of getting started 
E) All of the options are correct.

Question 2

In the short-term,newly-chartered banks fail at:

Accepted Answer

A) a lower rate than established banks. 
B) the same rate as established banks. 
C) a higher rate than established banks. 
D) a higher rate than non-chartered banks. 
E) a lower rate than non-chartered banks.

Question 3

A group of six investors wants to open a new bank.In their application to the Comptroller of the Currency,they discuss that there are six banks already existing in the community and that the largest of these has just acquired one of the smaller banks.These six banks do a moderate amount of advertising in the community.There is also one credit union that has one office and a savings bank that has two branches on the east side of town.Growth in the community is to the west.Which decision factor are the investors discussing for seeking a new charter?

Accepted Answer

A) The level of economic activity in the community 
B) The growth of economic activity in the community 
C) The need for additional advertising in the community 
D) The strength and character of the local competition 
E) None of the options are correct

Question 4

A group of six investors wants to open a new bank in the community of Edmond,Oklahoma.It has submitted the application to the Comptroller of the Currency.Which of the following would best describe the nature of the bank?

Accepted Answer

A) A state,member bank 
B) A state,insured bank 
C) A national bank 
D) A national bank without FDIC insurance 
E) None of the options are correct

Question 5

A majority of new banks do not become profitable for at least a decade.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following factor(s)does OCC assess during the application process for a national bank charter?

Accepted Answer

A) Market demand 
B) Probable customer base 
C) Competition and economic conditions 
D) Inherent risks in the services to be offered to the public 
E) All of the options are correct

Question 7

Most U.S.banks are chartered in urban areas.

Accepted Answer

A) True 
 B)False

Question 8

______________________ is demonstrated by organizers of new banks by showing that local banks are not conveniently located or fail to offer some key services.

Accepted Answer

The answer of ______________________ is demonstrated by organizers of new...

Question 9

Ratio of population per branch is calculated as:

Accepted Answer

A) total population in the area to be served divided by number of branch offices present in the area. 
B) total population in the state divided by number of branch offices present in the area. 
C) total population in the state divided by number of branch expected to be opened in next one year. 
D) total population in the area to be served divided by number of employees hired for the new branch office. 
E) None of the options are correct

Question 10

ATMs are profitable for all banks since they can eliminate tellers at branches that have ATMs.

Accepted Answer

A) True 
 B)False

Question 11

The Fred National Bank is planning to add a branch office on the west side of town.The bank has done a survey and has discovered that the mean household income in the area is $76,000 per year.Which factor would this address when considering whether to add a new branch?

Accepted Answer

A) Number of retail shops 
B) Average income level of households 
C) Ratio of population to branches 
D) Number of service facilities operated by financial service competitors 
E) Population density

Question 12

A(n)______________________ is a full service facility which offers many of the same services as the home or main office of a bank.

Accepted Answer

The answer of A(n)______________________ is a full service facility which...

Question 13

Under the feasibility standard adopted by the Comptroller of the Currency,applicants for a national bank charter are required to submit _____________,which contains a description of the proposed bank and its marketing,management,and financial plans.

Accepted Answer

A) memorandum of association 
B) articles of association 
C) a business plan 
D) a merger plan 
E) a contingency plan

Question 14

The total number of full-service branch offices has declined in the United States in recent years.

Accepted Answer

A) True 
 B)False

Question 15

Most new banks are situated along major routes of travel for commuters going to work,shopping areas,and schools.

Accepted Answer

A) True 
 B)False

Question 16

"Public need" is usually established with federal or state chartering authorities by showing that existing banks in the area are adequately profitable and have satisfactory amounts of capital.

Accepted Answer

A) True 
 B)False

Question 17

Increases in ______________ ratios tend to reduce new chartering activities in a particular region.

Accepted Answer

A) gross NPA 
B) net NPA 
C) liquidity 
D) concentration 
E) net interest margin

Question 18

The existence of branch banking in a given state:

Accepted Answer

A) encourages new banks to be chartered. 
B) discourages new banks from being chartered. 
C) results in more bank failures than normal. 
D) results in lower operating cost per unit of service. 
E) None of the options are correct

Question 19

A bank is planning to set up a new branch.It expects the new branch to generate 20 percent of the total business of the bank after it is opened.The bank expects the returns on this branch to be 15 percent with a standard deviation of 5 percent.Currently the bank has a 12 percent rate of return with a standard deviation of 4 percent.The correlation between the returns on the new branch and the bank's current returns is expected to be 0.25.What is the bank's expected standard deviation after adding this branch?

Accepted Answer

A) 12.84 percent 
B) 3.35 percent 
C) 4.36 percent 
D) 3.58 percent 
E) 6.8 percent

Question 20

Computer facilities in retail shops and stores that permit a customer to instantly pay for goods and services electronically by deducting the cost of each purchase directly from his or her deposit account are known as:

Accepted Answer

A) ATMs. 
B) POS terminals. 
C) ACHs. 
D) In-store branches. 
E) ALMs.

Exam 4: Establishing New Banks, Branches, ATMs, Telephone Services, and Websites

Which of the following is a key factor that organizers of a proposed new bank use in evaluating their investment opportunity?

In the short-term,newly-chartered banks fail at:

A group of six investors wants to open a new bank in the community of Edmond,Oklahoma.It has submitted the application to the Comptroller of the Currency.Which of the following would best describe the nature of the bank?

A majority of new banks do not become profitable for at least a decade.

Which of the following factor(s) does OCC assess during the application process for a national bank charter?

Most U.S.banks are chartered in urban areas.

______________________ is demonstrated by organizers of new banks by showing that local banks are not conveniently located or fail to offer some key services.

Ratio of population per branch is calculated as:

ATMs are profitable for all banks since they can eliminate tellers at branches that have ATMs.

The Fred National Bank is planning to add a branch office on the west side of town.The bank has done a survey and has discovered that the mean household income in the area is $76,000 per year.Which factor would this address when considering whether to add a new branch?

A(n)______________________ is a full service facility which offers many of the same services as the home or main office of a bank.

Under the feasibility standard adopted by the Comptroller of the Currency,applicants for a national bank charter are required to submit _____________,which contains a description of the proposed bank and its marketing,management,and financial plans.

The total number of full-service branch offices has declined in the United States in recent years.

Most new banks are situated along major routes of travel for commuters going to work,shopping areas,and schools.

"Public need" is usually established with federal or state chartering authorities by showing that existing banks in the area are adequately profitable and have satisfactory amounts of capital.

Increases in ______________ ratios tend to reduce new chartering activities in a particular region.

The existence of branch banking in a given state:

Computer facilities in retail shops and stores that permit a customer to instantly pay for goods and services electronically by deducting the cost of each purchase directly from his or her deposit account are known as: