Question 1

In an attempt to enhance the net social welfare benefits of the services provided by financial intermediaries,safety and soundness regulation requires a DI to hold a minimum level of cash reserves against deposits.

Accepted Answer

A) True 
 B)False

Question 2

The savings association industry continues to be the primary lender of residential mortgages.

Accepted Answer

A) True 
 B)False

Question 3

The securitization of mortgages involves the pooling of mortgage loans for sale in the financial markets.

Accepted Answer

A) True 
 B)False

Question 4

Currently (2015)J.P.Morgan Chase is the largest bank holding company in the world and operations in 60 countries.

Accepted Answer

A) True 
 B)False

Question 5

The movement of an off-balance-sheet asset or liability to an on-balance-sheet item is dependent on the occurrence of a contingent event.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following observations concerning trust departments is true?

Accepted Answer

A) They are found only among smaller community banks. 
B) Only the largest banks have sufficient staff to offer trust services. 
C) They provide banking services to other banks. 
D) Pension fund assets are the largest category of assets managed by trust departments.

Question 7

Although growing,the notional value of bank OBS activities remained less than the value of on-balance-sheet activities as of mod-2015.

Accepted Answer

A) True 
 B)False

Question 8

If a household invests in corporate securities and does not supervise how the funds are invested or used by the corporation,the risk of not earning the desired return or not having the funds returned increase.

Accepted Answer

A) True 
 B)False

Question 9

Negative externalities exist in the depository sector when

Accepted Answer

A) the fear of DI insolvency leads to bank deposit runs. 
B) lending activity is impaired or constrained. 
C) there are delays in disbursements from insolvent DIs. 
D) banks that are healthy suffer when another bank nears insolvency. 
E) All of the options.

Question 10

Real estate loans comprise approximately ______ percent of large commercial banks' (assets greater than $1 billion)loan portfolio.

Accepted Answer

A) 46 
B) 32 
C) 75.5 
D) 63

Question 11

By converting to a bank holding company,an investment bank gains access to Federal Reserve lending facilities.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following measures the difference between the private costs of regulations and the private benefits of those regulations for the producers of financial services?

Accepted Answer

A) Capital adequacy. 
B) Agency costs. 
C) Net regulatory burden. 
D) Charter value.

Question 13

Unfairly excluding some potential financial service consumers from the financial services marketplace is a reason why FIs must absorb net regulatory burden.

Accepted Answer

A) True 
 B)False

Question 14

For the following problems, choose among the following major banking laws.
-This legislation replaced FSLIC with FDIC-SAIF.

Accepted Answer

A) The McFadden Act of 1927 
B) The Glass-Steagall Act of 1933 
C) The Depository Institutions Deregulation and Monetary Control Act (DIDMC
A)  of 1980 
D) The Garn-St Germain Depository Institutions Act (DI
A)  of 1982 
E) The Competitive Equality in Banking Act (CEB
A)  of 1987
F)The Financial Institutions Reform, Recovery, and Enforcement Act (FIRRE
A)  of 1989
G)The Federal Deposit Insurance Corporation Improvement Act (FDICI
A)  of 1991
H)The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
I)Financial Services Modernization Act of 1999

Question 15

In terms of total assets,commercial banks with under $1 billion in assets have become a larger segment of the industry in recent years.

Accepted Answer

A) True 
 B)False

Question 16

By late 2015,the number of branches of existing commercial banks in the U.S.approximated ________,which was a(an)_________ from 1985.

Accepted Answer

A) 96,000;increase 
B) 43,8000;increase 
C) 68,200;decrease 
D) 103,000;decrease 
E) 82,500;increase

Question 17

Which of the following currently manages the insurance funds for both commercial banks and savings institutions?

Accepted Answer

A) FDIC. 
B) FSLIC. 
C) OCC. 
D) FRS.

Question 18

Failure to monitor the actions of firms in a timely and complete fashion after purchasing securities in that firm exposes the investor to agency costs.

Accepted Answer

A) True 
 B)False

Question 19

The Riegle-Neal Act of 1994 removed many of the restriction on interstate banking that were originally imposed by the 1933 Glass Steagall Act.

Accepted Answer

A) True 
 B)False

Question 20

When an FI functions as a broker,they are selling a financial asset that they have created and will continue to hold on their balance sheet.

Accepted Answer

A) True 
 B)False

Exam 2: Financial Services: Depository Institutions

In an attempt to enhance the net social welfare benefits of the services provided by financial intermediaries,safety and soundness regulation requires a DI to hold a minimum level of cash reserves against deposits.

The savings association industry continues to be the primary lender of residential mortgages.

The securitization of mortgages involves the pooling of mortgage loans for sale in the financial markets.

Currently (2015)J.P.Morgan Chase is the largest bank holding company in the world and operations in 60 countries.

The movement of an off-balance-sheet asset or liability to an on-balance-sheet item is dependent on the occurrence of a contingent event.

Which of the following observations concerning trust departments is true?

Although growing,the notional value of bank OBS activities remained less than the value of on-balance-sheet activities as of mod-2015.

If a household invests in corporate securities and does not supervise how the funds are invested or used by the corporation,the risk of not earning the desired return or not having the funds returned increase.

Negative externalities exist in the depository sector when

Real estate loans comprise approximately ______ percent of large commercial banks' (assets greater than $1 billion) loan portfolio.

By converting to a bank holding company,an investment bank gains access to Federal Reserve lending facilities.

Which of the following measures the difference between the private costs of regulations and the private benefits of those regulations for the producers of financial services?

Unfairly excluding some potential financial service consumers from the financial services marketplace is a reason why FIs must absorb net regulatory burden.

For the following problems, choose among the following major banking laws. -This legislation replaced FSLIC with FDIC-SAIF.

In terms of total assets,commercial banks with under $1 billion in assets have become a larger segment of the industry in recent years.

By late 2015,the number of branches of existing commercial banks in the U.S.approximated ,which was a(an) _ from 1985.

Which of the following currently manages the insurance funds for both commercial banks and savings institutions?

Failure to monitor the actions of firms in a timely and complete fashion after purchasing securities in that firm exposes the investor to agency costs.

The Riegle-Neal Act of 1994 removed many of the restriction on interstate banking that were originally imposed by the 1933 Glass Steagall Act.

When an FI functions as a broker,they are selling a financial asset that they have created and will continue to hold on their balance sheet.

Exam 2: Financial Services: Depository Institutions

In an attempt to enhance the net social welfare benefits of the services provided by financial intermediaries,safety and soundness regulation requires a DI to hold a minimum level of cash reserves against deposits.

The savings association industry continues to be the primary lender of residential mortgages.

The securitization of mortgages involves the pooling of mortgage loans for sale in the financial markets.

Currently (2015)J.P.Morgan Chase is the largest bank holding company in the world and operations in 60 countries.

The movement of an off-balance-sheet asset or liability to an on-balance-sheet item is dependent on the occurrence of a contingent event.

Which of the following observations concerning trust departments is true?

Although growing,the notional value of bank OBS activities remained less than the value of on-balance-sheet activities as of mod-2015.

If a household invests in corporate securities and does not supervise how the funds are invested or used by the corporation,the risk of not earning the desired return or not having the funds returned increase.

Negative externalities exist in the depository sector when

Real estate loans comprise approximately ______ percent of large commercial banks' (assets greater than $1 billion) loan portfolio.

By converting to a bank holding company,an investment bank gains access to Federal Reserve lending facilities.

Which of the following measures the difference between the private costs of regulations and the private benefits of those regulations for the producers of financial services?

Unfairly excluding some potential financial service consumers from the financial services marketplace is a reason why FIs must absorb net regulatory burden.

For the following problems, choose among the following major banking laws. -This legislation replaced FSLIC with FDIC-SAIF.

In terms of total assets,commercial banks with under $1 billion in assets have become a larger segment of the industry in recent years.

By late 2015,the number of branches of existing commercial banks in the U.S.approximated ________,which was a(an) _________ from 1985.

Which of the following currently manages the insurance funds for both commercial banks and savings institutions?

Failure to monitor the actions of firms in a timely and complete fashion after purchasing securities in that firm exposes the investor to agency costs.

The Riegle-Neal Act of 1994 removed many of the restriction on interstate banking that were originally imposed by the 1933 Glass Steagall Act.

When an FI functions as a broker,they are selling a financial asset that they have created and will continue to hold on their balance sheet.

By late 2015,the number of branches of existing commercial banks in the U.S.approximated ,which was a(an) _ from 1985.