Chapter 11

The Federal Reserve Chair from 1987-2006 who admitted the mistake of lax financial regulation leading to the global financial crisis was ______. A. Alan Greenspan B. Ben Bernanke C. Janet Yellen D. Paul Volcker

A. Alan Greenspan

What are currently the three most important financial centers? A. London, New York, and Tokyo B. London, New York, and Shanghai C. Paris, New York, and Tokyo D. Paris, New York, and Shanghai

A. London, New York, and Tokyo

The 2010 law that instituted broad financial regulations, rewrote the rules covering all aspects of finance, and expanded the power of the government over banking and financial markets was the ______ Act. A Sarbanes-Oxley Reason: The 2002 Sarbanes-Oxley Act involved investor protections. B. Dodd-Frank C. Robinson-Patman Reason: The Robinson-Patman Act was a 1936 prohibition of anticompetitive practices. D. Glass-Steagall Reason: The 1933 Glass-Steagall act mandated a separation of commercial and investment banking.

B. Dodd-Frank

Which statements about the international debt crisis are correct? A. It was caused by lending to OPEC countries. B. It began on August 20, 1982, when Mexico asked for loan forgiveness. C. The crisis was effectively solved by the introduction of Baker Bonds, named after Secretary of the Treasury James Baker. D. The source of the crisis was the high price of oil.

B. It began on August 20, 1982, when Mexico asked for loan forgiveness. D. The source of the crisis was the high price of oil.

Why is an Edge Act bank typically located in a different state from that of its parent? A. To engage in investment banking activities otherwise prohibited. B. To get around the prohibition on interstate branch banking. C. To allow them to accept foreign securities.

B. To get around the prohibition on interstate branch banking.

A rationale for a bank to establish multinational operations is that the managerial and marketing knowledge developed at home may make the provision of services in an additional country inexpensive, that is, there may be low ______ costs. A. sunk B. marginal C. fixed D. average

B. marginal

When banks establish multinational operations to prevent the erosion of their clientele to foreign banks seeking to service the multinational's foreign subsidiaries it is ______ defensive strategy, and when they do so to prevent the erosion of their traveler's check, tourist, and foreign business markets from foreign bank competition it is ______ defensive strategy. A. full service; wholesale B. wholesale; retail C. retail; full service

B. wholesale; retail

When did the Asian crisis occur? A. 2000 B. 2008 C. 1997 D. 1982

C. 1997

The provision of the Dodd-Frank Act that limits banks' proprietary trading and their sponsorship of hedge funds and private equity funds is referred to as the ______ Rule after the former Federal Reserve Chair. A. Greenspan B. Yellen C. Volcker D. Bernanke

C. Volcker

The correspondent banking system enables a bank's MNC client to A. conduct transactions globally throughout foreign bank branches. B. conduct business without having to oblige by foreign countries' banking regulations. C. conduct business worldwide through his local bank or its contacts.

C. conduct business worldwide through his local bank or its contacts.

An international bank that seeks Eurocurrency deposits and makes Eurocurrency loans is a(n) _____

Eurobank

A time deposit of money in an international bank located in a country different from the country that issued the currency is called a(n) _______

Eurocurrency

True or false: Branch bank loan limits are based on the capital of the branch bank, NOT the parent bank. True False

False

The group that raised oil prices in the early 1970s, leading to inflation and the higher interest rates of the international debt crisis, is known by its acronym ______

OPEC

A foreign branch bank operates like a local bank, but legally it is a part of the ______

Parent Bank

The Federal Reserve's massive program of buying long-term Treasuries and mortgage-backed-securities in response to the global financial crisis is referred to as ______ easing.

Quantitative

True or false: A correspondent bank relationship is established when two banks maintain a correspondent bank account with one another. True False

TRUE

The Asian crisis is said to have begun when the country _______ devalued its currency?

Thailand

Which are features of international banks and not of domestic banks? a. Facilitate the imports and exports of their clients by arranging trade financing b. Borrow and lend in the Eurocurrency market c. Frequently participate in international loan syndicates d. May be structured as bank holding companies so they can perform commercial and investment banking activities

a. Facilitate the imports and exports of their clients by arranging trade financing b. Borrow and lend in the Eurocurrency market c. Frequently participate in international loan syndicates

Banks that provide a majority of international banking services are commonly known as ______ banks. a. universal b. investment c. full service d. commercial

a. universal c. full service

Edge Act banks are federally chartered subsidiaries of U.S. banks that are physically located in the United States and are allowed to engage in a full range of _______ banking activities.

international