financial institutions (chapter 2)
Brokerage and securities firms are reluctant to associate with commercial banks because: 1) Commercial banks engage in riskier activities than securities firms 2) Commercial banks are not required to maintain some minimum amount of equity capital 3) Commercial banks are subject to more restrictive regulation than securities industry 4) Commercial banks are less profitable than securities firms 5) Commercial banks' deposits are not insured by a federal agency
Commercial banks are subject to more restrictive regulation than securities industry
The primary federal regulator of state banks that are not members of the Fed is the: 1) Office of Thrift Supervision. 2) FDIC. 3) National Credit Union Administration. 4) state banking department. 5) Office of the Comptroller of the Currency.
FDIC
The _________ repealed the Glass-Steagall Act. 1) Financial Institutions Reform, Recovery and Enforcement Act 2) Federal Deposit Insurance Corporation Improvement Act 3) Depository Institutions Deregulation and Monetary Control Act 4) Gramm-Leach-Bliley Act 5) Riegle-Neal Interstate Banking and Branching Efficiency Act
Gramm-Leach-Bliley Act
The _________ repealed the Glass-Steagall Act. 1) Financial Institutions Reform, Recovery and Enforcement Act 2) Federal Deposit Insurance Corporation Improvement Act 3) Riegle-Neal Interstate Banking and Branching Efficiency Act 4) Gramm-Leach-Bliley Act 5) Depository Institutions Deregulation and Monetary Control Act
Gramm-Leach-Bliley Act
Which of the following is not a purpose of bank regulation? 1) Provide monetary stability. 2) Ensure safety and soundness of banks. 3) Protect consumers from abuses by banks. 4) Guarantee minimal profitability of the banking system. 5) Provide a competitive financial system.
Guarantee minimal profitability of the banking system
Currently, the FDIC insures deposits up to: 1) $5,000 2) $50,000 3) $100,000 4) $10,000 5) $250,000
$250,000
Originally, the FDIC insured deposits up to: 1) $50,000 2) $2,500 3) $25,000 4) $100,000 5) $10,000
2,500
The Federal Reserve's Board of Governors consists of __ members appointed by the President and confirmed by the Senate. 1) 14 2) 12 3) 16 4) 7 5) 10
7
Under current regulations, Financial institutions pay premiums to the Deposit Insurance Fund: 1) Monthly, regardless of the size of the Deposit Insurance Fund 2) Once every five years 3) Until the loan to the Treasury is re-paid 4) Annually, regardless of the size of the Deposit Insurance Fund 5) Only when the Deposit Insurance Fund is under-capitalized
Annually, regardless of the size of the deposits insurance fund
Financial Institutions pay annual premiums to the Deposit Insurance Fund based on: 1) A fixed percentage of the loan portfolio 2) Risk profile only 3) Size of their deposits only 4) A fixed amount regardless of the size of the deposits or risk profile 5) Both risk profile and the size of the deposits
Both risk profile and the size of the deposits
Brokerage and securities firms are reluctant to associate with commercial banks because: 1) Commercial banks are not required to maintain some minimum amount of equity capital 2) Commercial banks engage in riskier activities than securities firms 3) Commercial banks are less profitable than securities firms 4) Commercial banks are subject to more restrictive regulation than securities industry 5) Commercial banks' deposits are not insured by a federal agency
commercial banks are subject to more restrictive regulation than securities industry
Which of the following institutions' customers have a "common bond"? 1) thrift 2) credit union 3) commercial bank 4) mortgage company 5) savings bank
credit union
Which of the following institutions' customers have a "common bond"? 1) commercial bank 2) mortgage company 3) savings bank 4) thrift 5) credit union
credit union
The ___________________________________ serves the Financial Stability Oversight Council by improving the quality, transparency, and accessibility of financial data and information: 1) Federal Reserve Research Arm 2) Federal Reserve Bank of St. Louis 3) Washington Bureau of Economic Forecast 4) Office of Financial Research 5) Federal Reserve Bank of New York
Office of Financial Research
A new charter to start a federal savings association is obtained from the: 1) Office of the Comptroller of the Currency. 2) National Credit Union Administration. 3) Federal Reserve 4) State banking department. 5) Office of Thrift Supervision.
Office of Thrift Supervision
The _________ allows adequately capitalized bank holding companies to acquire banks in any state. 1) Federal Deposit Insurance Corporation Improvement Act 2) Riegle-Neal Interstate Banking and Branching Efficiency Act 3) Competitive Equality Banking Act 4) Depository Institutions Deregulation and Monetary Control Act 5) Financial Institutions Reform, Recovery and Enforcement Act
Riegle-Neal interstate banking and branching efficiency act
Federal Reserve Reg. ____ requires disclosure of as to why a costumer was denied credit. 1) Z 2) B 3) C 4) BB 5) AA
Z
Historically, a commercial bank was defined as a firm that: 1) accepted NOW accounts and made consumer loans. 2) accepted government deposits and made public loans. 3) is regulated by the Federal Reserve. 4) accepted demand deposits and made business loans. 5) accepted demand deposits and made consumer loans.
accepted demand deposits and made business loans
Bank regulations typically: 1) involve a trade-off between the safety of the banking system and the efficiency of bank operations. 2) impose restrictions on the types of assets in which banks can invest. 3) set requirements for the minimum amount of capital that banks must hold. 4) all of the above
all of the above
Gramm-Leach-Bliley Act: 1) prohibited commercial banks from any association with securities firms and insurance underwriters 2) removed the ceiling on demand deposit account rates 3) repealed McFadden Act of 1927 4) prohibited commercial banks from branching across state lines 5) allowed commercial banks to associate with securities firms and insurance underwriters under the umbrella of Financial Services Holding company
allowed commercial banks to associate with securities firms and insurance underwriters under the umbrella of financial services holding company
Under current regulations, Financial institutions pay premiums to the Deposit Insurance Fund: 1) Until the loan to the Treasury is re-paid 2) Annually, regardless of the size of the Deposit Insurance Fund 3) Only when the Deposit Insurance Fund is under-capitalized 4) Monthly, regardless of the size of the Deposit Insurance Fund 5) Once every five years
annually, regardless of the size of the deposit insurance fund
Which Act limited the activities a company could engage in if it owned a bank? 1) Glass-Steagall Act 2) Competitive Equality Banking Act 3) Federal Reserve Act 4) Bank Holding Act 5) McFadden Act
bank holding act
Which Act limited the activities a company could engage in if it owned a bank? 1) McFadden Act 2) Federal Reserve Act 3) Competitive Equality Banking Act 4) Glass-Steagall Act 5) Bank Holding Act
bank holding act
Financial Institutions pay annual premiums to the Deposit Insurance Fund based on: 1) A fixed percentage of the loan portfolio 2) Both risk profile and the size of the deposits 3) Risk profile only 4) Size of their deposits only 5) A fixed amount regardless of the size of the deposits or risk profile
both risk profile and the size of the deposits
Generally, the failure of small banks 1) causes more widespread concern about the safety of the banking system than the failure of large banks. 2) causes equal concern about the safety of the banking system as the failure of large banks. 3) causes less concern about the safety of the banking system than the failure of large banks. 4) Either A or B can be true, depending on the type of business cycle that exists while the failures occur.
causes less concern about the safety of the banking system than the failure of large banks
A legal document that orders a firm to sop an unfair practice under full penalty of law is a: 1) cease and desist order. 2) quality assurance directive. 3) national bank order. 4) capital request. 5) memorandum of understanding.
cease and desist order
Which of the following is not one of the Fed's monetary policy tools? 1) Open market operations 2) Changes in the fed funds rate 3) Changes in the discount rate 4) Changes in the required reserve ratio 5) All of the above are monetary policy tools of the Fed
changes in the fed funds rate
_________ allowed any institution to "truncate" the paper check at any point in the check clearing process. 1) Check 21 Act 2) Sarbanes-Oxley Act 3) Riegle-Neal Interstate Banking and Branching Efficiency Act 4) Fair and Accurate Credit Transactions Act 5) Troubled Asset Relief Program
check 21 act
Depository institutions find insured deposits very attractive because: 1) Deposit customers are willing to accept interest rates on insured deposits that are below the rates that banks would have to pay without FDIC insurance. 2) They reduce the number of non-performing loans 3) Deposit Insurance requires banks to pay fixed premiums 4) Deposit customers are reluctant to invest in an insured institution
deposit customers are willing to accept interest rates on insured deposits that are below the rates that banks would have to pay without FDIC insurance
Depository institutions find insured deposits very attractive because: 1) They reduce the number of non-performing loans 2) Deposit Insurance requires banks to pay fixed premiums 3) Deposit customers are reluctant to invest in an insured institution 4) Deposit customers are willing to accept interest rates on insured deposits that are below the rates that banks would have to pay without FDIC insurance.
deposit customers are willing to accept interest rates on insured deposits that are below the rates that banks would have to pay without FDIC insurance
The Federal Deposit Insurance Reform Act of 2005 created which of the following? 1) National Credit Union Shares Insurance Fund 2) Savings Association Insurance Fund 3) Bank Insurance Fund 4) Deposit Insurance Fund 5) Federal Savings and Loan Insurance Fund
deposit insurance fund
Which of the following is not a specific criterion that regulators use to monitor banks? 1) asset quality 2) capital adequacy 3) earnings quality 4) sensitivity to financial market conditions 5) dollar value of fixed assets
dollar value of fixed assets
Which of the following is not a specific criterion that regulators use to monitor banks? 1) sensitivity to financial market conditions 2) earnings quality 3) capital adequacy 4) asset quality 5) dollar value of fixed assets
dollar value of fixed assets
Which of the following is not a fundamental function of the Federal Reserve? 1) Conduct the nation's monetary policy. 2) Provide an effective payments system. 3) Regulate banking operations. 4) Ensure bank profitability. 5) All of the above are fundamental functions of the Federal Reserve.
ensure bank profitability
A memorandum of understanding is a legal document that orders a firm to stop an unfair practice. 1) True 2) False
false
Bank regulations can guarantee that bankers will make sound management decisions. 1) True 2) False
false
Most banks have the ability to easily raise new capital by issuing new equity. 1) True 2) False
false
State-chartered banks must be members of the Federal Reserve System. 1) True 2) False
false
The McFadden Act of 1927 forbids national banks from underwriting equities. 1) True 2) False
false
Which of the following is the receiver of a failed depository institution? 1) Office of Thrift Supervision 2) Office of the Comptroller of the Currency 3) Federal Savings and Loan Insurance Corporation 4) Federal Reserve 5) Federal Deposit Insurance Corporation
federal deposit insurance corporation
National and state charters are available for all of the following except: 1) credit unions. 2) commercial banks. 3) savings associations. 4) Federal Reserve banks. 5) National and state charters are available for all of the above.
federal reserve banks
This legislation created Federal Deposit Insurance: 1) Financial Institutions Reform, Recovery and Enforcement Act 2) Deposit Insurance Act 3) Wall Street Reform and Consumer Protection Act 4) Glass-Steagall Act 5) McFadden Act
glass-steagall act
Which Act separated commercial banking, investment banking and insurance into three separate industries? 1) Federal Reserve Act 2) Glass-Steagall Act 3) McFadden Act 4) Bank Holding Act 5) Competitive Equality Banking Act
glass-steagall act
A formal regulatory document that prescribes corrective action for a problem institution is a: 1) national bank order. 2) capital request. 3) memorandum of understanding. 4) cease and desist order. 5) quality assurance directive.
memorandum of understanding
Which of the following officially designates a bank as insolvent? 1) Office of Thrift Supervision 2) Office of the Comptroller of the Currency 3) Federal Reserve 4) Resolution Trust Corporation 5) Office of National Charters
office of the comptroller of currency
A new charter to start a federal savings association is obtained from the: 1) Federal Reserve 2) Office of the Comptroller of the Currency. 3) Office of Thrift Supervision. 4) National Credit Union Administration. 5) State banking department.
office of thrift supervision
Which of the following is the most flexible of the Fed's tools for implementing monetary policy? 1) Open market operations 2) Changes in the fed funds rate 3) Private placements 4) Changes in the discount rate 5) Changes in the required reserve ratio
open market operations
A primary purpose of maintaining the safety and soundness of banks is to: 1) minimize bank losses. 2) encourage loan growth. 3) ensure liquidity for the stock market. 4) protect depositors. 5) prevent discrimination.
protect depositors
Savings and loans have historically specialized in: 1) demand deposit accounts. 2) auto loans. 3) mutual loan. 4) commercial loans. 5) real estate loans.
real estate loans
Volcker rule is intended to: 1) Reduce discriminatory practices by commercial banks. 2) Increase disclosure in derivatives holdings by commercial banks. 3) Reduce proprietary trading by commercial banks 4) Prohibit proprietary trading by hedge funds. 5) Prevent commercial banks from issuing subprime mortgage loans.
reduce proprietary trading by commercial banks
Volcker rule is intended to: 1) Reduce proprietary trading by commercial banks 2) Increase disclosure in derivatives holdings by commercial banks. 3) Prevent commercial banks from issuing subprime mortgage loans. 4) Reduce discriminatory practices by commercial banks. 5) Prohibit proprietary trading by hedge funds.
reduce proprietary trading by commercial banks
Which of the following was not a provision of the Financial Reform Act (Dodd-Frank Act) of 2010? 1) established the Consumer Financial Protection Bureau 2) reestablished the separation between banking and securities activities that had existed under the Glass-Steagall Act 3) put limits on banks' proprietary trading 4) required derivative securities to be more clearly disclosed traded through a clearinghouse or exchange 5) established the Financial Stability Oversight Council
reestablished the separation between banking and securities activities that had existed under the Glass-Steagall Act
The opening of a commercial bank in the United States 1) does not require a charter. 2) requires a charter from both the state and federal government. 3) requires a charter from a state or the federal government. 4) always requires a charter from the federal government. 5) always requires a charter from a state government.
requires a charter from a state of the federal government
The _________ established Public Company Oversight Board to regulate public accounting firms that audit publicly-traded companies. 1) Riegle-Neal Interstate Banking and Branching Efficiency Act 2) Competitive Equality Banking Act 3) Financial Institutions Reform, Recovery and Enforcement Act 4) Depository Institutions Deregulation and Monetary Control Act 5) Sarbanes-Oxley Act
sarbanes-oxley act
A new charter to start a state bank must be obtained from the: 1) State banking department. 2) Federal Deposit Insurance Corporation. 3) Office of Thrift Supervision. 4) Office of the Comptroller of the Currency. 5) Federal Reserve.
state banking department
Which of the following was temporarily used after the financial crisis of 2007 to allow depository institutions to borrow for a fixed term against a variety of collateral that is normally accepted for discount window loans? 1) Term Auction Facility 2) Housing and Economic Recovery Facility 3) Primary Dealer Credit Facilit 4) Troubled Asset Relief Program 5) Term Securities Lending Facility
term auction facility
Which of the following was a goal of the Depository Institutions Deregulation and Monetary Control Act of 1980? 1) To allow banks to pay market rates on deposits. 2) To allow banks to make long-term mortgage loans. 3) To allow banks to offer Money Market Deposit Accounts. 4) To reduce the number of leveraged buyouts. 5) To reduce the range of banking services offered.
to allow banks to pay market rates on deposits
Primary reason for Brokerage and securities firms' decisions to register as a Financial Services Holding Company is: 1) to be allowed to engage in proprietary trading 2) to be subject to more restrictive regulation 3) to increase profitability 4) to be subject to less restrictive regulation 5) to be eligible for Federal Deposit Insurance
to be eligible for federal deposit insurance
Financial Stability Oversight Council is chaired by: 1) Chairman of the Federal Reserve 2) Treasury Secretary 3) Head of the OCC 4) Chair of New York Fed 5) Head of the FDIC
treasury secretary
The _________ created a fund originally designed to allow the U.S. Treasury to purchase distressed assets from financial institutions. 1) Primary Dealer Credit Facility 2) Capital Purchase Program 3) Troubled Asset Relief Program 4) Foreclosure Prevention Act 5) Check 21 Act
troubled asset relief program
A bank holding company is a shell organization that owns subsidiary firm. 1) True 2) False
true
One of the functions of investment banking is to facilitate corporate mergers and acquisitions. 1) True 2) False
true
The Federal Reserve directly controls the discount rate. 1) True 2) False
true
The annual number of bank failures since 2007 has increased dramatically. 1) True 2) False
true
Federal deposit insurance 1) was created after World War II. 2) was created in 1960. 3) has existed since the 1800s. 4) was created in 1933
was created in 1933
The Federal Reserve's Board of Governors members are appointed by the President and confirmed by the Senate for staggered term of _____ years. 1) 4 2) 12 3) 14 4) 10 5) 7
14
The Federal Reserve has Reserve Banks and branches in ___ districts across the country. 1) 10 2) 50 3) 14 4) 16 5) 12
12
The Federal Reserve's Board of Governors members are appointed by the President and confirmed by the Senate for staggered term of _____ years. 1) 14 2) 10 3) 7 4) 4 5) 12
14