CH 12 T/F -- FIN475

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30. The volume of core deposits at U.S. banks has been growing in recent years relative to other categories of deposits.

FALSE

34. Legally imposed interest-rate ceilings on deposits were first set in place in the United States after passage of the Bank Holding Company Act.

FALSE

35. Gradual phase-out of legal interest-rate ceilings on deposits offered by U.S. banks was first authorized by the Glass-Steagall Act.

FALSE

36. The contention that there are certain banking services (such as small loans or savings and checking accounts) that every citizen should have access to is usually called socialized banking.

FALSE

40. IRA and Keogh deposits have great appeal for bankers principally because they can be sold bearing relatively low (often below-market) interest rates.

FALSE

41. In general, the longer the maturity of a deposit, the lower the yield a financial institution must offer to its depositors because of the greater interest-rate risk the bank faces with longer-term deposits.

FALSE

42. The availability of a large block of core deposits decreases the duration of a bank's liabilities.

FALSE

43. Interest-bearing checking accounts, on average, tend to generate lower net returns for banks than regular (non-interest-bearing) checking accounts.

FALSE

44. Personal checking accounts tend to be more profitable for banks than commercial checking accounts.

FALSE

45. NOW accounts can be held by businesses and individuals and are interest-bearing checking accounts.

FALSE

50. A bank has full control over its deposit prices in the long run.

FALSE

56. According to recent studies cited in this chapter, the number one factor that households consider in selecting a bank to hold their checking account is low fees and low minimum balance.

FALSE

57. According to recent studies cited in this chapter, the number one factor that households consider in choosing a bank to hold their savings deposit is location.

FALSE

58. Conditionally free deposits for customers mean that as long as the customers do not hold above a certain level of deposit, there are no monthly fees or per transaction charges.

FALSE

59. When a bank temporarily offers higher than average interest rates or lower than average customer fees in order to attract new business, they are practicing conditional pricing.

FALSE

61. The total dollar value of checks paid in the United States has grown modestly in recent years.

FALSE

63. The depository institutions which tend to have the highest deposit yields are credit unions.

FALSE

64. Urban markets are more responsive to deposit interest rates and fees than rural markets.

FALSE

31. According to the textbook, the U.S. Treasury keeps most of its operating funds in TT&L deposits.

TRUE

32. Deposits held by banks with others are called correspondent deposits.

TRUE

33. The implicit interest rate on checkable deposits equals the difference between the cost of supplying deposit services to a customer and the amount of the service charge actually assessed to that customer.

TRUE

37. Domestic deposits generate legal reserves.

TRUE

38. Excess legal reserves are the sources out of which new bank loans are created.

TRUE

39. Demand deposits are among the most volatile and least predictable of a bank's sources of funds with the shortest potential maturity.

TRUE

46. An MMDA is a short-term deposit where the bank can offer a competitive interest rate and which allows up to six preauthorized drafts per month.

TRUE

47. A Roth IRA allows an individual to accumulate investment earnings tax free and also pay no tax on their investment earnings when withdrawn provided the taxpayer follows the rules on this new account.

TRUE

48. Competition tends to raise deposit interest costs.

TRUE

49. Competition lowers the expected return to a bank from putting its deposits to work.

TRUE

51. Nonprice competition for deposits has tended to distort the allocation of scarce resources in the banking sector.

TRUE

52. Deposits are usually priced separately from loans and other bank services.

TRUE

53. According to the text, no-fee savings accounts are on the decline.

TRUE

54. The Truth in Savings Act requires a bank to disclose to its deposit customers, the frequency with which interest is compounded on all interest-bearing accounts.

TRUE

55. Under the Truth in Savings Act, customers must be informed of the impact of any early deposit withdrawals on the annual percentage yield they expect to receive from an interest-bearing deposit.

TRUE

60. Web-centered banks with little or no physical facilities are known as virtual banks.

TRUE

62. There are still a number of existing problems with online bill-paying services which has limited its growth.

TRUE

65. Research indicates that at least half of all households and small businesses hold their primary checking account at a depository institution situated within 3 miles of their location.

TRUE


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