CH 12 T/F -- FIN475
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
