Finance Ch 3
Checks may be cleared by: a. the Federal Reserve b. banks in the banking system c. both a and b d. neither a nor b
A and B
Financial institutions include: a. banks b. pension funds c. insurance companies d. all of the above
All of the above
The National Banking Act of 1864: a. established minimum capital requirements for federally chartered banks b. regulated loans with respect to safety and liquidity c. established minimum reserve requirements d. all of the above
All of the above
The notes of the Bank of North America a. served as a circulating medium of exchange b. loaned liberally to the government c. were redeemed in metallic coins upon demand d. all the above e. none of the above
All of the above
Types of financial institutions include all of the following EXCEPT: a. commercial banks b. pension funds c. insurance companies d. brokerage firms e. all of the above are types of financial institutions
All of the above
Types of financial institutions include all of the following EXCEPT: a. commercial banks b. pension funds c. insurance companies d. all of the above are types of financial institutions
All of the above
The First Bank of the United States ceased operations because: a. the need to provide financing for the Civil War was not supported by Congress b. of the opposition of state banking interests c. its charter had expired and there was no provision for its renewal d. both b and c
B and C
An investment bank accepts deposits, makes loans, and issues checking accounts.(T/F)
False
Insurance companies sell shares in their firms to individuals and invest the pooled proceeds in corporate and government securities. (T/F)
False
Investment banking firms sell shares in their firms to individuals and invest the pooled proceeds in corporate and government securities.(T/F)
False
The primary types of assets on a bank's balance sheet include cash and deposits. (T/F)
False
The prime rate of interest has been relatively stable during the past twenty-five years. (T/F)
False
.Investment banks accept deposits and makes loans to individuals and businesses. (T/F)
Fasle
.Savings and loan associations are cooperative nonprofit organizations that exist primarily to provide member depositors with consumer credit. (T/F)
Fasle
.The Monetary Control Act prohibited the Federal Reserve from controlling thrift institutions. (T/F)
Fasle
Commercial banks provide loans directly to consumers and businesses or aid individuals in obtaining financing of durable goods and homes. (T/F)
Fasle
Credit risk is the likelihood that a bank will be unable to meet depositor withdrawal demands and other liabilities when due.(T/F)
Fasle
Insurance companies receive contributions from employees and/or their employers and invest the proceeds on behalf of the employees for use during their retirement years. (T/F)
Fasle
Investment banking firms assist individuals to purchase new or existing securities issues or to sell previously purchased securities.(T/F)
Fasle
Mortgage banking firms provide loans directly to consumers and businesses or aid individuals in obtaining financing of durable goods and homes. (T/F)
Fasle
Secondary reserves are vault cash and deposits held at other depository institutions and at Federal Reserve Banks.(T/F)
Fasle
The U.S. banking system as it exists today is relatively unchanged since just before the Civil War. (T/F)
Fasle
The bank holding company may not engage in direct banking activities.(T/F)
Fasle
Today, reserve requirements imposed by the Federal Reserve apply only to member banks.(T/F)
Fasle
_____________ accept the savings of individuals and lend pooled savings to individuals primarily in the form of mortgage loans and operate almost entirely in New England , New York, and New Jersey, with most of their assets continuing to be invested in mortgage loans. a. Commercial banks b. Thrift institutions c. Credit unions d. Finance companies e. none of the above
None of the above
______________ are non-commercial bank depository institutions that include savings banks and credit unions, which accumulate individual savings and lend primarily to other individuals. a. Banks b. Securities firms c. Pension funds d. Finance companies e. none of the above
None of the above
______________ provide loans directly to consumers and businesses or aid individuals in obtaining financing of durable goods and homes, whereas ______________ originate mortgage loans on homes and other real property by bringing together borrowers and institutional investors. a. thrift institutions, savings and loans b. thrift institutions, mortgage banking firms c. property brokers, savings and loans d. property brokers, mortgage banking firms e. none of the above
None of the above
_______________ sell or market new securities issued by businesses to individual and institutional investors, whereas ______________ firms assist individuals who want to purchase new or existing securities issues or who want to sell previously purchased securities. a. Brokerage firms, investment banks b. Investment banks, savings banks c. savings banks, investment banks d. Brokerage firms, savings banks e. none of the above
None of the above
_________________ accept savings from individuals and then lend these pooled savings to businesses, governments, and individuals. a. Insurance companies b. Commercial finance companies c. Government institutions d. Investment banks e. none of the above
None of the above
__________________ are the two important forms of contractual savings organizations. a. Insurance companies and brokerage firms b. banks and insurance companies c. Investment banks and pension funds d. Pension funds and brokerage firms e. none of the above
None of the above
__________________ collect premiums on insurance policies and employee/employer contributions from pension fund participants and provide retirement benefits and insurance against major financial losses. a. Banks b. Personal service firms c. Investment banking firms d. Brokerage firms e. none of the above
None of the above
Interest rate risk results from possible price fluctuations in fixed-rate debt instruments associated with changes in market interest rates. (T/F)
True
International banking exists when banks operate in more than one country.(T/F)
True
Investment banking firms sell or market new securities issued by businesses to individual and institutional investors.(T/F)
True
Investment companies sell shares in their firms to individuals and invest the pooled proceeds in corporate and government securities.(T/F)
True
Major types of financial institutions in the U.S. include commercial banks, mutual funds, insurance companies, and pension funds. (T/F)
True
Mutual funds are open-end investment companies that can issue an unlimited number of shares to its investors and use the pooled proceeds to purchase corporate and government securities.(T/F)
True
Part of the reason that the Banking Act of 1933 was passed was in response to the large numbers of bank failures(T/F)
True
Pension funds receive contributions from employees and/or their employers and invest the proceeds on behalf of the employees for use during their retirement years. (T/F)
True
Pension funds receive contributions from employees and/or their employers and invest the proceeds on behalf of the employees.(T/F)
True
The Glass-Steagall Act was repealed with the passage of the Gramm-Leach-Bliley Act of 1999. (T/F)
True
The National Banking Act of 1864 made it possible for banks to receive federal charters.(T/F)
True
The effective rate of interest is generally lower on a standard loan than an otherwise equivalent discount loan.(T/F)
True
The largest type of liabilities on a bank's balance sheet is deposits.(T/F)
True
The main provisions of the Monetary Control Act of 1980 are deregulation and monetary control(T/F)
True
The principal assets of depository institutions are cash, securities, loans, and fixed assets.(T/F)
True
Credit unions are cooperative nonprofit organizations that exist primarily to provide member depositors with consumer credit.(T/F)
True
Depository institutions include commercial banks, savings and loans, savings banks, and credit unions.(T/F)
True
.The Basel Accord was an agreement between major central banks to adopt capital adequacy requirements for internationally involved banks.(T/F)
True
.The Federal Reserve Act of 1913 created a system of central banks in the United States. (T/F)
True
.The largest type of assets on a bank's balance is loans. (T/F)
True
Bank solvency reflects the ability to keep the value of a bank's assets greater than its liabilities(T/F)
True
Branch banks are those banking offices that are controlled by a single parent bank(T/F)
True
Commercial banks accept deposits and makes loans to individuals and businesses(T/F)
True
Credit risk is the chance of nonpayment or delayed payment of interest or principal. (T/F)
True
Credit unions are cooperative nonprofit organizations that exist primarily to provide member depositors with consumer credit(T/F)
True
