Markets test 2

FDIC deposit insurance is generally limited to ________________ per depositor per bank. -$50,000 -$100,000 -$150,000 -$200,000 -$250,000

$250,000

In 2018, banking sector regulations were modified to set a new asset threshold for enhanced regulations. What was the old threshold and what is the new threshold? -$50B to $200B -$100B to $250B -$50B to $250B -$100B to $200B

$50B to $250B

A U.S. bank converted $1 million to Swiss francs to make a Swiss franc loan to a valued corporate customer when the exchange rate was 1.2 francs per dollar. The borrower agreed to repay the principal plus 5 percent interest in one year. The borrower repaid Swiss francs at loan maturity and when the loan was repaid the exchange rate was 1.3 francs per dollar. What was the bank's dollar rate of return? -26.00% − (2.69%) -7.14% −(3.08%) -5.00%

(3.08%): {[($1 million × SFr 1.2 × 1.05)/SFr 1.3/$]/$1 million} − 1 = -0.0308, or -3.08% {[($1 million × SFr 1.2 × 1.05)/SFr 1.3/$]/$1 million} − 1 = -0.0308, or -3.08%

You buy a stock for $30 per share and sell it for $33 after holding it for slightly over a year and collecting a $0.75 per share dividend. Your ordinary income tax rate is 28 percent and your capital gains tax rate is 20 percent. Your after-tax rate of return is ? 8.20 percent 10.40 percent 12.50 percent 9.80 percent 8.60 percent

9. 8% ([(($33 − $30) × (1 − 0.20)) + ($0.75 × (1 − 0.28))]/$30 = $2.94/$30 = 0.098, or 9.8% [(($33 − $30) × (1 − 0.20)) + ($0.75 × (1 − 0.28))]/$30 = $2.94/$30 = 0.098, or 9.8%)

Which of the following are likely to lead to an appreciation of the U.S. dollar (all else held constant)? A. Higher real U.S. interest rates B. Lower U.S. inflation C. Higher nominal U.S. interest rates B and C only A and C only A and B only B only A, B, and C

A and B only

You have agreed to deliver the underlying commodity on a futures contract in 90 days. Today the underlying commodity price rises and you get a margin call. You must have: -a long position in a futures contract. -a short position in a futures contract. -sold a forward contract. -purchased a forward contract. -purchased a call option on a futures contract.

A short position in a futures contract

The preemptive right is designed to: -allow management to diffuse stock ownership of any voting power. -allow managers to preempt a stock offering if they do not like the terms of the deal. -allow existing shareholders the right to sell their existing shares before the new offer. -allow existing shareholders to buy shares of the new offering if they desire. -None of these choices are correct.

Allow existing shareholders to buy shares of the new offering if they desire.

After SVB was closed, on Sunday, the Federal Reserve and the U.S. Treasury worked together and created a facility (essentially a piggy bank) to loan money to troubled banks. What is the name of this facility? -Bank Urgent Rescue Program -Bank Term Funding Program -Saving Troubled Emergency Program -Fund Urgent National Deposit

Bank Term Funding Program

The launch of Marcus by Goldman Sachs is an example of which stage of the evolving relationship between banks and fintech? -The "rent a bank" stage. -Banks taking stake in fintech startups. -Fintech firms providing technology and infrastructure to banks. -Banks developing in-house fintech arms. -Banks divesting fintech arms.

Banks developing in-house fintech arms

A U.S. investor has borrowed pounds, converted them to dollars, and invested the dollars in the United States to take advantage of interest rate differentials. To cover the currency risk, the investor should: -sell pounds forward. -buy dollars forward. -buy pounds forward. -sell pounds spot. -None of these choices are correct.

Buy pounds forward.

The two main monetization strategies of BaaS include: -advertising to users and charging a la carte for each service used. -charging clients a monthly fee and charging a la carte for each service used. -charging clients a monthly fee and advertising to users. -charging clients a daily fee and advertising to users. -charging clients a daily fee and charging a la carte for each service used.

Charging clients a monthly fee and charging a la carte for each service used.

Areas of commercial bank regulation dealing with preventing banks from discriminating unfairly in lending are termed ______________________ regulations. -safety and soundness -consumer protection -investor protection -credit allocation -monetary policy

Consumer protection

Areas of commercial bank regulation designed to encourage banks to lend to socially important sectors such as housing and farming are termed ______________________ regulations. -safety and soundness -consumer protection -investor protection -credit allocation -monetary policy

Credit allocation

What is the name of the law that was passed in 2010 to regulate the banking sector in the wake of the Great Recession? -Dodd-Frank Act -Banking Risk Reduction Act -Securities Exchange Act -Glass Stegall Act

Dodd-Frank Act

Open Banking standards do all but which of the following? -Make it possible to pass on information to third parties -Eliminate all risk in the online banking system -Streamline access to bank data -Make it easier to find banks with disabled access -Enable comparison of the features of different personal and business accounts

Eliminate all risk in the online banking system

What measures the fintech users as a percentage of the digitally active population? -Fintech scale -Fintech data usage -Fintech popularity score -Fintech ace rating -Fintech adoption rate

Fintech adoption rate

When governments and regulators step in to save failing banks, commentators often cite a concern from economic theory that suggests that the bank rescues make the need for future bank rescues even more likely because banks will make even riskier investments in the future. What is the name of this economic concept? -Adverse Selection -Extreme Risk Seeking -Chasing Yield -Moral Hazard

Moral Hazard

Requiring foreign banks to operate under the same rules as domestic banks is termed: -favored status. -IBA clause. -national treatment. -NAFTA. -post-patriotism requirement

National treatment.

Banks' net foreign exposure is equal to: -net foreign assets. -net FX bought. -net foreign assets + net FX bought. -assets − liabilities. -None of these choices are correct.

Net foreign assets + net FX bought

By convention, a swap buyer on an interest rate swap agrees to: -periodically pay a fixed rate of interest and receive a floating rate of interest. -periodically pay a floating rate of interest and receive a fixed rate of interest. -swap both principal and interest at contract maturity. -back both sides of the swap agreement. -act as the dealer in the swap agreement.

Periodically pay a fixed rate of interest and receive a floating rate of interest.

Which of the following US based banks voluntarily closed or were shut down and forced to sell by regulators in the weekend following the SVB collapse? -Signature -Wells Fargo -US Bank -Silvergate -Truist

Signature; Silvergate

A higher level of which of the following variables would make a put option on common stock more valuable, all else held constant? -Stock price -Stock price volatility -Interest rates -Exercise price

Stock price volatility; Exercise price

In 2011, the introduction of Google Wallet (which later became Google Pay) allowed consumers to use smartphones equipped with near-field communication chips to make: -hit payments. -calls to banks. -instapayments. -bump transfers. -tap payments.

Tap payments.

Ethanol Lawn Mowers issued 500,000 shares to the public. The gross proceeds were $31.25 million and the net proceeds were $30 million. Merrel Bench was the lead underwriter and deal negotiator, but 10 other investment bankers (one of which was Golden Sax) were also used to put up capital and help sell the issue. Which of the following statements is/are correct? -The public paid $62.50 a share. -Golden Sax was the originating house. -The spread per share was $3.50. -Merrel Bench is the originating house. -This offer was a syndicated deal.

The public paid $62.50 a share; Merrel Bench is the originating house; This offer was a syndicated deal

The term disintermediation refers to: -the policy of not closing insolvent institutions in hopes that they can eventually turn around their performance. - the withdrawal of deposits from depository institutions that are reinvested in other types of intermediaries. -the policy of regulating the minimum rate of return institutions can pay on deposits. -chartering restrictions that limit the ability of new banks to enter into a local market. -the policy of not allowing banks to grow by creating a de novo branch outside their traditional market area.

The withdrawal of deposits from depository institutions that are reinvested in other types of intermediaries.