Question 1

Since 1974,commercial banks importance as a source of funds for nonfinancial borrowers

Accepted Answer

A)  has shrunk dramatically,from around 40 percent of total credit advanced to around 25 percent by 2014.
B)  has shrunk dramatically,from around 70 percent of total credit advanced to below 50 percent by 2014.
C)  has expanded dramatically,from around 50 percent of total credit advanced to above 70 percent by 2014.
D)  has expanded dramatically,from around 30 percent of total credit advanced to above 50 percent by 2014.E) All of the above
F) A) and B)

Question 2

Under the Gramm-Leach-Bliley Act the oversight of the securities activities of bank holding companies belongs to

Accepted Answer

A)  the SEC.
B)  the Comptroller of the Currency.
C)  the U.S.Treasury.
D)  the Federal Reserve.E) All of the above
F) B) and D)

Question 3

Under the Gramm-Leach-Bliley Act states retain regulatory authority over

Accepted Answer

A)  bank holding companies.
B)  securities activities.
C)  insurance activities.
D)  bank subsidiaries engaged in securities underwriting.E) B) and D)
F) C) and D)

Question 4

The experience of disintermediation in the banking industry illustrates that

Accepted Answer

A)  more regulation of financial markets may avoid such problems in the future.
B)  banks are unable to remain competitive with other financial intermediaries.
C)  consumers no longer desire the services that banks provide.
D)  markets invent alternatives to costly regulations.E) A) and D)
F) B) and C)

Question 5

Discuss three ways in which U.S.banks can become involved in international banking.

Accepted Answer

United States banks could open a foreign...

Question 6

With the creation of the Federal Deposit Insurance Corporation,member banks of the Federal Reserve System ________ to purchase FDIC insurance for their depositors,while non-member commercial banks ________ to buy deposit insurance.

Accepted Answer

A)  could choose;were required
B)  could choose;were given the option
C)  were required,could choose
D)  were required;were requiredE) A) and B)
F) C) and D)

Question 7

The McFadden Act of 1927

Accepted Answer

A)  effectively prohibited banks from branching across state lines.
B)  required that banks maintain bank capital equal to at least 6 percent of their assets.
C)  effectively required that banks maintain a correspondent relationship with large money center banks.
D)  separated the commercial banks and investment banks.E) B) and D)
F) A) and B)

Question 8

If a foreign bank operates a subsidiary bank in the U.S.,the subsidiary bank is

Accepted Answer

A)  subject to the same regulations as a U.S.owned bank.
B)  only subject to the regulations of the country in which the foreign bank is chartered.
C)  restricted to making loans to only foreign citizens in the U.S.
D)  restricted to accepting deposits from foreign citizens living in the U.S.E) A) and D)
F) A) and C)

Question 9

________ of a foreign bank operates in the U.S.but cannot accept deposits from domestic residents.

Accepted Answer

A)  An agency office
B)  A universal corporation
C)  A McFadden corporation
D)  A Basel branchE) B) and C)
F) None of the above

Question 10

Deposits in European banks denominated in dollars for the purpose of international transactions are known as

Accepted Answer

A)  Eurodollars.
B)  European Currency Units.
C)  European Monetary Units.
D)  International Monetary Units.E) All of the above
F) A) and B)

Question 11

Although the National Bank Act of 1863 was designed to eliminate state-chartered banks by imposing a prohibitive tax on banknotes,state banks were able to stay in business by

Accepted Answer

A)  issuing credit cards.
B)  ignoring the regulations.
C)  acquiring funds through deposits.
D)  branching into other states.E) A) and C)
F) A) and B)

Question 12

State banking authorities have sole jurisdiction over state banks

Accepted Answer

A)  without FDIC insurance.
B)  that are not members of the Federal Reserve System.
C)  operating as bank holding companies.
D)  chartered in the 21st century.E) None of the above
F) B) and C)

Question 13

A major controversy involving the banking industry in its early years was

Accepted Answer

A)  whether banks should both accept deposits and make loans or whether these functions should be separated into different institutions.
B)  whether the federal government or the states should charter banks.
C)  what percent of deposits banks should hold as fractional reserves.
D)  whether banks should be allowed to issue their own bank notes.E) B) and C)
F) All of the above

Question 14

Because of securitization,a new class of residential mortgages offered to borrowers with less-than-stellar credit records developed.These mortgages are known as

Accepted Answer

A)  risk-enhanced mortgages.
B)  subprime mortgages.
C)  bundled mortgages.
D)  adjustable-rate mortgages.E) A) and B)
F) All of the above

Question 15

An essential characteristic of credit unions is that

Accepted Answer

A)  they are typically large.
B)  branching across state lines is prohibited.
C)  their lending is primarily for mortgage loans.
D)  they are organized for individuals with a common bond.E) None of the above
F) B) and C)

Question 16

Bank consolidation will likely result in

Accepted Answer

A)  less competition.
B)  the elimination of community banks.
C)  increased competition.
D)  a shift in assets from larger banks to smaller banks.E) B) and D)
F) None of the above

Question 17

The Federal Reserve Act of 1913 required that

Accepted Answer

A)  state banks be subject to the same regulations as national banks.
B)  national banks establish branches in the cities containing Federal Reserve banks.
C)  national banks join the Federal Reserve System.
D)  state banks could not join the Federal Reserve System.E) All of the above
F) A) and D)

Question 18

According to Edward Kane,because the banking industry is one of the most ________ industries in America,it is an industry in which ________ is especially likely to occur.

Accepted Answer

A)  competitive;loophole mining
B)  competitive;innovation
C)  regulated;loophole mining
D)  regulated;innovationE) None of the above
F) B) and C)

Question 19

The most important developments that reduced banks cost advantages include

Accepted Answer

A)  the growth of the junk bond market.
B)  the competition from money market mutual funds.
C)  the growth of securitization.
D)  the growth in the commercial paper market.E) None of the above
F) C) and D)

Question 20

The U.S.banking system is considered to be a dual system because

Accepted Answer

A)  banks offer both checking and savings accounts.
B)  it actually includes both banks and thrift institutions.
C)  it is regulated by both state and federal governments.
D)  it was established before the Civil War,requiring separate regulatory bodies for the North and South.E) A) and B)
F) A) and C)

Exam 11: Banking Industry: Structure and Competition

The Federal Reserve Act of 1913 required that

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The U.S.banking system is considered to be a dual system because

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Bank consolidation will likely result in

Correct AnswerverifiedShow Answer

Since 1974,commercial banks importance as a source of funds for nonfinancial borrowers

Correct AnswerverifiedShow Answer

Because of securitization,a new class of residential mortgages offered to borrowers with less-than-stellar credit records developed.These mortgages are known as

Correct AnswerverifiedShow Answer

Although the National Bank Act of 1863 was designed to eliminate state-chartered banks by imposing a prohibitive tax on banknotes,state banks were able to stay in business by

Correct AnswerverifiedShow Answer

Under the Gramm-Leach-Bliley Act states retain regulatory authority over

Correct AnswerverifiedShow Answer

An essential characteristic of credit unions is that

Correct AnswerverifiedShow Answer

Under the Gramm-Leach-Bliley Act the oversight of the securities activities of bank holding companies belongs to

Correct AnswerverifiedShow Answer

The experience of disintermediation in the banking industry illustrates that

Correct AnswerverifiedShow Answer

If a foreign bank operates a subsidiary bank in the U.S.,the subsidiary bank is

Correct AnswerverifiedShow Answer

The McFadden Act of 1927

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A major controversy involving the banking industry in its early years was

Correct AnswerverifiedShow Answer

Deposits in European banks denominated in dollars for the purpose of international transactions are known as

Correct AnswerverifiedShow Answer

________ of a foreign bank operates in the U.S.but cannot accept deposits from domestic residents.

Correct AnswerverifiedShow Answer

Discuss three ways in which U.S.banks can become involved in international banking.

Correct AnswerverifiedUnited States banks could open a foreign...View AnswerShow Answer

According to Edward Kane,because the banking industry is one of the most ________ industries in America,it is an industry in which ________ is especially likely to occur.

Correct AnswerverifiedShow Answer

The most important developments that reduced banks cost advantages include

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State banking authorities have sole jurisdiction over state banks

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With the creation of the Federal Deposit Insurance Corporation,member banks of the Federal Reserve System ________ to purchase FDIC insurance for their depositors,while non-member commercial banks ________ to buy deposit insurance.

Correct AnswerverifiedShow Answer

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United States banks could open a foreign...
View Answer

According to Edward Kane,because the banking industry is one of the most industries in America,it is an industry in which is especially likely to occur.

Correct Answer
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Correct Answer
verified

Correct Answer
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With the creation of the Federal Deposit Insurance Corporation,member banks of the Federal Reserve System to purchase FDIC insurance for their depositors,while non-member commercial banks to buy deposit insurance.

Correct Answer
verified