As a result of loan write-offs, Bank A has to be liquidated by the regulators.The book value of the assets and liabilities of the bank is presented below (in millions of dollars).The market value of the loans has been estimated at $240 million. \[\begin{array} { | l | l | l | l | } \hline \text { Loans (book value) } & \$ 340 & \text { Insured Deposits } & \$ 200 \\ \hline & & \text { Uninsured Deposits } & \$ 100 \\ \hline & & \text { Equity } & \$ 40 \\ \hline \end{array}\] What is the cost to the FDIC if the insured depositor transfer resolution method is used by the regulators to resolve the bank failure?

A) $0. B) $20 million. C) $30 million. D) $40 million. E) $60 million. A) $0. B) $20 million. C) $30 million. D) $40 million. E) $60 million.

The following table shows the market value balance sheet of a failed bank ($ millions): \[\begin{array} { | l | l | l | l | } \hline \text { Assets } & 400 & \text { Insured Deposits } & \$ 200 \\ \hline & & \text { Uninsured Deposits } & \$ 400 \\ \hline \end{array}\] If the insured depositor transfer resolution method is utilized, what is the cost to uninsured depositors of bank failure resolution?

A) $0. B) -$200 million. C) $67 million. D) $133 million. E) $200 million. A) $0. B) -$200 million. C) $67 million. D) $133 million. E) $200 million.

Exam 20: Deposit Insurance and Other Liability Guarantees

Because deposit insurance premiums were not priced in an actuarially fair manner during the period from 1933-1980s, instability was created in the credit and monetary system.

(True/False)

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Question 81

Which of the following is a drawback of charging flat deposit insurance premiums?

(Multiple Choice)

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Question 82

As a result of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), the deposit insurance fund for the savings and loan industry has been combined with the deposit insurance fund for the commercial banking industry.

(True/False)

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Question 83

The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) restructured the savings association deposit insurance fund and transferred its management to the FDIC.

(True/False)

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Question 84

Interest rates charged to healthy banks that use the Federal Reserve discount window are typically set one percent below the fed funds target interest rate.

(True/False)

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Question 85

If regulators provide more protection against bank runs, the incidence of moral hazard is likely to increase.

(True/False)

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Question 86

As a result of loan write-offs, Bank A has to be liquidated by the regulators.The book value of the assets and liabilities of the bank is presented below (in millions of dollars).The market value of the loans has been estimated at $240 million. Loans (book value) \ 340 Insured Deposits \ 200 Uninsured Deposits \ 100 Equity \ 40 What is the cost to the FDIC if the insured depositor transfer resolution method is used by the regulators to resolve the bank failure?

(Multiple Choice)

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Question 87

Which of the following methods was NOT a method used to replenish the FDIC's deposit insurance reserve fund during the most recent financial crisis?

(Multiple Choice)

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Question 88

Bank risk taking can be controlled by increasing

(Multiple Choice)

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Question 89

Discount window loans from the Federal Reserve are used as

(Multiple Choice)

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Question 90

The changes implemented by the Fed in January 2003 to its discount window lending

(Multiple Choice)

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Question 91

Since its inception, the FDIC deposit insurance fund has never fallen to a negative balance.

(True/False)

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Question 92

The introduction of prompt corrective action capital zones by FDICIA was an attempt to place greater decision-making power at the discretion of regulators rather than on objective, measurable rules.

(True/False)

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Question 93

The risk of moral hazard decreases when capital levels are low.

(True/False)

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Question 94

The FDIC establishes risk-based deposit insurance premiums by considering all of the following EXCEPT

(Multiple Choice)

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Question 95

What was the objective of the FDIC Improvement Act (FDICIA) of 1991?

(Multiple Choice)

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Question 96

The improved financial health of the FDIC during the 1990s resulted in a considerable reduction in deposit insurance premiums.

(True/False)

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Question 97

The following table shows the market value balance sheet of a failed bank ($ millions): Assets 400 Insured Deposits \ 200 Uninsured Deposits \ 400 If the insured depositor transfer resolution method is utilized, what is the cost to uninsured depositors of bank failure resolution?

(Multiple Choice)

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Question 98

Why are credit unions less affected by financial crises experienced by other thrifts such as savings associations?

(Multiple Choice)

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Question 99

After nearly failing, the FDIC's Bank Insurance Fund (BIF) achieved record levels of reserves during the 1990s.

(True/False)

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Question 100

Showing 81 - 100 of 114

Exam 20: Deposit Insurance and Other Liability Guarantees

Because deposit insurance premiums were not priced in an actuarially fair manner during the period from 1933-1980s, instability was created in the credit and monetary system.

Which of the following is a drawback of charging flat deposit insurance premiums?

As a result of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), the deposit insurance fund for the savings and loan industry has been combined with the deposit insurance fund for the commercial banking industry.

The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) restructured the savings association deposit insurance fund and transferred its management to the FDIC.

Interest rates charged to healthy banks that use the Federal Reserve discount window are typically set one percent below the fed funds target interest rate.

If regulators provide more protection against bank runs, the incidence of moral hazard is likely to increase.

Which of the following methods was NOT a method used to replenish the FDIC's deposit insurance reserve fund during the most recent financial crisis?

Bank risk taking can be controlled by increasing

Discount window loans from the Federal Reserve are used as

The changes implemented by the Fed in January 2003 to its discount window lending

Since its inception, the FDIC deposit insurance fund has never fallen to a negative balance.

The introduction of prompt corrective action capital zones by FDICIA was an attempt to place greater decision-making power at the discretion of regulators rather than on objective, measurable rules.

The risk of moral hazard decreases when capital levels are low.

The FDIC establishes risk-based deposit insurance premiums by considering all of the following EXCEPT

What was the objective of the FDIC Improvement Act (FDICIA) of 1991?

The improved financial health of the FDIC during the 1990s resulted in a considerable reduction in deposit insurance premiums.

The following table shows the market value balance sheet of a failed bank ($ millions): Assets 400 Insured Deposits \ 200 Uninsured Deposits \ 400 If the insured depositor transfer resolution method is utilized, what is the cost to uninsured depositors of bank failure resolution?

Why are credit unions less affected by financial crises experienced by other thrifts such as savings associations?

After nearly failing, the FDIC's Bank Insurance Fund (BIF) achieved record levels of reserves during the 1990s.

Why Are Financial Institutions Special

Financial Services: Depository Institutions

Financial Services: Finance Companies

Financial Services: Securities Brokerage and Investment Banking

Financial Services: Mutual Funds and Hedge Funds

Financial Services: Insurance

Risks of Financial Institutions

Interest Rate Risk I

Interest Rate Risk II

Credit Risk: Individual Loan Risk

Credit Risk: Loan Portfolio and Concentration Risk

Liquidity Risk

Foreign Exchange Risk

Sovereign Risk

Market Risk

Off-Balance-Sheet Risk

Technology and Other Operational Risks

Fintech Risks

Liability and Liquidity Management

Capital Adequacy

Product and Geographic Expansion

Futures and Forwards

Options, Caps, Floors, and Collars

Swaps

Loan Sales

Securitization

Filters