Question 1

A large number of the savings institution failures during the in the 1980s was a result of

Accepted Answer

A) interest rate risk exposure. 
B) excessively risky investments. 
C) fraudulent behavior on the part of managers. 
D) All of the options. 
E) excessively risky investments and fraudulent behavior on the part of managers. 
A) interest rate risk exposure. 
B) excessively risky investments. 
C) fraudulent behavior on the part of managers. 
D) All of the options. 
E) excessively risky investments and fraudulent behavior on the part of managers. D

Question 2

Negotiable certificates of deposits are differentiated from fixed time deposits by their negotiability and active trading in the secondary markets.

Accepted Answer

A) True 
 B)False  True

Question 3

The primary reason for the decline of the S&L industry was the passage of legislation that gave commercial lending powers to the SL industry.

Accepted Answer

A) True 
 B)False  False

Question 4

A significant disadvantage for credit unions in competing with commercial banks is the severe restriction in the variety of products and services that they can offer.

Accepted Answer

A) True 
 B)False

Question 5

The primary objective of the 1933 Glass-Steagall Act was to prevent commercial banks from competing directly with commercial insurance companies.

Accepted Answer

A) True 
 B)False

Question 6

The maturity structure of the assets of commercial banks tends to be shorter than the maturity structure of liabilities.

Accepted Answer

A) True 
 B)False

Question 7

National-chartered commercial banks are most likely to be regulated by

Accepted Answer

A) the FDIC only. 
B) the FDIC and the Federal Reserve System. 
C) the Federal Reserve System only. 
D) the FDIC, the Federal Reserve System, and the Comptroller of the Currency. 
E) the Federal Reserve System and the Comptroller of the Currency. 
A) the FDIC only. 
B) the FDIC and the Federal Reserve System. 
C) the Federal Reserve System only. 
D) the FDIC, the Federal Reserve System, and the Comptroller of the Currency. 
E) the Federal Reserve System and the Comptroller of the Currency.

Question 8

Compared to the average commercial bank, credit unions tend to have higher overhead expenses per dollar of assets.

Accepted Answer

A) True 
 B)False

Question 9

As of 2015, commercial banks with over $10 billion in assets constituted approximately ____ percent of the industry assets and numbered approximately _____.

Accepted Answer

A) 53; 310 
B) 63; 65 
C) 73; 525 
D) 83; 95 
E) 93; 440 
A) 53; 310 
B) 63; 65 
C) 73; 525 
D) 83; 95 
E) 93; 440

Question 10

These organizations were originated to avoid the legal definition of a bank.

Accepted Answer

A) Money center banks. 
B) Saving's associations. 
C) Nonbank banks. 
D) Financial services holding companies. 
E) Savings banks. 
A) Money center banks. 
B) Saving's associations. 
C) Nonbank banks. 
D) Financial services holding companies. 
E) Savings banks.

Question 11

The largest liability on FDIC-insured savings institutions' balance sheet as of mid-2015 was

Accepted Answer

A) commercial paper. 
B) small time and savings deposits. 
C) repurchase agreements. 
D) FHLBB advances. 
E) cash. 
A) commercial paper. 
B) small time and savings deposits. 
C) repurchase agreements. 
D) FHLBB advances. 
E) cash.

Question 12

Compared to banks and savings institutions, credit unions are able to pay a higher rate on the deposits of members because

Accepted Answer

A) they intend to attract new members. 
B) they do not issue common stock. 
C) of their tax-exempt status. 
D) Regulation Q still applies to the industry. 
E) they are subject to the provisions of the Community Reinvestment Act. 
A) they intend to attract new members. 
B) they do not issue common stock. 
C) of their tax-exempt status. 
D) Regulation Q still applies to the industry. 
E) they are subject to the provisions of the Community Reinvestment Act.

Question 13

All commercial banks must be members of the Federal Reserve System.

Accepted Answer

A) True 
 B)False

Question 14

A primary advantage for a depository institution of belonging to the Federal Reserve System is

Accepted Answer

A) direct access to correspondent banking services. 
B) the lower deposit reserves required under the Federal Reserve System. 
C) direct access to the discount window of the Fed. 
D) commission less trading of U.S.government securities. 
E) decreased costs of regulatory compliance. 
A) direct access to correspondent banking services. 
B) the lower deposit reserves required under the Federal Reserve System. 
C) direct access to the discount window of the Fed. 
D) commission less trading of U.S.government securities. 
E) decreased costs of regulatory compliance.

Question 15

The largest liability on credit unions' combined balance sheet as of June 30, 2015 was

Accepted Answer

A) share drafts. 
B) open-market paper. 
C) large time deposits. 
D) ownership shares. 
E) small time deposits and savings deposits. 
A) share drafts. 
B) open-market paper. 
C) large time deposits. 
D) ownership shares. 
E) small time deposits and savings deposits.

Question 16

Large money center banks are often primary dealers in the U.S.Treasury markets.

Accepted Answer

A) True 
 B)False

Question 17

Money center banks rely more heavily on wholesale and borrowed funds as sources of liability funding than do community banks.

Accepted Answer

A) True 
 B)False

Question 18

The Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980 and the Garn-St.Germain Depository Institutions Act (DIA) of 1982 were the initial laws that began deregulation of the commercial banking industry.

Accepted Answer

A) True 
 B)False

Question 19

Credit unions may be federally or state chartered.If a credit union is chartered at the federal level, it is subject to the regulations imposed by the

Accepted Answer

A) Federal Reserve. 
B) National Credit Union Administration. 
C) State Banking Commission. 
D) Federal Credit Union Insurance Fund. 
E) Office of the Comptroller of the Currency. 
A) Federal Reserve. 
B) National Credit Union Administration. 
C) State Banking Commission. 
D) Federal Credit Union Insurance Fund. 
E) Office of the Comptroller of the Currency.

Question 20

The primary objective of the 1927 McFadden Act was to restrict interstate bank branching.

Accepted Answer

A) True 
 B)False

Exam 2: Financial Services: Depository Institutions

A large number of the savings institution failures during the in the 1980s was a result of

Negotiable certificates of deposits are differentiated from fixed time deposits by their negotiability and active trading in the secondary markets.

The primary reason for the decline of the S&L industry was the passage of legislation that gave commercial lending powers to the SL industry.

A significant disadvantage for credit unions in competing with commercial banks is the severe restriction in the variety of products and services that they can offer.

The primary objective of the 1933 Glass-Steagall Act was to prevent commercial banks from competing directly with commercial insurance companies.

The maturity structure of the assets of commercial banks tends to be shorter than the maturity structure of liabilities.

National-chartered commercial banks are most likely to be regulated by

Compared to the average commercial bank, credit unions tend to have higher overhead expenses per dollar of assets.

As of 2015, commercial banks with over $10 billion in assets constituted approximately ____ percent of the industry assets and numbered approximately _____.

These organizations were originated to avoid the legal definition of a bank.

The largest liability on FDIC-insured savings institutions' balance sheet as of mid-2015 was

Compared to banks and savings institutions, credit unions are able to pay a higher rate on the deposits of members because

All commercial banks must be members of the Federal Reserve System.

A primary advantage for a depository institution of belonging to the Federal Reserve System is

The largest liability on credit unions' combined balance sheet as of June 30, 2015 was

Large money center banks are often primary dealers in the U.S.Treasury markets.

Money center banks rely more heavily on wholesale and borrowed funds as sources of liability funding than do community banks.

The Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980 and the Garn-St.Germain Depository Institutions Act (DIA) of 1982 were the initial laws that began deregulation of the commercial banking industry.

Credit unions may be federally or state chartered.If a credit union is chartered at the federal level, it is subject to the regulations imposed by the

The primary objective of the 1927 McFadden Act was to restrict interstate bank branching.

Why Are Financial Institutions Special

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

Deposit Insurance and Other Liability Guarantees

Capital Adequacy

Product and Geographic Expansion

Futures and Forwards

Options, Caps, Floors, and Collars

Swaps

Loan Sales

Securitization

Filters

As of 2015, commercial banks with over $10 billion in assets constituted approximately percent of the industry assets and numbered approximately _.