Question 1

Which of the following dominates the loan portfolios of commercial banks with assets less than one billion dollars?

Accepted Answer

A) Commercial loans. 
B) Consumer loans. 
C) Real estate loans. 
D) Credit card debt. 
E) Industrial loans. 
A) Commercial loans. 
B) Consumer loans. 
C) Real estate loans. 
D) Credit card debt. 
E) Industrial loans.

Question 2

The savings association industry continues to be the primary lender of residential mortgages.

Accepted Answer

A) True 
 B)False

Question 3

Bigger banks tend to fund themselves in national markets and lend to larger corporations.

Accepted Answer

A) True 
 B)False

Question 4

Real estate loans comprise approximately ______ percent of large commercial banks' (assets greater than $1 billion) loan portfolio.

Accepted Answer

A) 46 
B) 32 
C) 75.5 
D) 63 
E) 84 
A) 46 
B) 32 
C) 75.5 
D) 63 
E) 84

Question 5

Which of the following observations concerning credit unions is NOT true?

Accepted Answer

A) They invest heavily in corporate securities. 
B) Member loans constitute a majority of their total assets. 
C) They tend to invest more of their assets in U.S.Treasuries than other DIs. 
D) They engage in off-balance-sheet activities. 
E) They focus more on providing services and less on profitability. 
A) They invest heavily in corporate securities. 
B) Member loans constitute a majority of their total assets. 
C) They tend to invest more of their assets in U.S.Treasuries than other DIs. 
D) They engage in off-balance-sheet activities. 
E) They focus more on providing services and less on profitability.

Question 6

The two largest asset classes on credit unions' combined balance sheet as of June 30, 2015 were

Accepted Answer

A) cash and investment. 
B) investment securities and share drafts. 
C) home mortgages and consumer loans. 
D) consumer loans and car loans. 
E) business loans and consumer loans. 
A) cash and investment. 
B) investment securities and share drafts. 
C) home mortgages and consumer loans. 
D) consumer loans and car loans. 
E) business loans and consumer loans.

Question 7

A significant advantage for credit unions in competing with commercial banks is the tax-exempt status that has been granted to credit unions.

Accepted Answer

A) True 
 B)False

Question 8

All banks with assets greater than $10 billion are considered money center banks.

Accepted Answer

A) True 
 B)False

Question 9

By late 2015, the number of branches of existing commercial banks in the U.S.approximated ________, which was a(an) _________ from 1985.

Accepted Answer

A) 96,000; increase 
B) 43,8000; increase 
C) 68,200; decrease 
D) 103,000; decrease 
E) 82,500; increase 
A) 96,000; increase 
B) 43,8000; increase 
C) 68,200; decrease 
D) 103,000; decrease 
E) 82,500; increase

Question 10

The most numerous of the institutions that define the depository institutions segment of the FI industry in the US is (are)

Accepted Answer

A) savings associations. 
B) small commercial banks. 
C) large commercial banks. 
D) savings banks. 
E) credit unions. 
A) savings associations. 
B) small commercial banks. 
C) large commercial banks. 
D) savings banks. 
E) credit unions.

Question 11

Prior to the financial crisis of 2008, the return on equity for small community banks had been larger than for large money center banks.

Accepted Answer

A) True 
 B)False

Question 12

Customer loans are classified on a DI's balance sheet as

Accepted Answer

A) assets, because the DI's major asset is its client base. 
B) liabilities, because the customer may default on the loan. 
C) assets, because the DI earns servicing fees on the loan. 
D) liabilities, because the DI must transfer funds to the borrower at the initiation of the loan. 
E) assets, because DIs originate and monitor loan portfolios. 
A) assets, because the DI's major asset is its client base. 
B) liabilities, because the customer may default on the loan. 
C) assets, because the DI earns servicing fees on the loan. 
D) liabilities, because the DI must transfer funds to the borrower at the initiation of the loan. 
E) assets, because DIs originate and monitor loan portfolios.

Question 13

In recent years, the number of commercial banks in the U.S.has been increasing.

Accepted Answer

A) True 
 B)False

Question 14

A consumer lending function is performed by each of the following FIs EXCEPT

Accepted Answer

A) mutual funds. 
B) finance companies. 
C) pension funds. 
D) depository institutions. 
E) insurance companies. 
A) mutual funds. 
B) finance companies. 
C) pension funds. 
D) depository institutions. 
E) insurance companies.

Question 15

The Riegle-Neal Act of 1994 removed many of the restriction on interstate banking that were originally imposed by the 1933 Glass Steagall Act.

Accepted Answer

A) True 
 B)False

Question 16

Savings banks and savings associations are savings institutions; with savings banks serving as the primary providers of residential mortgage loans, and savings associations concentrating on commercial loans and corporate bonds as well as mortgage assets.

Accepted Answer

A) True 
 B)False

Question 17

Regulatory forbearance refers to a policy of

Accepted Answer

A) allowing insolvent banks to continue to operate. 
B) foreclosing real estate properties in the event on non-payments of mortgages. 
C) strict regulation of banks, closing them down as soon as they are insolvent. 
D) rescheduling of all loans of a client in the event of non-payment. 
E) foreclosing real estate properties in the event on non-payments of mortgages and strict regulation of banks, closing them down as soon as they are insolvent. 
A) allowing insolvent banks to continue to operate. 
B) foreclosing real estate properties in the event on non-payments of mortgages. 
C) strict regulation of banks, closing them down as soon as they are insolvent. 
D) rescheduling of all loans of a client in the event of non-payment. 
E) foreclosing real estate properties in the event on non-payments of mortgages and strict regulation of banks, closing them down as soon as they are insolvent.

Question 18

Savings institutions enjoyed record profitability during the late 1990s and early 2000s.

Accepted Answer

A) True 
 B)False

Question 19

The Financial Services Modernization Act of 1999 allows commercial banking activities and securities underwriting to operate simultaneously under the same ownership structure.

Accepted Answer

A) True 
 B)False

Question 20

The Federal Reserve System has regulatory supervision over all holding company banks whether they include national- or state-chartered banks.

Accepted Answer

A) True 
 B)False

Exam 2: Financial Services: Depository Institutions

Which of the following dominates the loan portfolios of commercial banks with assets less than one billion dollars?

The savings association industry continues to be the primary lender of residential mortgages.

Bigger banks tend to fund themselves in national markets and lend to larger corporations.

Real estate loans comprise approximately ______ percent of large commercial banks' (assets greater than $1 billion) loan portfolio.

Which of the following observations concerning credit unions is NOT true?

The two largest asset classes on credit unions' combined balance sheet as of June 30, 2015 were

A significant advantage for credit unions in competing with commercial banks is the tax-exempt status that has been granted to credit unions.

All banks with assets greater than $10 billion are considered money center banks.

By late 2015, the number of branches of existing commercial banks in the U.S.approximated ________, which was a(an) _________ from 1985.

The most numerous of the institutions that define the depository institutions segment of the FI industry in the US is (are)

Prior to the financial crisis of 2008, the return on equity for small community banks had been larger than for large money center banks.

Customer loans are classified on a DI's balance sheet as

In recent years, the number of commercial banks in the U.S.has been increasing.

A consumer lending function is performed by each of the following FIs EXCEPT

The Riegle-Neal Act of 1994 removed many of the restriction on interstate banking that were originally imposed by the 1933 Glass Steagall Act.

Savings banks and savings associations are savings institutions; with savings banks serving as the primary providers of residential mortgage loans, and savings associations concentrating on commercial loans and corporate bonds as well as mortgage assets.

Regulatory forbearance refers to a policy of

Savings institutions enjoyed record profitability during the late 1990s and early 2000s.

The Financial Services Modernization Act of 1999 allows commercial banking activities and securities underwriting to operate simultaneously under the same ownership structure.

The Federal Reserve System has regulatory supervision over all holding company banks whether they include national- or state-chartered banks.

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

By late 2015, the number of branches of existing commercial banks in the U.S.approximated , which was a(an) _ from 1985.