Question 1

Banks chartered by the Federal government are called national banks.

Accepted Answer

A) True 
 B)False

Question 2

Banks operating in more than one state used to be illegal.

Accepted Answer

A) True 
 B)False

Question 3

How did a lack of competition among banks give rise to mutual funds?

Accepted Answer

The lack of competition meant

Question 4

Disintermediation occurs when investors take their money out of banks to buy assets that could provide a market rate of return.

Accepted Answer

A) True 
 B)False

Question 5

Why does the lack of a prepayment clause matter to the interest rate risk involved in taking a fixed rate mortgage?

Accepted Answer

Without the clause, if interes

Question 6

The increase in nominal interest rates during the 1970s led to an increase in the size of the traditional banking industry.

Accepted Answer

A) True 
 B)False

Question 7

The United States allows individuals to establish

Accepted Answer

A)  savings and loans associations. 
B)  mutual savings banks. 
C)  credit unions. 
D)  all of the above. 
A)  savings and loans associations. 
B)  mutual savings banks. 
C)  credit unions. 
D)  all of the above.

Question 8

Today, a few large banks have a larger share of

Accepted Answer

A)  assets. 
B)  deposits. 
C)  capital 
D)  all of the above. 
A)  assets. 
B)  deposits. 
C)  capital 
D)  all of the above.

Question 9

Unit banks

Accepted Answer

A)  have no branches. 
B)  are highly competitive. 
C)  are an increasingly common type of financial institution. 
D)  all of the above. 
A)  have no branches. 
B)  are highly competitive. 
C)  are an increasingly common type of financial institution. 
D)  all of the above.

Question 10

Why have some argued that securitization has increased risk across the whole economy, increasing the severity of the recession in 2009?

Accepted Answer

Loans are no longer held by a

Question 11

The Erosion of Glass-Steagall has allowed financial institutions to take advantage of economies of scale or scope. Explain.

Accepted Answer

Financial institutions can now

Question 12

The process of bundling loans and selling pieces of the group is known as securitization.

Accepted Answer

A) True 
 B)False

Question 13

Near monopolization of in banks led to

Accepted Answer

A)  stagnancy in innovation. 
B)  increased innovation. 
C)  greater depositors. 
D)  none of the above 
A)  stagnancy in innovation. 
B)  increased innovation. 
C)  greater depositors. 
D)  none of the above

Question 14

Unit banks have no branches.

Accepted Answer

A) True 
 B)False

Question 15

Unit banks and national banks comprise all the banks in the United States.

Accepted Answer

A) True 
 B)False

Question 16

Why is it easier for financial innovation in a permissive regulatory system?

Accepted Answer

Permissive regulatory systems

Question 17

Bank consolidation is potentially a problem because

Accepted Answer

A)  it is harder for large banks to implement technological innovations. 
B)  some consumers may get worse service. 
C)  banks are less able to innovate. 
D)  all of the above. 
A)  it is harder for large banks to implement technological innovations. 
B)  some consumers may get worse service. 
C)  banks are less able to innovate. 
D)  all of the above.

Question 18

Bank consolidation is desirable because

Accepted Answer

A)  banks are able to do specialized lending. 
B)  banks are more diversified. 
C)  banks are more able to serve small business. 
D)  all of the above. 
A)  banks are able to do specialized lending. 
B)  banks are more diversified. 
C)  banks are more able to serve small business. 
D)  all of the above.

Question 19

What type of regulation did holding companies circumvent?

Accepted Answer

Holding companies go

Question 20

Unit banks

Accepted Answer

A)  have no branches. 
B)  have a local monopoly. 
C)  had little incentive to innovate. 
D)  all of the above. 
A)  have no branches. 
B)  have a local monopoly. 
C)  had little incentive to innovate. 
D)  all of the above.

Exam 10: Innovation and Structure in Banking and Finance

Banks chartered by the Federal government are called national banks.

Banks operating in more than one state used to be illegal.

How did a lack of competition among banks give rise to mutual funds?

Disintermediation occurs when investors take their money out of banks to buy assets that could provide a market rate of return.

Why does the lack of a prepayment clause matter to the interest rate risk involved in taking a fixed rate mortgage?

The increase in nominal interest rates during the 1970s led to an increase in the size of the traditional banking industry.

The United States allows individuals to establish

Today, a few large banks have a larger share of

Unit banks

Why have some argued that securitization has increased risk across the whole economy, increasing the severity of the recession in 2009?

The Erosion of Glass-Steagall has allowed financial institutions to take advantage of economies of scale or scope. Explain.

The process of bundling loans and selling pieces of the group is known as securitization.

Near monopolization of in banks led to

Unit banks have no branches.

Unit banks and national banks comprise all the banks in the United States.

Why is it easier for financial innovation in a permissive regulatory system?

Bank consolidation is potentially a problem because

Bank consolidation is desirable because

What type of regulation did holding companies circumvent?

Unit banks

The Financial System

Money

Interest Rates

The Economics of Interest-Rate Fluctuations

The Economics of Interest-Rate Spreads and Yield Curves

Rational Expectations, Efficient Markets, and the Valuation of Corporate Equities

Financial Structure, Transaction Costs, and Asymmetric Information

Bank Management

The Economics of Financial Regulation

Financial Derivatives

Financial Crises: Causes and Consequences

Central Bank Form and Function

The Money Supply Process and the Money Multipliers

Monetary Policy Tools

Monetary Policy Targets and Goals

Foreign Exchange

International Monetary Regimes

Money Demand

Is-Lm

Is-Lm in Action

Aggregate Supply and Demand and the Growth Diamond

Monetary Policy Transmission Mechanisms

Inflation and Money

Rational Expectations Redux: Monetary Policy Implications

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