Question 1

In general, when interest rates fall, a savings institution's cost of obtaining funds declines more than the decline in the interest earned on its loans and investments.

Accepted Answer

A) True 
 B)False

Question 2

Today, credit unions are regulated as to the

Accepted Answer

A) types of services they can offer. 
B) rates they offer on deposits. 
C) maturity of residential loans they can make. 
D) size of residential mortgage loans they can make. 
A) types of services they can offer. 
B) rates they offer on deposits. 
C) maturity of residential loans they can make. 
D) size of residential mortgage loans they can make.

Question 3

____ are the primary asset of savings institutions. ​

Accepted Answer

A) Mortgages 
B) Cash balances 
C) Investment securities 
D) Business loans 
A) Mortgages 
B) Cash balances 
C) Investment securities 
D) Business loans

Question 4

If depositors move money from their checking accounts to short-term CDs, this would ____ the rate sensitivity of the savings institution's liabilities to interest rate movements.

Accepted Answer

A) increase 
B) have no effect on 
C) decrease 
D) increase AND decrease are correct, depending on the size of the savings institution 
A) increase 
B) have no effect on 
C) decrease 
D) increase AND decrease are correct, depending on the size of the savings institution

Question 5

Under the Financial Reform Act (Dodd-Frank Act)of 2010, all federally chartered savings institutions are to be regulated by the Federal Reserve.

Accepted Answer

A) True 
 B)False

Question 6

The capital of savings institutions is primarily composed of retained earnings and funds obtained from issuing stock.

Accepted Answer

A) True 
 B)False

Question 7

____ is (are)not a main source of funds for savings institutions.

Accepted Answer

A) Deposits 
B) Borrowed funds 
C) Capital 
D) Mortgages 
A) Deposits 
B) Borrowed funds 
C) Capital 
D) Mortgages

Question 8

Savings institutions obtain most of their funds from

Accepted Answer

A) savings and time deposits. 
B) loans. 
C) mortgages. 
D) repurchase agreements. 
A) savings and time deposits. 
B) loans. 
C) mortgages. 
D) repurchase agreements.

Question 9

Which of the following are  NOT  an asset of savings institutions?

Accepted Answer

A) loans 
B) mortgages 
C) NOW accounts 
D) mortgage-backed securities 
A) loans 
B) mortgages 
C) NOW accounts 
D) mortgage-backed securities

Question 10

Which of the following was NOT a major reason for the savings institution crisis in the late 1980s?

Accepted Answer

A) large losses on real estate loans 
B) large losses on loans to less-developed countries 
C) fraud 
D) illiquidity 
E) increased interest expenses 
A) large losses on real estate loans 
B) large losses on loans to less-developed countries 
C) fraud 
D) illiquidity 
E) increased interest expenses

Question 11

The risk that a credit union will experience an unanticipated wave of withdrawals without an offsetting amount of new deposits is ____ risk.

Accepted Answer

A) credit (default) 
B) interest rate 
C) liquidity 
D) exchange rate 
E) None of these are correct. 
A) credit (default) 
B) interest rate 
C) liquidity 
D) exchange rate 
E) None of these are correct.

Question 12

Because credit unions' sources and uses of funds are generally interest rate ____, movements in interest revenues and interest expenses of credit unions are ____.

Accepted Answer

A) sensitive; negatively correlated 
B) insensitive; highly correlated 
C) sensitive; uncorrelated 
D) sensitive; highly correlated 
E) insensitive; uncorrelated 
A) sensitive; negatively correlated 
B) insensitive; highly correlated 
C) sensitive; uncorrelated 
D) sensitive; highly correlated 
E) insensitive; uncorrelated

Question 13

____ savings institutions hold the most assets in aggregate. ​

Accepted Answer

A) Stock-owned 
B) Mutual 
C) Closely held 
D) Privatized 
A) Stock-owned 
B) Mutual 
C) Closely held 
D) Privatized

Question 14

Because credit unions do not issue stock, they are technically sole proprietorships.

Accepted Answer

A) True 
 B)False

Question 15

Most mortgages originated by savings institutions are for

Accepted Answer

A) commercial buildings. 
B) land for commercial purposes. 
C) single-family homes or multifamily dwellings. 
D) None of these are correct. 
A) commercial buildings. 
B) land for commercial purposes. 
C) single-family homes or multifamily dwellings. 
D) None of these are correct.

Question 16

Interest-paying checkable accounts offered by credit unions are called

Accepted Answer

A) NOW accounts. 
B) money market deposit accounts. 
C) share certificates. 
D) share drafts. 
A) NOW accounts. 
B) money market deposit accounts. 
C) share certificates. 
D) share drafts.

Question 17

Because credit unions are for-profit organizations, their income is taxable.

Accepted Answer

A) True 
 B)False

Question 18

All federally chartered credit unions are required to obtain insurance from the National Credit Union Share Insurance Fund (NCUSIF).

Accepted Answer

A) True 
 B)False

Question 19

Because savings institutions commonly use long-term liabilities to finance short-term assets, they depend on additional deposits to accommodate withdrawal requests.

Accepted Answer

A) True 
 B)False

Question 20

Credit unions obtain most of their funds by borrowing from the U.S. government.

Accepted Answer

A) True 
 B)False

Exam 21: Thrift Operations

In general, when interest rates fall, a savings institution's cost of obtaining funds declines more than the decline in the interest earned on its loans and investments.

Today, credit unions are regulated as to the

____ are the primary asset of savings institutions. ​

If depositors move money from their checking accounts to short-term CDs, this would ____ the rate sensitivity of the savings institution's liabilities to interest rate movements.

Under the Financial Reform Act (Dodd-Frank Act)of 2010, all federally chartered savings institutions are to be regulated by the Federal Reserve.

The capital of savings institutions is primarily composed of retained earnings and funds obtained from issuing stock.

____ is (are)not a main source of funds for savings institutions.

Savings institutions obtain most of their funds from

Which of the following are NOT an asset of savings institutions?

Which of the following was NOT a major reason for the savings institution crisis in the late 1980s?

The risk that a credit union will experience an unanticipated wave of withdrawals without an offsetting amount of new deposits is ____ risk.

Because credit unions' sources and uses of funds are generally interest rate ____, movements in interest revenues and interest expenses of credit unions are ____.

____ savings institutions hold the most assets in aggregate. ​

Because credit unions do not issue stock, they are technically sole proprietorships.

Most mortgages originated by savings institutions are for

Interest-paying checkable accounts offered by credit unions are called

Because credit unions are for-profit organizations, their income is taxable.

All federally chartered credit unions are required to obtain insurance from the National Credit Union Share Insurance Fund (NCUSIF).

Because savings institutions commonly use long-term liabilities to finance short-term assets, they depend on additional deposits to accommodate withdrawal requests.

Credit unions obtain most of their funds by borrowing from the U.S. government.

Role of Financial Markets and Institutions

Determination of Interest Rates

Structure of Interest Rates

Functions of the Fed

Monetary Policy

Money Markets

Bond Markets

Bond Valuation and Risk

Mortgage Markets

Stock Offerings and Investor Monitoring

Stock Valuation and Risk

Market Microstructure and Strategies

Financial Futures Markets

Options Markets

Swap Markets

Foreign Exchange Derivative Markets

Commercial Bank Operations

Bank Regulation

Bank Management

Bank Performance

Finance Company Operations

Mutual Fund Operations

Securities Operations

Insurance and Pension Fund Operations

Pension Fund Operations

Filters

____ are the primary asset of savings institutions.

Because credit unions' sources and uses of funds are generally interest rate , movements in interest revenues and interest expenses of credit unions are .

____ savings institutions hold the most assets in aggregate.