Question 1

Because credit unions ____ stock, they are technically owned by the ____.

Accepted Answer

A) issue; depositors 
B) do not issue; depositors 
C) issue; stockholders 
D) do not issue; management 
A) issue; depositors 
B) do not issue; depositors 
C) issue; stockholders 
D) do not issue; management

Question 2

Credit unions use the majority of their funds to invest in the stock market.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is true about credit unions versus commercial banks and savings institutions?

Accepted Answer

A) C redit unions are less able to quickly generate additional deposits. 
B) S avings institutions and commercial banks can borrow from the Central Liquidity Facility, but credit unions cannot. 
C) S avings institutions and commercial banks are less able to quickly generate additional deposits. 
D) Credit unions have more exposure to interest rate risk. 
A) C redit unions are less able to quickly generate additional deposits. 
B) S avings institutions and commercial banks can borrow from the Central Liquidity Facility, but credit unions cannot. 
C) S avings institutions and commercial banks are less able to quickly generate additional deposits. 
D) Credit unions have more exposure to interest rate risk.

Question 4

If a savings institution's assets have a considerably longer duration than its liabilities, it can reduce its exposure to interest rate risk by

Accepted Answer

A) reducing its proportion of assets in the short duration categories. 
B) increasing its proportion of liabilities in the short duration categories. 
C) reducing its proportion of assets in the long duration categories . 
D) reducing its proportion of assets in the short duration categories AND increasing its proportion of liabilities in the short duration categories. 
A) reducing its proportion of assets in the short duration categories. 
B) increasing its proportion of liabilities in the short duration categories. 
C) reducing its proportion of assets in the long duration categories . 
D) reducing its proportion of assets in the short duration categories AND increasing its proportion of liabilities in the short duration categories.

Question 5

Savings institutions commonly measure the gap between their rate-sensitive assets and rate-sensitive liabilities in order to determine their exposure to credit risk.

Accepted Answer

A) True 
 B)False

Question 6

Credit unions obtain most of their funds from

Accepted Answer

A) issuing common stock. 
B) retained earnings. 
C) share deposits by members. 
D) issuing long-term bonds. 
A) issuing common stock. 
B) retained earnings. 
C) share deposits by members. 
D) issuing long-term bonds.

Question 7

A savings institution owned by its depositors is a ____ savings institution.

Accepted Answer

A) mutual 
B) stock 
C) credit 
D) closed-end 
A) mutual 
B) stock 
C) credit 
D) closed-end

Question 8

To manage interest rate risk, a savings institution could use

Accepted Answer

A) fixed-rate mortgages. 
B) currency options. 
C) interest rate futures contracts. 
D) letters of credit. 
A) fixed-rate mortgages. 
B) currency options. 
C) interest rate futures contracts. 
D) letters of credit.

Question 9

According to your text, about ____ percent of credit unions are insured by the National Credit Union Share Insurance Fund.

Accepted Answer

A) 20 
B) 40 
C) 60 
D) 90 
A) 20 
B) 40 
C) 60 
D) 90

Question 10

Money market deposit accounts (MMDAs)are

Accepted Answer

A) trust accounts managed by savings institutions. 
B) checking accounts that do not pay interest. 
C) accounts offered primarily by money market funds. 
D) deposit accounts offering limited checking and close-to-market interest rates. 
A) trust accounts managed by savings institutions. 
B) checking accounts that do not pay interest. 
C) accounts offered primarily by money market funds. 
D) deposit accounts offering limited checking and close-to-market interest rates.

Question 11

The objective of a credit union is to act as an intermediary for its members by using members' deposited funds to provide loans to other members who are in need of funds.

Accepted Answer

A) True 
 B)False

Question 12

Credit unions use the majority of their funds to

Accepted Answer

A) purchase investment securities. 
B) provide commercial real estate loans. 
C) provide small business loans to members. 
D) provide consumer loans to members. 
A) purchase investment securities. 
B) provide commercial real estate loans. 
C) provide small business loans to members. 
D) provide consumer loans to members.

Question 13

The Financial Reform Act of 2010 did all of the following EXCEPT

Accepted Answer

A) strengthened the standards required to obtain a mortgage. 
B) required more disclosures by financial institutions regarding the quality of the underlying assets when they sell mortgage-backed securities. 
C) required savings institutions to sell off any holdings of junk bonds and prohibited them from investing in junk bonds in the future. 
D) established the Consumer Financial Protection Bureau. 
A) strengthened the standards required to obtain a mortgage. 
B) required more disclosures by financial institutions regarding the quality of the underlying assets when they sell mortgage-backed securities. 
C) required savings institutions to sell off any holdings of junk bonds and prohibited them from investing in junk bonds in the future. 
D) established the Consumer Financial Protection Bureau.

Question 14

In general, savings institutions are larger than commercial banks.

Accepted Answer

A) True 
 B)False

Question 15

To measure ____ risk, some savings institutions measure the duration of their respective assets and liabilities.

Accepted Answer

A) credit 
B) interest rate 
C) liquidity 
D) None of these are correct. 
A) credit 
B) interest rate 
C) liquidity 
D) None of these are correct.

Question 16

The National Credit Union Administration (NCUA)is responsible for regulating savings institutions.

Accepted Answer

A) True 
 B)False

Question 17

____ do NOT represent an asset of credit unions.

Accepted Answer

A) Mortgage-backed securities 
B) Home-equity loans 
C) Automobile loans 
D) Stocks 
A) Mortgage-backed securities 
B) Home-equity loans 
C) Automobile loans 
D) Stocks

Question 18

The National Credit Union Share Insurance Fund (NCUSIF)requires all

Accepted Answer

A) federally chartered credit unions to obtain insurance from the NCUSIF. 
B) state-chartered credit unions to obtain insurance from the NCUSIF. 
C) credit unions to pay a supplemental insurance premium each year. 
D) depository institutions to pay a supplemental insurance premium each year. 
A) federally chartered credit unions to obtain insurance from the NCUSIF. 
B) state-chartered credit unions to obtain insurance from the NCUSIF. 
C) credit unions to pay a supplemental insurance premium each year. 
D) depository institutions to pay a supplemental insurance premium each year.

Question 19

Stock-owned savings institutions ____ susceptible to unfriendly takeovers. Mutual savings institutions ____ susceptible to unfriendly takeovers.

Accepted Answer

A) are; are not 
B) are; are 
C) are not; are 
D) are not; are not 
A) are; are not 
B) are; are 
C) are not; are 
D) are not; are not

Question 20

The majority of maturities on consumer loans offered by credit unions are ____ term, causing income generated on their asset portfolio to be ____ to interest rate movements.

Accepted Answer

A) long; insensitive 
B) short or medium; sensitive 
C) long; sensitive 
D) short or medium; insensitive 
A) long; insensitive 
B) short or medium; sensitive 
C) long; sensitive 
D) short or medium; insensitive

Exam 21: Thrift Operations

Because credit unions ____ stock, they are technically owned by the ____.

Credit unions use the majority of their funds to invest in the stock market.

Which of the following is true about credit unions versus commercial banks and savings institutions?

If a savings institution's assets have a considerably longer duration than its liabilities, it can reduce its exposure to interest rate risk by

Savings institutions commonly measure the gap between their rate-sensitive assets and rate-sensitive liabilities in order to determine their exposure to credit risk.

Credit unions obtain most of their funds from

A savings institution owned by its depositors is a ____ savings institution.

To manage interest rate risk, a savings institution could use

According to your text, about ____ percent of credit unions are insured by the National Credit Union Share Insurance Fund.

Money market deposit accounts (MMDAs)are

The objective of a credit union is to act as an intermediary for its members by using members' deposited funds to provide loans to other members who are in need of funds.

Credit unions use the majority of their funds to

The Financial Reform Act of 2010 did all of the following EXCEPT

In general, savings institutions are larger than commercial banks.

To measure ____ risk, some savings institutions measure the duration of their respective assets and liabilities.

The National Credit Union Administration (NCUA)is responsible for regulating savings institutions.

____ do NOT represent an asset of credit unions.

The National Credit Union Share Insurance Fund (NCUSIF)requires all

Stock-owned savings institutions ____ susceptible to unfriendly takeovers. Mutual savings institutions ____ susceptible to unfriendly takeovers.

The majority of maturities on consumer loans offered by credit unions are ____ term, causing income generated on their asset portfolio to be ____ to interest rate movements.

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

Because credit unions stock, they are technically owned by the .

Stock-owned savings institutions susceptible to unfriendly takeovers. Mutual savings institutions susceptible to unfriendly takeovers.

The majority of maturities on consumer loans offered by credit unions are term, causing income generated on their asset portfolio to be to interest rate movements.