Exam 21: Product and Geographic Expansion

Which of the following is true of X efficiencies?

The emergence of the Euro as a uniform medium of exchange is expected to cause the importance of the dollar to increase among major European countries.

In order to achieve a more stable revenue stream in a merger, the asset and liability portfolios of the two institutions should have similar credit, interest rate, and liquidity characteristics.

The required monitoring and surveillance efforts of several regulatory bodies in the case of large holding companies with multi-subsidiaries may actually decrease the efficiency of regulatory oversight.

The specialized nature in which credit intermediation is performed by shadow banks makes the process less cost efficient than if done by traditional banks.

In the banking environment, economic and legal firewalls often have been designed to separate the risks of investment bank affiliate activities from commercial banks.

An investment bank may take a big loss when underwriting an issue on a firm commitment basis because

The NAFTA agreement and other agreements reached through the help of the World Trade Organization should reduce some of the restrictions that have faced Canadian banks in attempts to enter emerging market countries.

Chinese Walls are

The process of using lending power to coerce a loan customer to use products sold by a securities affiliate is called information transfer.

Concern about the improper transfer of inside information has been used to justify product segmentation on the grounds of

The European Community Second Banking Directive has aided the international competitive position of European banks by creating a single banking market in Europe.

What is the impact of underpricing a securities issue?

An organization form that limits business transactions to a single location is

The establishment of a global or international presence by an FI can be achieved in all but which of the following ways?

Which of the following was not an operating characteristic of foreign banks operating in the U.S. prior to the International Banking Act of 1978?

The merger bid premium usually is defined as

Which of the following is not a reasonable argument for the increase in the number of banks that can compete in security underwriting activities?

The commercial paper market is an example of nonbank competition on the asset side of the balance sheet that has become increasingly intense for banks.

To avoid being exposed to potential losses in a securities offering, a bank may place the securities in the accounts of customers in the trust department or other areas over which it has discretionary investment powers.