Exam 19: Banking Industry: Structure and Competition

Rising market interest rates in the 1960s and the 1970s,combined with regulated deposit rate ceilings,

Adjustable-rate mortgages

Eurodollars are created when deposits in accounts in the United States are transferred to a bank outside the country and are kept in the form of dollars.

What are Treasury strips? What roles have reinvestment risk and information technology played in the development of this financial product?

When disintermediation occurs,the banking system ________ deposits and bank lending ________.

Which of the following is an example of a financial innovation introduced to avoid regulations?

The Federal Reserve's Regulation Q

Unlike commercial banks,S&Ls can only be chartered by the federal government.

The traditional financial intermediation role of banking has been to make ________-term loans and to fund them with ________-term deposits.

Burdensome regulations,along with inflation and rising interest rates,help to explain

In the 1950s,the interest rate on three-month Treasury bills fluctuated between 1.0% and 3.5%.In the 1980s,the three-month Treasury bill rate ranged from 5% to over 15%.From this,one could predict that in the 1980s interest-rate risk was ________ and the demand for financial innovation was ________.

The prohibition against banks underwriting corporate securities and engaging in brokerage,real estate,and insurance activities was repealed by the

Today the United States has a dual banking system in which banks supervised by the ________ and by the ________ operate side by side.

Which bank regulatory agency has the sole regulatory authority over bank holding companies?

High-yield bonds rated below investment grade by the bond-rating agencies are frequently referred to as ________.

The entry of Sears,AT&T,and GM into the credit card business is an indication of

The practice of creating marketable debt instruments that are backed by otherwise illiquid assets is known as ________.

Because of the abuses by state banks and the clear need for a central bank to help the federal government raise funds during the War of 1812,Congress created the

Rising interest-rate risk ________ the ________ financial innovation.

Economies of scope come from increasing the size of a given financial activity and economies of scale come from combining different activities to lower their costs.