Question 1

Interest rate risk results from possible price fluctuations in fixed-rate debt instruments associated with changes in market interest rates.

Accepted Answer

A) True 
 B)False  True

Question 2

The _______________________ provided for separation of commercial banking and investment banking activities in the United States.

Accepted Answer

A) Glass Steagall Act 
B) Gramm-Leach-Bliley Act 
C) Garn-Saint Germain Act 
D) Depository Institutions Deregulation and Monetary Control Act 
A) Glass Steagall Act 
B) Gramm-Leach-Bliley Act 
C) Garn-Saint Germain Act 
D) Depository Institutions Deregulation and Monetary Control Act A

Question 3

Investment banking firms assist individuals to purchase new or existing securities issues or to sell previously purchased securities.

Accepted Answer

A) True 
 B)False  False

Question 4

Which of the following would not be part of primary bank capital?

Accepted Answer

A) bank premises 
B) common stock of the bank 
C) loan loss reserves 
D) perpetual preferred stock 
A) bank premises 
B) common stock of the bank 
C) loan loss reserves 
D) perpetual preferred stock

Question 5

An open-end investment company that can issue an unlimited number of its shares to investors and use the pooled proceeds to purchase corporate and government securities is called a (n)

Accepted Answer

A) mutual fund 
B) pension fund 
C) insurance company 
D) brokerage firm 
A) mutual fund 
B) pension fund 
C) insurance company 
D) brokerage firm

Question 6

The item on the assets side of a bank's balance sheet that represents the largest proportion of bank assets is:

Accepted Answer

A) deposits 
B) owner's capital 
C) securities 
D) loans 
A) deposits 
B) owner's capital 
C) securities 
D) loans

Question 7

Nonbank financial conglomerates are large corporations that offer various financial services, such as mortgage insurance, real estate management, and consumer finance.

Accepted Answer

A) True 
 B)False

Question 8

Investment banking firms sell or market new securities issued by businesses to individual and institutional investors.

Accepted Answer

A) True 
 B)False

Question 9

The principal assets of savings banks are:

Accepted Answer

A) securities 
B) vault cash and deposits at other banks 
C) real estate mortgages 
D) all the above 
A) securities 
B) vault cash and deposits at other banks 
C) real estate mortgages 
D) all the above

Question 10

One of the most significant advantages claimed by branch banking is:

Accepted Answer

A) lower interest rates are usually available from branch bank 
B) convenience for customers 
C) banking operations are easier to regulate 
D) all the above 
A) lower interest rates are usually available from branch bank 
B) convenience for customers 
C) banking operations are easier to regulate 
D) all the above

Question 11

The Second Bank of the United States was created to:

Accepted Answer

A) replace the First Bank of the United States 
B) appease political interests 
C) restore order to chaotic banking conditions 
D) all the above 
A) replace the First Bank of the United States 
B) appease political interests 
C) restore order to chaotic banking conditions 
D) all the above

Question 12

Investment companies sell shares in their firms to individuals and invest the pooled proceeds in corporate and government securities.

Accepted Answer

A) True 
 B)False

Question 13

The Federal Reserve Act of 1913 created a system of central banks in the United States.

Accepted Answer

A) True 
 B)False

Question 14

The Equity Capital Ratio for a bank with owners' equity of $3 million and total assets of $50 million would be:

Accepted Answer

A) 3% 
B) 6% 
C) 2.83% 
D) 5.66% 
E) none of the above 
A) 3% 
B) 6% 
C) 2.83% 
D) 5.66% 
E) none of the above

Question 15

Bank solvency reflects the ability to keep the value of a bank's assets greater than its liabilities.

Accepted Answer

A) True 
 B)False

Question 16

The National Banking Act of 1864 provided for:

Accepted Answer

A) federally chartered banks 
B) the establishment of a system of central banks 
C) deregulation and monetary control 
D) the establishment of deposit insurance 
A) federally chartered banks 
B) the establishment of a system of central banks 
C) deregulation and monetary control 
D) the establishment of deposit insurance

Question 17

_______________ provide loans directly to consumers and businesses and help borrowers obtain mortgage loans on real property.

Accepted Answer

A) banks 
B) securities firms 
C) pension funds 
D) finance firms 
E) none of the above 
A) banks 
B) securities firms 
C) pension funds 
D) finance firms 
E) none of the above

Question 18

Savings and loan associations are cooperative nonprofit organizations that exist primarily to provide member depositors with consumer credit.

Accepted Answer

A) True 
 B)False

Question 19

Foreign banks in the United States:

Accepted Answer

A) are prohibited in all 50 states 
B) need the approval of the Federal Reserve 
C) are not subject to federal examination 
D) none of the above 
A) are prohibited in all 50 states 
B) need the approval of the Federal Reserve 
C) are not subject to federal examination 
D) none of the above

Question 20

The item on the liabilities and equity section of a bank's balance sheet that represents the largest proportion of a typical bank's assets is:

Accepted Answer

A) deposits 
B) owner's capital 
C) securities 
D) federal funds 
A) deposits 
B) owner's capital 
C) securities 
D) federal funds

Interest rate risk results from possible price fluctuations in fixed-rate debt instruments associated with changes in market interest rates.

The _______________________ provided for separation of commercial banking and investment banking activities in the United States.

Investment banking firms assist individuals to purchase new or existing securities issues or to sell previously purchased securities.

Which of the following would not be part of primary bank capital?

An open-end investment company that can issue an unlimited number of its shares to investors and use the pooled proceeds to purchase corporate and government securities is called a (n)

The item on the assets side of a bank's balance sheet that represents the largest proportion of bank assets is:

Nonbank financial conglomerates are large corporations that offer various financial services, such as mortgage insurance, real estate management, and consumer finance.

Investment banking firms sell or market new securities issued by businesses to individual and institutional investors.

The principal assets of savings banks are:

One of the most significant advantages claimed by branch banking is:

The Second Bank of the United States was created to:

Investment companies sell shares in their firms to individuals and invest the pooled proceeds in corporate and government securities.

The Federal Reserve Act of 1913 created a system of central banks in the United States.

The Equity Capital Ratio for a bank with owners' equity of $3 million and total assets of $50 million would be:

Bank solvency reflects the ability to keep the value of a bank's assets greater than its liabilities.

The National Banking Act of 1864 provided for:

_______________ provide loans directly to consumers and businesses and help borrowers obtain mortgage loans on real property.

Savings and loan associations are cooperative nonprofit organizations that exist primarily to provide member depositors with consumer credit.

Foreign banks in the United States:

The item on the liabilities and equity section of a bank's balance sheet that represents the largest proportion of a typical bank's assets is:

The Financial Environment

Money and the Monetary System

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

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Exam 3: Banks and Other Financial Institutions

Interest rate risk results from possible price fluctuations in fixed-rate debt instruments associated with changes in market interest rates.

The _______________________ provided for separation of commercial banking and investment banking activities in the United States.

Investment banking firms assist individuals to purchase new or existing securities issues or to sell previously purchased securities.

Which of the following would not be part of primary bank capital?

An open-end investment company that can issue an unlimited number of its shares to investors and use the pooled proceeds to purchase corporate and government securities is called a (n)

The item on the assets side of a bank's balance sheet that represents the largest proportion of bank assets is:

Nonbank financial conglomerates are large corporations that offer various financial services, such as mortgage insurance, real estate management, and consumer finance.

Investment banking firms sell or market new securities issued by businesses to individual and institutional investors.

The principal assets of savings banks are:

One of the most significant advantages claimed by branch banking is:

The Second Bank of the United States was created to:

Investment companies sell shares in their firms to individuals and invest the pooled proceeds in corporate and government securities.

The Federal Reserve Act of 1913 created a system of central banks in the United States.

The Equity Capital Ratio for a bank with owners' equity of $3 million and total assets of $50 million would be:

Bank solvency reflects the ability to keep the value of a bank's assets greater than its liabilities.

The National Banking Act of 1864 provided for:

_______________ provide loans directly to consumers and businesses and help borrowers obtain mortgage loans on real property.

Savings and loan associations are cooperative nonprofit organizations that exist primarily to provide member depositors with consumer credit.

Foreign banks in the United States:

The item on the liabilities and equity section of a bank's balance sheet that represents the largest proportion of a typical bank's assets is:

The Financial Environment

Money and the Monetary System

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters