Exam 17: Technology and Other Operational Risks

Which of the following wholesale services offered by FI's to businesses allows the FI to combine the email capabilities of the internet with the FI's ability to process payments electronically through the interbank payment networks?

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Question 1

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Distinguish between diseconomies of scale and diseconomies of scope.How could they occur?

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Question 2

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Diseconomies of scale occur when the average cost of production increases as the amount of production increases.This situation can occur when the costs of excess capacity and cost overruns due to integration problems easily absorb the expected benefits from large-scale investments.Diseconomies of scope occur when the average cost of production is higher from the joint production of services than the average costs from the previous independent production of the services.This situation can occur if the technology used in the production of a portion of the services is not sufficiently efficient for the production of the remaining services.

Assume that ABC Bank produces product A for a corporate client, while XYZ Bank produces product B for the client.The total operating cost for producing product A is $200 000 and $300 000 for product B.The resulting business volumes for the FI are $7 500 000 for product A and $10 000 000 for product B.What is the total average cost of producing products A and B separately (round to two decimals)?

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Question 3

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Which of the following are the two basic approaches to analysing the cost functions of FIs?

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Question 4

Economies of scale refers to the:

(Multiple Choice)

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Question 5

There is little strong evidence that larger multi-product financial service firms enjoy cost advantages over smaller, more specialised firms.

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Question 6

The term economies of scope refers to the ability of an FI to generate synergistic cost savings through joint use of inputs in producing multiple outputs.

(True/False)

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Question 7

Which of the following occurs if the costs of joint production of FI services are higher than they would be if they were produced independently?

(Multiple Choice)

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Question 8

How can the interest income of an FI be increased by improved technological efficiency?

(Multiple Choice)

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Question 9

Which of the following statements is false?

(Multiple Choice)

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Question 10

Assume that ABC Bank produces product A for a corporate client, while XYZ Bank produces product B for the client.The total operating cost for producing product A is $200 000 and $300 000 for product B.The resulting business volumes for the FI are $7 500 000 for product A and $10 000 000 for product B.Further assume that if the two banks merged they would be able to achieve $50 000 in cost efficiencies.What is the average cost of producing products A and B if the two institutions merged (round to two decimals)?

(Multiple Choice)

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Question 11

How can the operating income of an FI be increased by improved technological efficiency?

(Multiple Choice)

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Question 12

Potential reasons that technologically based product innovations result in a negative net present value are:

(Multiple Choice)

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Question 13

ES account stands for:

(Multiple Choice)

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Question 14

Which of the following are potential benefits of technology for an FI?

(Multiple Choice)

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Question 15

Some of the most important retail payment product innovations are:

(Multiple Choice)

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Question 16

Which of the following statements is true?

(Multiple Choice)

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Question 17

Retail customers mostly prefer to obtain their cash by withdrawing it from an ATM.Since 2005:

(Multiple Choice)

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Question 18

Which of the following statements is true?

(Multiple Choice)

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Question 19

According to studies, which of the following may better explain cost differences and operating cost efficiencies among FIs?

(Multiple Choice)

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Question 20

Showing 1 - 20 of 77

Which of the following wholesale services offered by FI's to businesses allows the FI to combine the email capabilities of the internet with the FI's ability to process payments electronically through the interbank payment networks?

Distinguish between diseconomies of scale and diseconomies of scope.How could they occur?

Which of the following are the two basic approaches to analysing the cost functions of FIs?

Economies of scale refers to the:

There is little strong evidence that larger multi-product financial service firms enjoy cost advantages over smaller, more specialised firms.

The term economies of scope refers to the ability of an FI to generate synergistic cost savings through joint use of inputs in producing multiple outputs.

Which of the following occurs if the costs of joint production of FI services are higher than they would be if they were produced independently?

How can the interest income of an FI be increased by improved technological efficiency?

Which of the following statements is false?

How can the operating income of an FI be increased by improved technological efficiency?

Potential reasons that technologically based product innovations result in a negative net present value are:

ES account stands for:

Which of the following are potential benefits of technology for an FI?

Some of the most important retail payment product innovations are:

Which of the following statements is true?

Retail customers mostly prefer to obtain their cash by withdrawing it from an ATM.Since 2005:

Which of the following statements is true?

According to studies, which of the following may better explain cost differences and operating cost efficiencies among FIs?

Why Are Financial Institutions Special

The Financial Service Industry: Depository Institutions

The Financial Service Industry: Other Financial Institutions

Risks of Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: the Duration Model

Managing Interest Rate Risk Using Off-Balance-Sheet Instruments

Managing Interest Rate Risk Using Securitisation

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Sovereign Risk

Foreign Exchange Risk

Liquidity Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Capital Management and Adequacy

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