Question 1

Recent problems in the financial system will likely cause bank consolidation to:

Accepted Answer

A)   Speed up
B)   Remain constant
C)   Triple
D)   Slow down
E)   None of the aboveF) A) and E)
G) A) and D)

Question 2

Construct the report of condition (balance sheet) for First National Bank for December 31 of the year just ended from following information.

Accepted Answer

The answer of Construct the report of condition (balance sheet)...

Question 3

The FDIC Improvement Act in 1991 granted the Federal Deposit Insurance Corporation authority to close the U.S. offices of foreign banks if these are operated in an unsafe manner.

Accepted Answer

A) True 
 B)False

Question 4

According to the text, which of the following is not a permissible activity for bank holding companies?

Accepted Answer

A)   Credit cards
B)   Equipment leasing
C)   Data processing
D)   Financial advice
E)   All of the above are permissible activitiesF) None of the above
G) A) and E)

Question 5

The most important security held in U.S. bank investment portfolios today is:

Accepted Answer

A)   Municipal bonds and notes
B)   Federal government and federal agency securities
C)   Foreign debt
D)   Corporate bonds
E)   Corporate stocksF) A) and C)
G) D) and E)

Question 6

The money position of a bank involves its legal reserves.

Accepted Answer

A) True 
 B)False

Question 7

A relatively new fund-raising device used by banks and a few other financial intermediaries in recent years in which better quality loans are packaged into asset pools as collateral for bank security issues sold to investors is known as:

Accepted Answer

A)   Security hypothecation
B)   Securitization
C)   Loan transfers
D)   Co-managed loan trusts
E)   None of the aboveF) C) and E)
G) B) and D)

Question 8

The banking system can create money only dollar for dollar with the amount of excess reserves in the banking system.

Accepted Answer

A) True 
 B)False

Question 9

The U.S. banking system is moving toward consolidation which means:

Accepted Answer

A)   More efficient use of resources
B)   Economies of scale
C)   Increased competition
D)   All of the above
E)   None of the aboveF) B) and E)
G) B) and C)

Question 10

Primary reserves are the banker's first line of defense against withdrawals.

Accepted Answer

A) True 
 B)False

Question 11

No U.S. banks are permitted to offer investment banking services involving corporate securities inside the United States.

Accepted Answer

A) True 
 B)False

Question 12

The banking system can take a given volume of cash reserves and:

Accepted Answer

A)   Lend them
B)   Create a multiple amount of credit
C)   Spend them
D)   None of theseE) A) and D)
F) B) and C)

Question 13

Lease financing by commercial banks generally carries a higher yield to banks than direct loans but lacks any tax advantage as direct loans do.

Accepted Answer

A) True 
 B)False

Question 14

Loans granted to finance the purchase of buildings, machinery and equipment are called working capital loans.

Accepted Answer

A) True 
 B)False

Question 15

From 1975 to year 2000, the number of U.S. commercial banks and the average size of a U.S. bank have changed as follows:

Accepted Answer

A)   The total number of commercial banks has been dropping and the average size of a U.S. bank has been increasing
B)   The total number of commercial banks has been dropping and the average size of a U.S. bank has been decreasing
C)   The total number of commercial banks has been increasing and the average size of a U.S. bank has been increasing
D)   The total number of commercial banks has been increasing and the average size of a U.S. bank has been decreasing
E)   None of the aboveF) A) and B)
G) A) and E)

Question 16

The number and different sizes of commercial banks in a given community or market area is referred to as:

Accepted Answer

A)   Banking structure
B)   Competition among banks
C)   Economies of scale
D)   Market array
E)   None of the aboveF) C) and D)
G) A) and D)

Question 17

The allowance for loan and lease losses (ALL)  is a:

Accepted Answer

A)   Loss reserve
B)   Contra asset account
C)   Measured of the bank's assets
D)   A and B
E)   None of the aboveF) A) and D)
G) A) and E)

Question 18

For the EC (European Community) , conversion to the Euro will offer the following benefits:

Accepted Answer

A)   Reduced currency risk for banks, investors and traders
B)   More stable economy within the European Union
C)   Increase competition between European banks and other suppliers of goods and services
D)   None of the above
E)   All of the aboveF) None of the above
G) C) and D)

Question 19

The structural change which makes banking organizations looking more and more like other financial-service providers is called:

Accepted Answer

A)   Convergence
B)   Consolidation
C)   Deregulation
D)   Bank failure
E)   None of the aboveF) D) and E)
G) C) and D)

Question 20

Vault cash held by a depository institution does not count as part of the legal reserves of a U.S. depository institution.

Accepted Answer

A) True 
 B)False

Exam 14: Banking and Financial Services: Regulations, Operations, and Trends

The banking system can create money only dollar for dollar with the amount of excess reserves in the banking system.

Correct AnswerverifiedShow Answer

Primary reserves are the banker's first line of defense against withdrawals.

Correct AnswerverifiedShow Answer

Lease financing by commercial banks generally carries a higher yield to banks than direct loans but lacks any tax advantage as direct loans do.

Correct AnswerverifiedShow Answer

Loans granted to finance the purchase of buildings, machinery and equipment are called working capital loans.

Correct AnswerverifiedShow Answer

A relatively new fund-raising device used by banks and a few other financial intermediaries in recent years in which better quality loans are packaged into asset pools as collateral for bank security issues sold to investors is known as:

Correct AnswerverifiedShow Answer

The banking system can take a given volume of cash reserves and:

Correct AnswerverifiedShow Answer

The most important security held in U.S. bank investment portfolios today is:

Correct AnswerverifiedShow Answer

The allowance for loan and lease losses (ALL) is a:

Correct AnswerverifiedShow Answer

According to the text, which of the following is not a permissible activity for bank holding companies?

Correct AnswerverifiedShow Answer

Vault cash held by a depository institution does not count as part of the legal reserves of a U.S. depository institution.

Correct AnswerverifiedShow Answer

The money position of a bank involves its legal reserves.

Correct AnswerverifiedShow Answer

The number and different sizes of commercial banks in a given community or market area is referred to as:

Correct AnswerverifiedShow Answer

Construct the report of condition (balance sheet) for First National Bank for December 31 of the year just ended from following information.

Correct AnswerverifiedShow Answer

The U.S. banking system is moving toward consolidation which means:

Correct AnswerverifiedShow Answer

Recent problems in the financial system will likely cause bank consolidation to:

Correct AnswerverifiedShow Answer

From 1975 to year 2000, the number of U.S. commercial banks and the average size of a U.S. bank have changed as follows:

Correct AnswerverifiedShow Answer

No U.S. banks are permitted to offer investment banking services involving corporate securities inside the United States.

Correct AnswerverifiedShow Answer

For the EC (European Community) , conversion to the Euro will offer the following benefits:

Correct AnswerverifiedShow Answer

The structural change which makes banking organizations looking more and more like other financial-service providers is called:

Correct AnswerverifiedShow Answer

The FDIC Improvement Act in 1991 granted the Federal Deposit Insurance Corporation authority to close the U.S. offices of foreign banks if these are operated in an unsafe manner.

Correct AnswerverifiedShow Answer

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