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Exam
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MULTIPLE CHOICE.
1. Which type of thrift institution was relatively unaffected by the traumas of deregulation in the 1980s?
A) mutual savings banks
B) credit unions
C) savings-and-loans
D) IBFs
2. Because banks are act as dealers in financial instruments such as bonds, foreign currency and derivatives, they are
exposed to
A) trading risk.
B) interest risk.
C) liquidity risk.
D) credit risk.
3. Because banking is very __________-intensive, a bank generally becomes successful if it can __________ the ratio of
salary and wages to total assets.
A) labor; raise
B) labor; lower
C) capital; raise
D) capital; lower
4. In a typical year, about __________ of bank business loans in the United States are made by foreign-owned banks
through their branches here.
A) twenty percent
B) one-third
C) one-half
D) ten percent
5. The Glass-Steagall Act prevented commercial banks from
A) getting into investment banking.
B) selling shares in themselves in the open market.
C) opening branches in other states unless the bank is part of a bank holding company.
D) issuing commercial paper.
6. A package of nontraded financial instruments can be transformed into a traded financial instrument through the
process of
A) repurchasing.
B) securitization.
C) underwriting.
D) collateralization.
7. With overnight repos, __________ gain access to short-term funds to lend.
A) corporations
B) consumers
C) governments
D) banks
8. Non-transactions deposits are different from transactions deposits in that
A) transactions deposits have unlimited check writing privileges while non-transactions deposits do not.
B) transactions deposits have limited check writing privileges while non-transactions deposits have unlimited check
writing privileges.
C) transactions deposits have no check writing privileges while non-transactions deposits have limited check writing
privileges.
D) transactions deposits have no check writing privileges while non-transactions deposits do.
9. Depository institutions are the most important source of credit to
A) state governments.
B) large businesses.
C) small businesses.
D) mutual funds.
10. Credit unions made it through the 1980s in relatively good shape because
A) they held many mortgages among their assets.
B) most of their depositors were businesses.
C) most of their depositors were individuals.
D) they held no mortgages among their assets.
11. The ratio of equity to total assets is a measure of a bank's __________ risk.
A) liquidity
B) interest rate
C) credit
D) leverage
12. For banks, net interest income is becoming a __________ proportion of their total operating income as the banks are
__________ nontraditional sources of revenue.
A) rising; pulling out of
B) falling; shifting into
C) rising; shifting into
D) falling; pulling out of
13. The assets of a bank are its __________ of funds
A) uses
B) excess
C) reserves
D) sources
14. Regulation Q was responsible for the drop in importance of __________ as a source of bank funds.
A) time deposits
B) equity
C) savings deposits
D) transactions deposits
15. Since 1960 U.S. banks have __________ the proportion of their total lending which is done overseas.
A) scaled back
B) increased
C) reduced to near zero
D) held nearly constant
1. B
2. A
3. B
4. B
5. A
6. B
7. D
8. A
9. C
10. D
11. D
12. C
13. A
14. D
15. B