Question 1

Prior to the 1980s, regulation of the banking system included which of the following?

Accepted Answer

A)  restrictions on entry
B)  regulation Q interest rate ceilings
C)  restrictions on branching
D)  All of the above are correct.E) C) and D)
F) All of the above D

Question 2

Which of the following is false?

Accepted Answer

A)  Merchant banking is the making of direct equity investments (purchasing stock)  in start-up or growing nonfinancial businesses.
B)  A financial holding company can own a bank, a securities firm, and an insurance company.
C)  Financial holding companies can engage in a much broader array of financial and nonfinancial services than bank holding companies.
D)  Financial holding companies have been outlawed as a result of the financial crisis of 2007-2009.E) A) and B)
F) None of the above

Question 3

Commercial banks that are members of the Fed are

Accepted Answer

A)  not provided discount privileges with the Fed.
B)  regulated by the Fed.
C)  not subject to reserve requirements set by the Fed.
D)  All of the above of the above are correct.E) All of the above
F) C) and D) B

Question 4

The McFadden Act was designed to do which of the following?

Accepted Answer

A)  prohibit state-chartered banks from branching across state lines
B)  prohibit national banks from branching across state lines
C)  require state banks to abide by the branching laws of the state in which they are located
D)  All of the above are correct.E) C) and D)
F) A) and B)

Question 5

Which of the following is not authorized by the Gramm-Leach-Bliley (GLBA)  Act of 1999?

Accepted Answer

A)  The formation of financial holding companies whereby banks, security firms, insurance companies, and other financial firms can affiliate under common ownership.
B)  Financial holding companies can engage in merchant banking activities.
C)  Financial holding companies can engage in any other activity that the Fed determines to be financial in nature or incidental to financial activities.
D)  All of the above were authorized by GLBA.E) A) and C)
F) A) and B)

Question 6

The Interstate Banking and Branching Efficiency Act (IBBEA)  was designed to

Accepted Answer

A)  allow state-chartered banks to join the FDIC.
B)  allow state-chartered banks to join the Fed.
C)  allow unrestrained nationwide branching of banks.
D)  allow intrastate branching for all national banks.E) A) and B)
F) C) and D)

Question 7

Who regulates state-chartered, insured, Fed-member banks?

Accepted Answer

A)  the Federal Deposit Insurance Corporation
B)  the Comptroller of the Currency
C)  the Fed
D)  Both the Fed and the FDIC regulate state-chartered, insured, Fed-member banks.E) A) and D)
F) A) and B)

Question 8

Which of the following is characteristic of a banking system composed of a small number of large banks?

Accepted Answer

A)  fierce price competition
B)  high efficiency (low cost)  due to extensive competition
C)  a low number of bank failures
D)  All of the above are correct.E) None of the above
F) B) and C)

Question 9

The erosion and breakdown of barriers to interstate branching and various activities in the financial services industry has resulted in which of the following?

Accepted Answer

A)  increased competition in the financial services industry
B)  the ineffectiveness of many financial regulations
C)  disagreement among regulatory authorities
D)  All of the above are correct.E) C) and D)
F) All of the above

Question 10

In order to be a commercial bank in the United States, a bank must be

Accepted Answer

A)  Chartered.
B)  part government owned.
C)  Certificated.
D)  All of the above are correct.E) A) and D)
F) A) and B)

Question 11

Approximately how many banks were there in the United States in 2008?

Accepted Answer

A)  7,200
B)  67,000
C)  11,200
D)  34,000E) B) and C)
F) A) and B) A

Question 12

Provisions of the Glass Steagall Act included all of the following except:

Accepted Answer

A)  separating commercial and investment banking.
B)  creating the FDIC.
C)  outlawing interstate branching.
D)  limiting the proportion of stock purchases that could be financed by borrowing.E) B) and D)
F) B) and C)

Question 13

The FDIC was created in

Accepted Answer

A)  1913 by the Congress at the same time the Fed was created.
B)  1933 by the Congress as a result of the banking collapse in the early years of the Great Depression.
C)  1945 in the reforms put in place after World War II.
D)  1980 by the Congress as part of the overall movement towards deregulation.E) B) and C)
F) All of the above

Question 14

An adjustable rate loan

Accepted Answer

A)  can be used by a bank to hedge interest rate risk.
B)  adjusts to household income levels.
C)  shifts the interest rate risk onto the lender.
D)  All of the above are correct.E) None of the above
F) C) and D)

Question 15

The Glass-Steagall Act of 1933 established which of the following?

Accepted Answer

A)  Regulation Q interest rate ceilings
B)  the separation of commercial and investment banking
C)  the FDIC
D)  All of the above are correct.E) C) and D)
F) All of the above

Question 16

Applicants desiring a bank charter for banking must

Accepted Answer

A)  be free of a criminal record.
B)  demonstrate a knowledge of the business of banking.
C)  have a large supply of funds to finance the bank.
D)  All of the above are correct.E) All of the above
F) A) and B)

Question 17

_____________________________is the making of direct equity investments (purchasing stock)  in start-up or growing nonfinancial businesses.

Accepted Answer

A)  Merchant banking
B)  Investment banking
C)  Commercial banking
D)  None of the aboveE) A) and C)
F) None of the above

Question 18

Who is the primary regulator of state-chartered, insured, non-Fed-member banks?

Accepted Answer

A)  the Federal Deposit Insurance Corporation
B)  the Comptroller of the Currency
C)  the Fed
D)  the state in which they are charteredE) A) and C)
F) B) and D)

Question 19

Regulation Q refers to which of the following?

Accepted Answer

A)  maximum ceilings on the interest rates banks could receive from bonds
B)  maximum ceilings on the interest rates banks could receive from borrowers
C)  minimum floors on the interest rates banks could pay on deposits
D)  maximum ceilings on the interest rates banks could pay on depositsE) A) and D)
F) C) and D)

Question 20

__________ was passed in response to the Great Depression. It established Regulation Q ceilings, separated commercial and investment banking, and created the FDIC.

Accepted Answer

A)  The Glass-Steagall Act
B)  The McFadden Act
C)  The Financial Institutions Reform, Recovery, and Enforcement Act (FIRRE
A)  
D)  The Depository Institutions Deregulation and Monetary Control Act (DIDMC
A)  E) A) and B)
F) A) and C)

Exam 9: Commercial Banking Structure, Regulation, and Performance

Prior to the 1980s, regulation of the banking system included which of the following?

Correct AnswerverifiedD

Which of the following is false?

Correct AnswerverifiedShow Answer

Commercial banks that are members of the Fed are

Correct AnswerverifiedB

The McFadden Act was designed to do which of the following?

Correct AnswerverifiedShow Answer

Which of the following is not authorized by the Gramm-Leach-Bliley (GLBA) Act of 1999?

Correct AnswerverifiedShow Answer

The Interstate Banking and Branching Efficiency Act (IBBEA) was designed to

Correct AnswerverifiedShow Answer

Who regulates state-chartered, insured, Fed-member banks?

Correct AnswerverifiedShow Answer

Which of the following is characteristic of a banking system composed of a small number of large banks?

Correct AnswerverifiedShow Answer

The erosion and breakdown of barriers to interstate branching and various activities in the financial services industry has resulted in which of the following?

Correct AnswerverifiedShow Answer

In order to be a commercial bank in the United States, a bank must be

Correct AnswerverifiedShow Answer

Approximately how many banks were there in the United States in 2008?

Correct AnswerverifiedA

Provisions of the Glass Steagall Act included all of the following except:

Correct AnswerverifiedShow Answer

The FDIC was created in

Correct AnswerverifiedShow Answer

An adjustable rate loan

Correct AnswerverifiedShow Answer

The Glass-Steagall Act of 1933 established which of the following?

Correct AnswerverifiedShow Answer

Applicants desiring a bank charter for banking must

Correct AnswerverifiedShow Answer

_____________________________is the making of direct equity investments (purchasing stock) in start-up or growing nonfinancial businesses.

Correct AnswerverifiedShow Answer

Who is the primary regulator of state-chartered, insured, non-Fed-member banks?

Correct AnswerverifiedShow Answer

Regulation Q refers to which of the following?

Correct AnswerverifiedShow Answer

__________ was passed in response to the Great Depression. It established Regulation Q ceilings, separated commercial and investment banking, and created the FDIC.

Correct AnswerverifiedShow Answer

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A

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