Economics

Only ________ can issue monoline insurance policies.

Only ________ can issue monoline insurance policies.

Only ________ can issue monoline insurance policies.
A) insurance companies that issue multiple types of insurance
B) insurance companies that specialize in credit insurance alone
C) life insurance companies
D) property insurance

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The type of credit insurance that landed AIG into trouble in 2008 is called

The type of credit insurance that landed AIG into trouble in 2008 is called

The type of credit insurance that landed AIG into trouble in 2008 is called
A) monoline insurance.
B) insurance rate swaps.
C) default insurance.
D) credit default swaps.

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Relative to life insurance companies, property and casualty insurance companies hold

Relative to life insurance companies, property and casualty insurance companies hold

Relative to life insurance companies, property and casualty insurance companies hold
A) fewer municipal bonds.
B) more long-term government bonds.
C) more commercial mortgages.
D) more liquid assets.

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Under the Gramm-Leach-Bliley Act states retain regulatory authority over

Under the Gramm-Leach-Bliley Act states retain regulatory authority over

Under the Gramm-Leach-Bliley Act states retain regulatory authority over
A) bank holding companies.
B) securities activities.
C) bank subsidiaries engaged in securities underwriting.
D) insurance activities.

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The legislation overturning the Glass-Steagall Act is

The legislation overturning the Glass-Steagall Act is

The legislation overturning the Glass-Steagall Act is
A) the McFadden Act.
B) the Riegle-Neal Act.
C) the Gramm-Leach-Bliley Act.
D) the Garn-St. Germain Act

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The ability to use one resource to provide different products and services is

The ability to use one resource to provide different products and services is

The ability to use one resource to provide different products and services is
A) economies of scope.
B) diversification.
C) vertical integration.
D) economies of scale.

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Allowing bank branching across state lines gives banks greater ability to coordinate bank operations

Allowing bank branching across state lines gives banks greater ability to coordinate bank operations

Allowing bank branching across state lines gives banks greater ability to coordinate bank operations. This makes it easier for them to receive the benefits of
A) economies of scale.
B) the dual banking system.
C) disintermediation.

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Bank holding companies that rival money center banks in size, but are not located in money center ci

Bank holding companies that rival money center banks in size, but are not located in money center ci

Bank holding companies that rival money center banks in size, but are not located in money center cities are
A) international banks.
B) local banks.
C) bank clearing houses.
D) superregional banks.

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Financial innovations that grew out of the bank branching restrictions were

Financial innovations that grew out of the bank branching restrictions were

Financial innovations that grew out of the bank branching restrictions were
A) bank holding companies and automated teller machines.
B) automated teller machines and sweep accounts.
C) automated teller machines and bank credit cards.

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ATMs were developed because of breakthroughs in technology and as a

ATMs were developed because of breakthroughs in technology and as a

ATMs were developed because of breakthroughs in technology and as a
A) means of avoiding paying interest to corporate customers.
B) increasing the competition from foreign banks.
C) way of concealing transactions from the SEC.
D)

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A financial innovation that developed as a result of banks avoidance of bank branching restrictions

A financial innovation that developed as a result of banks avoidance of bank branching restrictions

A financial innovation that developed as a result of banks avoidance of bank branching restrictions was
A) commercial paper.
B) junk bonds.
C) bank holding companies.
D) money market mutual funds.

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Which of the following is a TRUE statement concerning bank holding companies?

Which of the following is a TRUE statement concerning bank holding companies?

Which of the following is a TRUE statement concerning bank holding companies?
A) Bank holding companies have experienced dramatic growth in the past three decades.
B) Bank holding companies own few large banks.
C) The McFadden Act has

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Lack of competition in the United States banking industry can be attributed to

Lack of competition in the United States banking industry can be attributed to

Lack of competition in the United States banking industry can be attributed to
A) the fact that competition does not benefit consumers.
B) recent legislation restricting competition.
C) nineteenth-century populist sentiment.
D) th

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The large number of banks in the United States is an indication of

The large number of banks in the United States is an indication of

The large number of banks in the United States is an indication of
A) vigorous competition within the banking industry.
B) consumer preference for local banks.
C) only efficient banks operating within the United States.
D) lack of

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The legislation that effectively prohibited banks from branching across state lines and forced all n

The legislation that effectively prohibited banks from branching across state lines and forced all n

The legislation that effectively prohibited banks from branching across state lines and forced all national banks to conform to the branching regulations in the state in which they reside is the
A) Garn-St.Germain Act.
B) Glass-Steagall Act

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The McFadden Act of 1927 (Multiple Choice Question)

The McFadden Act of 1927 (Multiple Choice Question)

The McFadden Act of 1927
A) effectively required that banks maintain a correspondent relationship with large money center banks.
B) effectively prohibited banks from branching across state lines.
C) separated the commercial banks and i

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The presence of so many commercial banks in the United States is most likely the result of

The presence of so many commercial banks in the United States is most likely the result of

The presence of so many commercial banks in the United States is most likely the result of
A) consumers' preference for state banks.
B) prior regulations that restricted the ability of these financial institutions to open branches.

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The decline in traditional banking internationally can be attributed to

The decline in traditional banking internationally can be attributed to

The decline in traditional banking internationally can be attributed to
A) increased regulation.
B) increasing monopoly power of banks over depositors.
C) improved information technology.
D) increased protection from competition.

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Banks have attempted to maintain adequate profit levels by

Banks have attempted to maintain adequate profit levels by

Banks have attempted to maintain adequate profit levels by
A) pursuing new off-balance-sheet activities.
B) making fewer riskier loans, such as commercial real estate loans.
C) decreasing capital accounts.
D) increasing reserve de

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The most important developments that reduced banks' income advantages include

The most important developments that reduced banks' income advantages include

The most important developments that reduced banks' income advantages include
A) the increase in off-balance sheet activities.
B) the competition from money market mutual funds.
C) the elimination of Regulation Q ceilings.
D)

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One factor contributing to the decline in cost advantages that banks once had is the

One factor contributing to the decline in cost advantages that banks once had is the

One factor contributing to the decline in cost advantages that banks once had is the
A) decline in the importance of checkable deposits from over 40 percent of banks' liabilities to 15 percent today.
B) decline in the importance of che

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Banks responded to disintermediation by

Banks responded to disintermediation by

Banks responded to disintermediation by
A) supporting the elimination of interest rate regulations, enabling them to better compete for funds.
B) opposing the elimination of interest rate regulations, as this would increase their cost of fu

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The experience of disintermediation in the banking industry illustrates that

The experience of disintermediation in the banking industry illustrates that

The experience of disintermediation in the banking industry illustrates that
A) consumers no longer desire the services that banks provide.
B) more regulation of financial markets may avoid such problems in the future.
C) banks are una

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Disintermediation resulted from (Multiple Choice Question)

Disintermediation resulted from (Multiple Choice Question)

Disintermediation resulted from
A) reserve requirements.
B) increases in federal income taxes.
C) elimination of Regulation Q (the regulation imposing interest rate ceilings on bank deposits).
D) interest rate ceilings combined wi

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Financial innovation has caused (Multiple Choice Question)

Financial innovation has caused (Multiple Choice Question)

Financial innovation has caused
A) banks to suffer declines in their cost advantages in acquiring funds, although it has not caused a decline in income advantages.
B) banks to suffer a simultaneous decline of cost and income advantages.

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Since 1980 (Multiple Choice Question)

Since 1980 (Multiple Choice Question)

Since 1980
A) bank profits have grown rapidly due to deregulation.
B) banks have decreased risk taking to offset the decline in profits.
C) banks have offset the decline in profits from off-balance-sheet activities with increased incom

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Thrift institutions importance as a source of funds for borrowers

Thrift institutions importance as a source of funds for borrowers

Thrift institutions importance as a source of funds for borrowers
A) has expanded dramatically, from around 15 percent of total credit advanced in the late 1970s to above 25 percent by 2014.
B) has shrunk from over 20 percent of total credi

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Since 1974, commercial banks importance as a source of funds for nonfinancial borrowers

Since 1974, commercial banks importance as a source of funds for nonfinancial borrowers

Since 1974, commercial banks importance as a source of funds for nonfinancial borrowers
A) has shrunk dramatically, from around 40 percent of total credit advanced to around 25 percent by 2014.
B) has expanded dramatically, from around 50 p

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Sweep accounts (Multiple Choice Question)

Sweep accounts (Multiple Choice Question)

Sweep accounts
A) have made reserve requirements nonbinding for many banks.
B) sweep funds out of deposit accounts into long-term securities.
C) reduce banks' assets.
D) enable banks to avoid paying interest to corporate cust

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In September 2008, the Reserve Primary Fund, a money market mutual fund, found itself in the situati

In September 2008, the Reserve Primary Fund, a money market mutual fund, found itself in the situati

In September 2008, the Reserve Primary Fund, a money market mutual fund, found itself in the situation know as "breaking the buck." This means that
A) shares earned more than a dollar in interest.
B) they required shareholders to

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Money market mutual funds (Multiple Choice Question)

Money market mutual funds (Multiple Choice Question)

Money market mutual funds
A) are legally deposits.
B) are subject to reserve requirements.
C) have an interest-rate ceiling.
D) function as interest-earning checking accounts.

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Prior to 2008, bank managers looked on reserve requirements

Prior to 2008, bank managers looked on reserve requirements

Prior to 2008, bank managers looked on reserve requirements
A) as a subsidy on loans.
B) as a tax on deposits.
C) as a subsidy on deposits.
D) as a tax on loans.

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According to Edward Kane, because the banking industry is one of the most ________ industries in Ame

According to Edward Kane, because the banking industry is one of the most ________ industries in Ame

According to Edward Kane, because the banking industry is one of the most ________ industries in America, it is an industry in which ________ is especially likely to occur.
A) regulated; innovation
B) competitive; loophole mining
C) co

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________ is creating a marketable capital market instrument by bundling a portfolio of mortgage or a

________ is creating a marketable capital market instrument by bundling a portfolio of mortgage or a

________ is creating a marketable capital market instrument by bundling a portfolio of mortgage or auto loans.
A) Diversification
B) Securitization
C) Computerization
D) Arbitrage

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The process of transforming otherwise illiquid financial assets into marketable capital market instr

The process of transforming otherwise illiquid financial assets into marketable capital market instr

The process of transforming otherwise illiquid financial assets into marketable capital market instruments is known as
A) arbitrage.
B) internationalization.
C) program trading.
D) securitization.

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The development of money market mutual funds contributed to the growth of ________ since the money m

The development of money market mutual funds contributed to the growth of ________ since the money m

The development of money market mutual funds contributed to the growth of ________ since the money market mutual funds need to hold liquid, high-quality, short-terms assets.
A) the junk bond market
B) the commercial paper market
C) the

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In 1977, he pioneered the concept of selling new public issues of junk bonds for companies that had

In 1977, he pioneered the concept of selling new public issues of junk bonds for companies that had

In 1977, he pioneered the concept of selling new public issues of junk bonds for companies that had not yet achieved investment-grade status.
A) Roger Milliken
B) Michael Milken
C) Ivan Boesky
D) Carl Icahn

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Newly-issued high-yield bonds rated below investment grade by the bond-rating agencies are frequentl

Newly-issued high-yield bonds rated below investment grade by the bond-rating agencies are frequentl

Newly-issued high-yield bonds rated below investment grade by the bond-rating agencies are frequently referred to as
A) municipal bonds.
B) Yankee bonds.
C) junk bonds.
D) "fallen angels."

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So-called fallen angels differ from junk bonds in that

So-called fallen angels differ from junk bonds in that

So-called fallen angels differ from junk bonds in that
A) junk bonds have ratings below Baa, whereas fallen angels have ratings below C.
B) junk bonds refer to newly issued bonds with low credit ratings, whereas fallen angels refer to previ

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A disadvantage of virtual banks (clicks) is thatA) they are more costly to operate than physical ban

A disadvantage of virtual banks (clicks) is thatA) they are more costly to operate than physical ban

A disadvantage of virtual banks (clicks) is that
A) they are more costly to operate than physical banks.
B) their hours are more limited than physical banks.
C) they are less convenient than physical banks.
D) customers worry abou

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