Bank Regulation

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Question 1
Free
Multiple Choice

Deposit insurance has a limit of:

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A

$10,000.

B

$25,000.

C

$100,000.

D

$250,000.

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Question 2
Free
Multiple Choice

The opening of a commercial bank in the United States

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A

does not require a charter.

B

always requires a charter from a state government.

C

always requires a charter from the federal government.

D

requires a charter from a state or the federal government.

E

requires a charter from both the state and federal government.

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Question 3
Free
Multiple Choice

National banks are regulated by ____ , and state banks are regulated by ____ .

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A

the Comptroller of the Currency; their state agency

B

the Comptroller of the Currency; the Comptroller of the Currency

C

their state agency; their state agency

D

their state agency; the Comptroller of the Currency

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Question 4
Free
Multiple Choice

All Fed member banks must hold

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A

private insurance on deposits

B

FDIC insurance on deposits.

C

both FDIC and private insurance on deposits

D

none of the above

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Question 5
Free
Multiple Choice

In making loans to a single customer, commercial banks ____ restricted to a maximum percentage of their capital, and they ____ allowed to use borrowed or deposited funds to purchase common stock.

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A

are; are

B

are; are not

C

are not; are

D

are not; are not

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Question 6
True/False

Banks commonly use depositor funds to invest in stocks.

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True
False
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Question 7
Multiple Choice

The liquidity coverage ratio, which is measured under the Basel III guidelines, is the ratio of a bank's _________ to its ___________ .

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A
liquid assets; projected net cash outflow
B
liquid assets; retained earnings
C
Tier 1 capital; liquid assets
D
projected net cash outflow; Tier 1 capital
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Question 8
Multiple Choice

The Depository Institutions Deregulation and Monetary Control Act of 1980 allowed banks to set their own

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A
reserve requirements.
B
capital ratios.
C
interest rates on savings deposits.
D
corporate loan interest rates.
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Question 9
Multiple Choice

The Glass-Steagall Act of 1933 prevented

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A
any firm that accepts deposits from underwriting stocks and bonds of corporations.
B
any firm that accepts deposits from underwriting general obligation bonds of states and municipalities.
C
any firm that accepts deposits from holding any corporate bonds in its asset portfolio.
D
state-chartered banks from offering commercial loans.
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Question 10
Multiple Choice

Which of the following was not achieved by the Depository Institutions Deregulation and Monetary Control Act of 1980?

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A
removed interest rate ceilings on deposits
B
allowed banks to offer NOW accounts
C
increased competition among depository institutions
D
allowed interstate banking for depository institutions in most states
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Question 11
Multiple Choice

The Garn-St Germain Act of 1982

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A
permitted depository institutions to offer money market deposit accounts.
B
prevented depository institutions from acquiring problem institutions across geographic boundaries.
C
required the Fed to explicitly charge depository institutions for its services.
D
allowed the Fed to provide check clearing to depository institutions at no charge.
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Question 12
Multiple Choice

Which of the following is not a specific criterion that regulators use to monitor banks?

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A
capital adequacy
B
dollar value of fixed assets
C
asset quality
D
earnings
E
sensitivity to financial market conditions
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Question 13
Multiple Choice

The potential risk that financial problems can spread through financial institutions and the financial system is referred to as ________ risk.

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A
systemic
B
systematic
C
unsystematic
D
market
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Question 14
Multiple Choice

The Basel framework recommends that banks maintain capital in proportion to their:

Choose correct answer/s
A
mortgages
B
commercial paper
C
liabilities
D
risk-weighted assets
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Question 15
True/False

In general, a bank defines its value-at-risk as the estimated potential loss from its trading businesses that could result from adverse movements in market prices.

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True
False
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Question 16
Multiple Choice

Which of the following is an "off-balance-sheet commitment"?

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A
long-term debt
B
additional paid-in capital
C
notes payable
D
letters of credit backing commercial paper issued by firms
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Question 17
Multiple Choice

The liquidity component of the CAMELS rating refers to

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A
how a bank's earnings would change if economic conditions change.
B
how readily a bank's management would detect its financial problems.
C
a bank's sensitivity to financial market conditions.
D
the type of loans that a bank provides, the bank's process for deciding whether to provide loans, and the credit rating of debt securities that it purchases.
E
whether a bank frequently needs to borrow from outside sources, such as the discount window.
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Question 18
Multiple Choice

Which of the following is not a corrective action that regulators may take when a bank is identified as a problem bank?

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A
examine the bank frequently and thoroughly
B
request that the bank boost its capital level or delay its plans to expand
C
require the bank to provide additional financial information that is periodically updated to allow continued monitoring
D
take legal action against the bank if it does not comply with their suggested remedies
E
All of the above are possible corrective actions taken by bank regulators.
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Question 19
Multiple Choice

The fee banks pay to the FDIC for deposit insurance is now

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A
a fixed dollar amount for all banks.
B
a fixed percentage of the bank's deposits for all banks.
C
a fixed percentage of the bank's loan volume for all banks.
D
based on the risk of the bank
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Question 20
Multiple Choice

Generally, the failure of small banks

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A
causes more widespread concern about the safety of the banking system than the failure of large banks.
B
causes equal concern about the safety of the banking system as the failure of large banks.
C
causes less concern about the safety of the banking system than the failure of large banks.
D
Either A or B can be true, depending on the type of business cycle that exists while the failures occur.
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