Thrift Operations

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Question 1
Free
Multiple Choice

____ savings institutions hold the most assets in aggregate.

Choose correct answer/s
A

Stock-owned

B

Mutual

C

Closely held

D

Privatized

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Question 2
Free
Multiple Choice

Which of the following statements is incorrect?

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A

A mutual-to-stock conversion allows savings institutions to obtain additional capital by issuing stock.

B

Because of their ownership structure, mutual savings institutions are more susceptible to unfriendly takeovers.

C

When a mutual savings institution is involved in an acquisition, it first converts to a stock-owned savings institution.

D

Consolidation and acquisitions have caused the number of mutual and stock savings institutions to decline consistently over the years.

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Question 3
Free
Multiple Choice

Federally chartered savings institutions are regulated by the

Choose correct answer/s
A

Securities and Exchange Commission (SEC).

B

National Credit Union Administration.

C

Comptroller of the Currency and the Federal Reserve.

D

U.S. Treasury.

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Question 4
Free
Multiple Choice

Savings institutions obtain most of their funds from

Choose correct answer/s
A

savings and time deposits.

B

loans.

C

mortgages.

D

repurchase agreements.

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Question 5
Free
Multiple Choice

When savings institutions are unable to attract sufficient deposits, they can

Choose correct answer/s
A

borrow in the federal funds market.

B

borrow from the Federal Reserve.

C

borrow through a repurchase agreement.

D

all of the above

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Question 6
True/False

The capital of savings institutions is primarily composed of retained earnings and funds obtained from issuing stock.

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True
False
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Question 7
Multiple Choice

If depositors move money from their checking accounts to short-term CDs, this would ____ the rate sensitivity of the savings institution's liabilities to interest rate movements.

Choose correct answer/s
A
increase
B
have no effect on
C
decrease
D
A or C, depending on the size of the savings institution
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Question 8
Multiple Choice

____ are the primary asset of savings institutions.

Choose correct answer/s
A
Mortgages
B
Cash balances
C
Investment securities
D
Business loans
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Question 9
Multiple Choice

____ do not represent an asset of credit unions.

Choose correct answer/s
A
Mortgage-backed securities
B
Home equity loans
C
Automobile loans
D
Stocks
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Question 10
Multiple Choice

Which of the following is not an asset of savings institutions?

Choose correct answer/s
A
loans
B
mortgages
C
NOW accounts
D
mortgage-backed securities
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Question 11
Multiple Choice

Most mortgages originated by savings institutions are for

Choose correct answer/s
A
commercial buildings.
B
land for commercial purposes.
C
single-family homes or multifamily dwellings.
D
none of the above.
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Question 12
Multiple Choice

If a savings institution's assets have a considerably longer duration than its liabilities, it can reduce its exposure to interest rate risk by

Choose correct answer/s
A
reducing its proportion of assets in the short duration categories.
B
increasing its proportion of liabilities in the short duration categories.
C
increasing its proportion of liabilities in the long duration category.
D
A and B
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Question 13
Multiple Choice

Adjustable-rate mortgages ____ the adverse impact of rising interest rates on a typical savings institution's spread. They ____ the favorable impact of declining interest rates on the spread.

Choose correct answer/s
A
reduce; reduce
B
reduce; increase
C
increase; increase
D
increase; reduce
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Question 14
Multiple Choice

To measure ____ risk, some savings institutions measure the duration of their respective assets and liabilities.

Choose correct answer/s
A
credit
B
interest rate
C
liquidity
D
none of the above
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Question 15
Multiple Choice

A contract that allows for the purchase of a specified debt security for a specified price at a future point in time is known as a(n)

Choose correct answer/s
A
interest rate futures contract.
B
interest rate swap contract.
C
interest cap contract.
D
security swap contract.
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Question 16
True/False

An interest rate swap reduces the favorable impact of declining interest rates.

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True
False
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Question 17
Multiple Choice

A savings institution owned by its depositors is a ____ savings institution.

Choose correct answer/s
A
mutual
B
stock
C
credit
D
closed-end
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Question 18
Multiple Choice

Which of the following was not a major reason for the savings institution crisis in the late 1980s?

Choose correct answer/s
A
large losses on real estate loans
B
large losses on loans to less-developed countries
C
fraud
D
illiquidity
E
increased interest expenses
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Question 19
Multiple Choice

The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) prohibited savings institutions from

Choose correct answer/s
A
merging
B
offering mortgage loans .
C
investing in junk bonds.
D
making loans to foreign governments.
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Question 20
Multiple Choice

The risk that a credit union will experience an unanticipated wave of withdrawals without an offsetting amount of new deposits is ____ risk.

Choose correct answer/s
A
credit (default)
B
interest rate
C
liquidity
D
exchange rate
E
none of the above
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