FIN 413 Final Exam Questions With Complete Solutions
Banks are required to hold __% of their deposits on reserve at
their district FRB? Correct Answers 10%
Basel I - 1993 Correct Answers Incorporated different credit
risks of assets into capital adequacy measures
Basel II - 2006 Correct Answers Allowed two options for
addressing credit risk. The standard (Basel I) approach or the
Internal Ratings Based (IRB) approach
Basel III - 2010 Correct Answers Raised the quality,
consistency and transparency of the capital base of banks
Board of Directors Correct Answers Each FRB has its own 9-
member BoD
Board of Governors Correct Answers In the Federal Reserve
System, a seven-member board that makes most economic
decisions regarding interest rates and the supply of money. All 7
members sit on the FOMC.
Can a coupon on a Treasury security be any non-negative
number? Correct Answers No must be only 1/8ths of a percent
Can forwards and futures agreements be sold prior to
expiration? Correct Answers Yes
Commercial Banks Correct Answers Organizations that accept
deposits and make loans.
, Community Reinvestment Act of 1977 Correct Answers
Required banks to make credit available in poor communities
Correspondent banking Correct Answers A relationship where
the large bank will provide services and products to the smaller
bank.
Depository Institutions Correct Answers Commercial banks,
savings banks, credit unions
Do any money market securities offer coupons and why?
Correct Answers No, none of them ever offer coupons, this is
because they are all issued as discount
Dodd-Frank Bill (2010) Correct Answers Created the Consumer
Financial Protection Agency
Fed Ownership Correct Answers Part Private / Part Government
Not publicly traded
Operate as non-profits
Fed System Membership Correct Answers Nationally-Chartered
banks require to be members of the FRS
State-Chartered banks can choose to be members
Membership gives access to fed funds wire transfer network
Commercial banks that become members must buy stock in their
FRB
FOMC Structure Correct Answers 7 members of the BoG +
president of the NY Fed + 4 rotating district presidents
Banks are required to hold __% of their deposits on reserve at
their district FRB? Correct Answers 10%
Basel I - 1993 Correct Answers Incorporated different credit
risks of assets into capital adequacy measures
Basel II - 2006 Correct Answers Allowed two options for
addressing credit risk. The standard (Basel I) approach or the
Internal Ratings Based (IRB) approach
Basel III - 2010 Correct Answers Raised the quality,
consistency and transparency of the capital base of banks
Board of Directors Correct Answers Each FRB has its own 9-
member BoD
Board of Governors Correct Answers In the Federal Reserve
System, a seven-member board that makes most economic
decisions regarding interest rates and the supply of money. All 7
members sit on the FOMC.
Can a coupon on a Treasury security be any non-negative
number? Correct Answers No must be only 1/8ths of a percent
Can forwards and futures agreements be sold prior to
expiration? Correct Answers Yes
Commercial Banks Correct Answers Organizations that accept
deposits and make loans.
, Community Reinvestment Act of 1977 Correct Answers
Required banks to make credit available in poor communities
Correspondent banking Correct Answers A relationship where
the large bank will provide services and products to the smaller
bank.
Depository Institutions Correct Answers Commercial banks,
savings banks, credit unions
Do any money market securities offer coupons and why?
Correct Answers No, none of them ever offer coupons, this is
because they are all issued as discount
Dodd-Frank Bill (2010) Correct Answers Created the Consumer
Financial Protection Agency
Fed Ownership Correct Answers Part Private / Part Government
Not publicly traded
Operate as non-profits
Fed System Membership Correct Answers Nationally-Chartered
banks require to be members of the FRS
State-Chartered banks can choose to be members
Membership gives access to fed funds wire transfer network
Commercial banks that become members must buy stock in their
FRB
FOMC Structure Correct Answers 7 members of the BoG +
president of the NY Fed + 4 rotating district presidents
