FIN 461 LATEST 2026 COMPREHENSIVE QUESTIONS AND
ANSWERS RATED A+
✔✔The first state in the U.S. to allow out of state acquisitions was
A. New York.
B. California.
C. Florida.
D. Maine.
E. Alaska. - ✔✔D
✔✔The first regional banking pact in the U.S. was in
A. the Southeast.
B. New England.
C. the Northwest.
D. the Southwest.
E. the Midwest. - ✔✔B
✔✔Legislations restricting geographic expansion have been undermined in all of the
following ways EXCEPT
A. regional banking pacts.
B. purchase of troubled banks.
C. opening of nonbank banks.
D. acquisition of subsidiaries.
E. acquisition of insurance companies out of state. - ✔✔E
✔✔The Riegle-Neal Act of 1994
A. specifically allows banks to establish de novo branches in new states.
B. effectively stopped full interstate branching within the U.S.
C. is given credit for initiating a wave of bank mergers across the U.S.
D. allowed foreign banks to acquire U.S. banks.
E. All of the options. - ✔✔C
✔✔. The Herfindahl-Hirschman Index (HHI) is a measure of
A. market concentration.
B. profitability.
C. market performance.
D. annual sector growth.
E. investor reaction. - ✔✔A
✔✔An interest rate swap
A. involves a swap buyer who agrees to make a number of variable-rate payments on
periodic settlement dates.
B. involves a swap seller who agrees to make a number of fixed-rate payments on
periodic settlement dates.
C. is effectively a succession of forward contracts on interest rates.
, D. involves comparative advantage by the fixed-rate side of the swap, but not the
variable-rate side.
E. eliminates credit risk. - ✔✔C
✔✔In terms of valuation, a 12-year interest rate swap can be can be considered in
terms of
A. a series of option contracts.
B. a zero-coupon bond.
C. a U.S. Treasury STRIP.
D. bond-equivalent valuation.
E. securitization of a derivative contract. - ✔✔D
✔✔A bank with a strong positive leverage adjusted duration gap can hedge their
exposure to interest rate increases by entering into
A. a currency swap agreement to receive the fixed rate payment.
B. an interest rate swap agreement to make the fixed-rate payment side of the swap.
C. a credit swap agreement to receive the floating rate payment.
D. a commodity swap agreement to make the fixed-rate payment side of the swap.
E. an equity swap agreement to make the floating-rate payment side of the swap. -
✔✔B
✔✔In the derivatives markets, the instrument with the longest potential maturity is
A. options.
B. futures.
C. forwards.
D. swaps.
E. currencies. - ✔✔D
✔✔Which of the following is the primary factor that determines the fixed and floating
rates set at the time an interest rate swap is initiated?
A. Actual market rates that materialized over the life of the swap contract.
B. London interbank offer rate (LIBOR).
C. Upfront fee payments.
D. Market's expectations of future short-term rates.
E. Varying notional values underlying the swap. - ✔✔D
✔✔The cash flows that actually are paid on an interest rate swap depend on
A. the market's expectations of future short-term interest rates.
B. upfront fee payments.
C. varying notional values underlying the swap.
D. special interest rate terms and indexes.
E. actual market rates that materialize over the life of the swap contract. - ✔✔E
✔✔A contract that is a fixed-floating interest rate swap with a third party acting as an
intermediary is known as
ANSWERS RATED A+
✔✔The first state in the U.S. to allow out of state acquisitions was
A. New York.
B. California.
C. Florida.
D. Maine.
E. Alaska. - ✔✔D
✔✔The first regional banking pact in the U.S. was in
A. the Southeast.
B. New England.
C. the Northwest.
D. the Southwest.
E. the Midwest. - ✔✔B
✔✔Legislations restricting geographic expansion have been undermined in all of the
following ways EXCEPT
A. regional banking pacts.
B. purchase of troubled banks.
C. opening of nonbank banks.
D. acquisition of subsidiaries.
E. acquisition of insurance companies out of state. - ✔✔E
✔✔The Riegle-Neal Act of 1994
A. specifically allows banks to establish de novo branches in new states.
B. effectively stopped full interstate branching within the U.S.
C. is given credit for initiating a wave of bank mergers across the U.S.
D. allowed foreign banks to acquire U.S. banks.
E. All of the options. - ✔✔C
✔✔. The Herfindahl-Hirschman Index (HHI) is a measure of
A. market concentration.
B. profitability.
C. market performance.
D. annual sector growth.
E. investor reaction. - ✔✔A
✔✔An interest rate swap
A. involves a swap buyer who agrees to make a number of variable-rate payments on
periodic settlement dates.
B. involves a swap seller who agrees to make a number of fixed-rate payments on
periodic settlement dates.
C. is effectively a succession of forward contracts on interest rates.
, D. involves comparative advantage by the fixed-rate side of the swap, but not the
variable-rate side.
E. eliminates credit risk. - ✔✔C
✔✔In terms of valuation, a 12-year interest rate swap can be can be considered in
terms of
A. a series of option contracts.
B. a zero-coupon bond.
C. a U.S. Treasury STRIP.
D. bond-equivalent valuation.
E. securitization of a derivative contract. - ✔✔D
✔✔A bank with a strong positive leverage adjusted duration gap can hedge their
exposure to interest rate increases by entering into
A. a currency swap agreement to receive the fixed rate payment.
B. an interest rate swap agreement to make the fixed-rate payment side of the swap.
C. a credit swap agreement to receive the floating rate payment.
D. a commodity swap agreement to make the fixed-rate payment side of the swap.
E. an equity swap agreement to make the floating-rate payment side of the swap. -
✔✔B
✔✔In the derivatives markets, the instrument with the longest potential maturity is
A. options.
B. futures.
C. forwards.
D. swaps.
E. currencies. - ✔✔D
✔✔Which of the following is the primary factor that determines the fixed and floating
rates set at the time an interest rate swap is initiated?
A. Actual market rates that materialized over the life of the swap contract.
B. London interbank offer rate (LIBOR).
C. Upfront fee payments.
D. Market's expectations of future short-term rates.
E. Varying notional values underlying the swap. - ✔✔D
✔✔The cash flows that actually are paid on an interest rate swap depend on
A. the market's expectations of future short-term interest rates.
B. upfront fee payments.
C. varying notional values underlying the swap.
D. special interest rate terms and indexes.
E. actual market rates that materialize over the life of the swap contract. - ✔✔E
✔✔A contract that is a fixed-floating interest rate swap with a third party acting as an
intermediary is known as
