ECN 315 MULTIPLE CHOICE EXAM 2 QUESTIONS AND ANSWERS
A large source of funding for finance companies is - CORRECT ANSWER✅✅Commercial paper
suppose there is a change to banking regulations and bank leverage ratios increase. As a result ROE at
banks ______ and risk insolvency ______? - CORRECT ANSWER✅✅decreases/decreases
if interest rates decrease, bank manages would prefer to be holding
A) Short-term and variable rate loans
B) long-term, fixed-rate securities and loans
C) a diverse portfolio of long-term loans from different types of busniesses
D) high risk, high yield loans - CORRECT ANSWER✅✅B
which of the following statements best describes what has happened to the number of commercial
banks in the United States since 1950?
A) the # of commercial banks remained roughly constant and then began a fairly steep decline in the
early 1990s.
B) the number of commercial banks has been gradually declining since 1950
C) the number of commercial banks has been constant since 1950
D) the number of commercial banks remained roughly constant and then began to increase in the 1990s
- CORRECT ANSWER✅✅A
the first stage of a financial crisis usually includes
A) debt deflation and a decline in economic activity
B) bank failure
C) reduction of credit extended to households
D) mismanaged financial innovation
E) all of these - CORRECT ANSWER✅✅D
, The Dodd Frank Act of 2010
A) Designated the largest of financial institutions as "systematically significant" requires and these banks
pass stress tests before distributing dividends
B) requires that ALL banks pass stress test before distributing dividends
C)requires that all shadow banking entities insure their liabilities
D) reestablished the separation of commercial banks and investment banks
E) all of the above - CORRECT ANSWER✅✅A
which of the following is not considered money (M1 or M2) in the United States today?
A) a checking deposit in the amount of $100
B) s savings deposit in the amount of $10,000
C) a retail money market account deposit in the amount of $30,000
D) a $1 million deposit at the federal reserve bank of San Fran held on behalf of western alliance bank -
CORRECT ANSWER✅✅D
According to the consumer financial protection Bureau, millions of Americans do not have credit enough
credit history to create a credit score. Lenders cannot tell is a borrower with a credit score is a high or
low risk of default, so all of these borrowers are treated as ______ this is an example of _______
A) high risk/ moral hazard
B) low risk/ moral hazard
C) high risk/adverse selection
D) low risk/ adverse selection - CORRECT ANSWER✅✅c
capital of a bank fall is
A) depositors withdraw large sums of money unexpectedly
A large source of funding for finance companies is - CORRECT ANSWER✅✅Commercial paper
suppose there is a change to banking regulations and bank leverage ratios increase. As a result ROE at
banks ______ and risk insolvency ______? - CORRECT ANSWER✅✅decreases/decreases
if interest rates decrease, bank manages would prefer to be holding
A) Short-term and variable rate loans
B) long-term, fixed-rate securities and loans
C) a diverse portfolio of long-term loans from different types of busniesses
D) high risk, high yield loans - CORRECT ANSWER✅✅B
which of the following statements best describes what has happened to the number of commercial
banks in the United States since 1950?
A) the # of commercial banks remained roughly constant and then began a fairly steep decline in the
early 1990s.
B) the number of commercial banks has been gradually declining since 1950
C) the number of commercial banks has been constant since 1950
D) the number of commercial banks remained roughly constant and then began to increase in the 1990s
- CORRECT ANSWER✅✅A
the first stage of a financial crisis usually includes
A) debt deflation and a decline in economic activity
B) bank failure
C) reduction of credit extended to households
D) mismanaged financial innovation
E) all of these - CORRECT ANSWER✅✅D
, The Dodd Frank Act of 2010
A) Designated the largest of financial institutions as "systematically significant" requires and these banks
pass stress tests before distributing dividends
B) requires that ALL banks pass stress test before distributing dividends
C)requires that all shadow banking entities insure their liabilities
D) reestablished the separation of commercial banks and investment banks
E) all of the above - CORRECT ANSWER✅✅A
which of the following is not considered money (M1 or M2) in the United States today?
A) a checking deposit in the amount of $100
B) s savings deposit in the amount of $10,000
C) a retail money market account deposit in the amount of $30,000
D) a $1 million deposit at the federal reserve bank of San Fran held on behalf of western alliance bank -
CORRECT ANSWER✅✅D
According to the consumer financial protection Bureau, millions of Americans do not have credit enough
credit history to create a credit score. Lenders cannot tell is a borrower with a credit score is a high or
low risk of default, so all of these borrowers are treated as ______ this is an example of _______
A) high risk/ moral hazard
B) low risk/ moral hazard
C) high risk/adverse selection
D) low risk/ adverse selection - CORRECT ANSWER✅✅c
capital of a bank fall is
A) depositors withdraw large sums of money unexpectedly
