TEST BANK FOR BANK MANAGEMENT & FINANCIAL
SERVICES 9TH EDITION PETER S ROSE, SYLVIA C
HUDGINS
,Chapter 1
An Overview of the Changing Financial-Services Sector
Fill in the Blank Questions
1. _______________________ is a traditional service provided by banks in which the banks store
the valuables of their customers and certify their true value.
Answer: Safekeeping of valuables
2. The fact that financial institutions make loans based on confidential information is the
_______________________ theory of banking.
Answer: delegated monitoring
3. _______________________ refers to when a financial institution trades one form of currency for
another. An example of this would be when the bank trades dollars for yen for a fee.
Answer: currency exchange
4.A(n) _______________________ is a traditional service which permits a depositor to write a draft
in payment for goods and services.
Answer: demand deposit (checking account)
5. _______________________ is a service provided by banks where the bank lends money to
individuals for the purchase of durable and other goods.
Answer: Consumer lending
6. The _______________________ of a bank is a traditional service where the bank manages the
financial affairs and property of individuals (and in some cases businesses).
Answer: trust services
1Rose/Hudgins, Bank Management and Financial Services, 8/e
, 7. Companies such as Merrill Lynch and Sears which offered some but not all banking services in
the 1980s were called _______________________.
Answer: nonbank banks
8. The loosening of government regulation and control of financial institutions is called
_______________________.
Answer: deregulation
9. ___________________________ is an alternative to lending in which the financial institution
purchases the equipment and rents it to its customers.
Answer: Equipment leasing services
10. The___________________________ is a landmark act which allows financial service providers
to offer an expanded menu of financial services for the customer. This law allows banks to truly
become conglomerate financial service providers.
Answer: Financial Services Modernization Act (Gramm-Leach-Bliley Act)
11. The country with the most banks is _______________________.
Answer: United States
12. According to Congress a ____________ is defined as any institution that can qualify for deposit
insurance administered by the FDIC.
Answer: Bank
13. A bank which spans regions, nations, and continents, offering the widest menu of financial
services is known as a __________bank.
Answer: money-center bank
14. _____________ refers to the movement of businesses across industry lines in order to broaden its
base.
Answer: Convergence
15. Banks which serve primarily households and small firms are known as ____________ banks.
Answer: retail
16. Banks that sell deposits and make loans to businesses and individuals are known as ______banks.
Answer: commercial
17. Banks which underwrite issues of new securities for their corporate customers are known as
________ banks.
Answer: investment
2 Test Bank, Chapter 1
, 18. Banks which function under a federal charter through the Comptroller of the Currency in the
United States are known as ____________ banks.
Answer: National
19. Banks which supply both debt and equity capital to businesses are known as _________ banks.
Answer: merchant
20. A bank that offers its services only over the internet is known as a(n)
.
Answer: virtual bank
21. When a local merchant sells the accounts receivables they hold against their
customer to a bank this generally known as
.
Answer: discounting commercial notes
22. A(n) offers loans to commercial enterprises
(such as appliance dealers) or to individuals using funds borrowed in the open
market or from other financial institutions. Examples of this type of financial
service provider include GMAC Financial Services and Household Finance.
Answer: finance company
23. A(n) buys and sells securities on behalf of their
customers and for their own accounts. Examples of this type of financial
service provider include Merrill Lynch and Charles Schwab.
Answer: security broker (or dealer)
24. A(n) sells shares mainly to upscale
investors in a broad group of different kinds of assets including nontraditional
investments in commodities, real estate, loans to ailing companies and other
risky assets.
Answer: hedge fund
25. When a bank agrees to handle the cash collections and disbursements for a
company and invest any temporary cash surpluses in interest bearing assets,
they are providing services to their customers.
Answer: cash management
True/False Questions
3Rose/Hudgins, Bank Management and Financial Services, 8/e
SERVICES 9TH EDITION PETER S ROSE, SYLVIA C
HUDGINS
,Chapter 1
An Overview of the Changing Financial-Services Sector
Fill in the Blank Questions
1. _______________________ is a traditional service provided by banks in which the banks store
the valuables of their customers and certify their true value.
Answer: Safekeeping of valuables
2. The fact that financial institutions make loans based on confidential information is the
_______________________ theory of banking.
Answer: delegated monitoring
3. _______________________ refers to when a financial institution trades one form of currency for
another. An example of this would be when the bank trades dollars for yen for a fee.
Answer: currency exchange
4.A(n) _______________________ is a traditional service which permits a depositor to write a draft
in payment for goods and services.
Answer: demand deposit (checking account)
5. _______________________ is a service provided by banks where the bank lends money to
individuals for the purchase of durable and other goods.
Answer: Consumer lending
6. The _______________________ of a bank is a traditional service where the bank manages the
financial affairs and property of individuals (and in some cases businesses).
Answer: trust services
1Rose/Hudgins, Bank Management and Financial Services, 8/e
, 7. Companies such as Merrill Lynch and Sears which offered some but not all banking services in
the 1980s were called _______________________.
Answer: nonbank banks
8. The loosening of government regulation and control of financial institutions is called
_______________________.
Answer: deregulation
9. ___________________________ is an alternative to lending in which the financial institution
purchases the equipment and rents it to its customers.
Answer: Equipment leasing services
10. The___________________________ is a landmark act which allows financial service providers
to offer an expanded menu of financial services for the customer. This law allows banks to truly
become conglomerate financial service providers.
Answer: Financial Services Modernization Act (Gramm-Leach-Bliley Act)
11. The country with the most banks is _______________________.
Answer: United States
12. According to Congress a ____________ is defined as any institution that can qualify for deposit
insurance administered by the FDIC.
Answer: Bank
13. A bank which spans regions, nations, and continents, offering the widest menu of financial
services is known as a __________bank.
Answer: money-center bank
14. _____________ refers to the movement of businesses across industry lines in order to broaden its
base.
Answer: Convergence
15. Banks which serve primarily households and small firms are known as ____________ banks.
Answer: retail
16. Banks that sell deposits and make loans to businesses and individuals are known as ______banks.
Answer: commercial
17. Banks which underwrite issues of new securities for their corporate customers are known as
________ banks.
Answer: investment
2 Test Bank, Chapter 1
, 18. Banks which function under a federal charter through the Comptroller of the Currency in the
United States are known as ____________ banks.
Answer: National
19. Banks which supply both debt and equity capital to businesses are known as _________ banks.
Answer: merchant
20. A bank that offers its services only over the internet is known as a(n)
.
Answer: virtual bank
21. When a local merchant sells the accounts receivables they hold against their
customer to a bank this generally known as
.
Answer: discounting commercial notes
22. A(n) offers loans to commercial enterprises
(such as appliance dealers) or to individuals using funds borrowed in the open
market or from other financial institutions. Examples of this type of financial
service provider include GMAC Financial Services and Household Finance.
Answer: finance company
23. A(n) buys and sells securities on behalf of their
customers and for their own accounts. Examples of this type of financial
service provider include Merrill Lynch and Charles Schwab.
Answer: security broker (or dealer)
24. A(n) sells shares mainly to upscale
investors in a broad group of different kinds of assets including nontraditional
investments in commodities, real estate, loans to ailing companies and other
risky assets.
Answer: hedge fund
25. When a bank agrees to handle the cash collections and disbursements for a
company and invest any temporary cash surpluses in interest bearing assets,
they are providing services to their customers.
Answer: cash management
True/False Questions
3Rose/Hudgins, Bank Management and Financial Services, 8/e
