FIN 384 Exam 4 Questions and Answers
Banks use the holding company form of organization for all the following except
A. expanding geographically
B. reducing taxes
C. complying with federal regulations.
D. diversifying services ** Answ** C. complying with federal regulations.
A bank holding company might apply for a "financial" holding company status from the Fed if it
were planning to purchase a life insurance company.
True
False ** Answ** True
Common types of letters of credit include all the following except
a. commercial letters of credit
b. term letters of credit
c. financial SLCs
d. performance SLCs ** Answ** b. term letters of credit
All the following are added the "base rate" except
a. adjustment for tax differences
b. adjustment for default risk
c. adjustment for term to maturity
d. adjustment for competitive factor ** Answ** a. adjustment for tax differences
Fee-based services have become an increasing share of bank revenue.
True
False ** Answ** True
Which of the following is true in regard to money market deposit accounts?
a.
,MMDAs specify a maturity.
b.
MMDAs offer limited check-writing privileges.
c.
MMDAs require no minimum balance.
d.
MMDAs are less liquid than retail CDs. ** Answ** b.
MMDAs offer limited check-writing privileges.
Banker's acceptances are not
A. a source of funds for large banks.
B. drafts drawn on a bank by a corporation to pay for merchandise.
C. foreign deposits accepted overseas by branches of American banks.
D. used in international trade. ** Answ** C. foreign deposits accepted overseas by branches
of American banks.
The interest rate charged on loans between depository institutions is commonly referred to as the
a. primary credit rate.
b. discount rate.
c. None of these are correct.
d. federal funds rate. ** Answ** d. federal funds rate.
Which of the following is not an off-balance sheet activity of banks?
A. standby letters of credit
B. loan brokerage
C. securitization
D. repurchase agreements ** Answ** D. repurchase agreements
Which of the following statements is NOT correct?
The five largest U.S. banks now account for more than 50 percent of bank assets.
, b. Acquisitions have been a convenient method for banks to grow quickly and capitalize on
economies of scale.
c. All of these statements are correct.
d. The banking industry has become less concentrated in recent years. ** Answ** d. The
banking industry has become less concentrated in recent years.
The main similarity between banks' loans and investments is that they are both
a. sources of bank funds
b. risky
c. liquid
d. uses of bank funds ** Answ** d. uses of bank funds
____ is (are) NOT a major source of funds for commercial banks.
a. Bank capital
b. Commercial loans
c. Borrowed funds
d. Deposit accounts ** Answ** b. Commercial loans
The most important determinant of consumers' bank selection is
a. safety
b. cost
c. locational convenience
d. technology ** Answ** c. locational convenience
Savings deposits are a larger percent of funding for small banks, compared to large banks.
True
False ** Answ** True
In a standby letter of credit, a bank agrees to
a. service credit card loans originated by another bank.
b. charge a fixed interest rate for a line of credit for a specified period.
Banks use the holding company form of organization for all the following except
A. expanding geographically
B. reducing taxes
C. complying with federal regulations.
D. diversifying services ** Answ** C. complying with federal regulations.
A bank holding company might apply for a "financial" holding company status from the Fed if it
were planning to purchase a life insurance company.
True
False ** Answ** True
Common types of letters of credit include all the following except
a. commercial letters of credit
b. term letters of credit
c. financial SLCs
d. performance SLCs ** Answ** b. term letters of credit
All the following are added the "base rate" except
a. adjustment for tax differences
b. adjustment for default risk
c. adjustment for term to maturity
d. adjustment for competitive factor ** Answ** a. adjustment for tax differences
Fee-based services have become an increasing share of bank revenue.
True
False ** Answ** True
Which of the following is true in regard to money market deposit accounts?
a.
,MMDAs specify a maturity.
b.
MMDAs offer limited check-writing privileges.
c.
MMDAs require no minimum balance.
d.
MMDAs are less liquid than retail CDs. ** Answ** b.
MMDAs offer limited check-writing privileges.
Banker's acceptances are not
A. a source of funds for large banks.
B. drafts drawn on a bank by a corporation to pay for merchandise.
C. foreign deposits accepted overseas by branches of American banks.
D. used in international trade. ** Answ** C. foreign deposits accepted overseas by branches
of American banks.
The interest rate charged on loans between depository institutions is commonly referred to as the
a. primary credit rate.
b. discount rate.
c. None of these are correct.
d. federal funds rate. ** Answ** d. federal funds rate.
Which of the following is not an off-balance sheet activity of banks?
A. standby letters of credit
B. loan brokerage
C. securitization
D. repurchase agreements ** Answ** D. repurchase agreements
Which of the following statements is NOT correct?
The five largest U.S. banks now account for more than 50 percent of bank assets.
, b. Acquisitions have been a convenient method for banks to grow quickly and capitalize on
economies of scale.
c. All of these statements are correct.
d. The banking industry has become less concentrated in recent years. ** Answ** d. The
banking industry has become less concentrated in recent years.
The main similarity between banks' loans and investments is that they are both
a. sources of bank funds
b. risky
c. liquid
d. uses of bank funds ** Answ** d. uses of bank funds
____ is (are) NOT a major source of funds for commercial banks.
a. Bank capital
b. Commercial loans
c. Borrowed funds
d. Deposit accounts ** Answ** b. Commercial loans
The most important determinant of consumers' bank selection is
a. safety
b. cost
c. locational convenience
d. technology ** Answ** c. locational convenience
Savings deposits are a larger percent of funding for small banks, compared to large banks.
True
False ** Answ** True
In a standby letter of credit, a bank agrees to
a. service credit card loans originated by another bank.
b. charge a fixed interest rate for a line of credit for a specified period.
