Chapter 1
Banking and the Financial Services Industry
Multiple Choice
1. Which act separated commercial banking, investment banking and insurance into three
separate industries?
a. Glass-Steagall Act
b. Bank Holding Company Act
c. McFadden Act
d. Federal Reserve Act
e. Competitive Equality Banking Act
Answer: a
2. Which act limited the activities a company could engage in if it owned a bank?
a. Federal Reserve Act
b. Bank Holding Company Act
c. McFadden Act
d. Glass-Steagall Act
e. Competitive Equality Banking Act
Answer: b
3. Which of the following mortgage types were offered to “subprime” borrowers?
a. Interest Only
b. Option Adjustable-Rate
c. Principal Only
, d. All of the above
e. a. and b. only
Answer: e
4. The U.S. government took all of the following actions to address the credit crisis in 2008
except:
a. putting Fannie Mae into conservatorship.
b. passed the Troubled Asset Relief Program (TARP).
c. created the Keep Banks Solvent (KBS) agency.
d. authorized large non-financial firms to sell bonds that were FDIC-insured.
e. temporarily increased FDIC domestic deposit coverage to $250,000.
Answer: c
,5. At the end of 2008, which of the following investment banks remained independent?
a. Bear Stearns
b. Goldman Sachs
c. Lehman Brothers
d. Merrill Lynch
e. a. and b.
Answer: b
6. In 2008, the U.S. Treasury financial supported financial institutions by:
a. purchasing troubled assets.
b. buying preferred stock in some financial institutions.
c. issuing guarantees on money market funds.
d. increasing the deposit insurance limit.
e. all of the above.
Answer: e
7. Which of the following is false regarding community banks?
a. They typically have extensive operations in specific regions of the country.
b. They typically operate in a limited geographic area.
c. They often focus on lending to small businesses.
d. The bulk of their funding comes from deposits.
e. They tend to grow at a modest rate.
Answer: a
8. __________ have a large international presence.
a. Global banks
, b. Nationwide banks
c. Super regional banks
d. Regional banks
e. Specialty Banks
Answer: a
Banking and the Financial Services Industry
Multiple Choice
1. Which act separated commercial banking, investment banking and insurance into three
separate industries?
a. Glass-Steagall Act
b. Bank Holding Company Act
c. McFadden Act
d. Federal Reserve Act
e. Competitive Equality Banking Act
Answer: a
2. Which act limited the activities a company could engage in if it owned a bank?
a. Federal Reserve Act
b. Bank Holding Company Act
c. McFadden Act
d. Glass-Steagall Act
e. Competitive Equality Banking Act
Answer: b
3. Which of the following mortgage types were offered to “subprime” borrowers?
a. Interest Only
b. Option Adjustable-Rate
c. Principal Only
, d. All of the above
e. a. and b. only
Answer: e
4. The U.S. government took all of the following actions to address the credit crisis in 2008
except:
a. putting Fannie Mae into conservatorship.
b. passed the Troubled Asset Relief Program (TARP).
c. created the Keep Banks Solvent (KBS) agency.
d. authorized large non-financial firms to sell bonds that were FDIC-insured.
e. temporarily increased FDIC domestic deposit coverage to $250,000.
Answer: c
,5. At the end of 2008, which of the following investment banks remained independent?
a. Bear Stearns
b. Goldman Sachs
c. Lehman Brothers
d. Merrill Lynch
e. a. and b.
Answer: b
6. In 2008, the U.S. Treasury financial supported financial institutions by:
a. purchasing troubled assets.
b. buying preferred stock in some financial institutions.
c. issuing guarantees on money market funds.
d. increasing the deposit insurance limit.
e. all of the above.
Answer: e
7. Which of the following is false regarding community banks?
a. They typically have extensive operations in specific regions of the country.
b. They typically operate in a limited geographic area.
c. They often focus on lending to small businesses.
d. The bulk of their funding comes from deposits.
e. They tend to grow at a modest rate.
Answer: a
8. __________ have a large international presence.
a. Global banks
, b. Nationwide banks
c. Super regional banks
d. Regional banks
e. Specialty Banks
Answer: a
