Banking

Q: Which of the following is NOT a type of consumer loan? A. Personal cash loan. B. Mobile home loan. C. Private-label credit card loan. D. Equipment loan. E. Motor vehicle loan.

Q: Home equity loans have A. become less profitable for finance companies. B. seen reduced demand since the Tax Reform Act of 1986 was passed. C. interest charges that are not tax deductible. D. a higher bad debt expense than those on other finance company loans. E. allows customers to borrow on a line of credit secured with a second mortgage on their home.

Q: Finance companies that prey on desperate higher-risk customers charging unfairly exorbitant interest rates are referred to as A. refinancing companies. B. captive companies. C. business credit companies. D. loan shark companies. E. personal credit companies.

Q: A finance company may be classified as a subprime lender if it A. charges interest rates below those charged by commercial banks. B. lends to low-risk customers. C. lends to high-risk customers. D. originated from check cashing outlets in the early 1990s. E. is wholly owned by a parent corporation.

Q: As of 2012, which of the following is true concerning payday lending? A. The typical borrower earns less than $25,000. B. Payday lending has been effectively banned in 18 states. C. Interest rate on payday loans were capped at an annual interest rate of 30% by federal legislation. D. Less than $30 billion of payday loans were generated by the industry. E. Payday lenders were banned from forming relationships with nationally chartered banks.

Q: Which of the following is a major source of debt capital for a captive finance company? A. Premiums. B. Deposits. C. Equity. D. Bank loans. E. Parent company.

Q: Prior to the financial crisis that began in 2007, finance companies A. had experienced slow asset growth because of the upcoming economic slowdown. B. had found subprime lending to be a risk-free method to achieve growth. C. had experienced strong profit and loan growth, especially those companies that lend to less risky customers. D. had experienced strong success in the area of electronic lending. E. had avoided takeover attempts by other financial institutions.

Q: During the period from 1977 to 2012, A. total assets in finance companies grew over 1,000%. B. commercial paper became a less important source of funds for finance companies. C. assets in finance companies became less diversified. D. mortgage lending declined in importance to finance companies. E. in finance companies, consumer lending increased as a percent of total assets.

Q: Ally Financial [formerly General Motors Acceptance Corporation (GMAC)] A. is a wholly owned subsidiary of General Motors. B. only provides financing to purchasers of automobiles built by General Motors. C. was classified as a commercial bank holding company in 2008. D. did not participate in federal bailout funds during the financial crisis because of their financial strength. E. is the largest finance company in the U.S.

Q: In financing their asset growth, finance companies A. have relied more on bank loans over time. B. rely heavily on short-term commercial paper. C. use less equity capital than commercial banks. D. do not issue demand deposits, but can issue time deposits. E. use very small amounts of long-term debt and bonds.

Q: Which of the following is the type of loan that Ford Motor Credit Corporation provides to Ford dealers to finance the cars that the dealer has for sale? A. Inventory loan. B. Wholesale loan. C. Automobile lease. D. Factoring. E. Equipment loan.

Q: Finance companies often prefer to lease equipment to customers because A. repossession in the event of default is easier. B. a lease with little or no down payment is more attractive to business customers. C. the finance company receives the benefit of depreciation expense. D. All of the above. E. Answers A and C only.

Q: Which of the following is NOT an advantage of a finance company over a commercial bank in providing services to small business customers? A. Finance companies are less willing to accept risky customers than are banks. B. Finance companies are not subject to regulations that restrict the type of products and services they can offer. C. Finance companies often have substantial industry and product expertise. D. Finance companies generally have lower overhead than banks. E. Finance companies do not accept deposits and therefore are not subject to bank-type regulatory restrictions.

Q: Finance companies charge different rates than do commercial banks which A. tend to be higher than bank rates. B. often reflect a more risky borrower. C. causes some finance companies to be classified as subprime lenders. D. must meet state usury law guidelines. E. All of the above.

Q: Which of the following is NOT true? A. The fastest growing area of finance companies in recent years has been in the area of leasing and business loans. B. Consumer loans represent the largest portion of the loan portfolio of finance companies. C. Finance companies rely on short-term commercial paper and customer deposits to finance their assets. D. Finance companies rely on short-term commercial paper and long-term debt to finance their assets. E. Finance companies are now the largest issuers of commercial paper in the U.S.

Q: Factoring involves A. making loans to customers that depository institutions find too risky to lend. B. providing financing for the purchase of products manufactured by the parent company. C. approving of collateral that depository institutions do not find acceptable. D. providing financing through equipment leasing. E. purchasing of accounts receivable by finance company from corporate customers.

Q: A company that specializes in making loans to the customers of a particular retailer or manufacturer would best be categorized as a A. sales finance institution. B. personal credit institution. C. business credit institution. D. lease finance company. E. factoring company.

Q: This type of finance company competes directly with depository institutions for consumer loans because they can frequently process loans faster and more conveniently. A. Sales finance institution. B. Personal credit institution. C. Business credit institution. D. Lease finance company. E. Factoring company.

Q: A company that specializes in making installment loans to consumers would best be categorized as a A. sales finance institution. B. personal credit institution. C. business credit institution. D. lease finance company. E. factoring company.

Q: Which of the following is NOT a type of finance company? A. Sales finance institutions. B. Personal credit institutions. C. Business credit institutions. D. Captive finance company. E. All of the above are types of finance companies.

Q: Which of the following is NOT true? A. The finance company industry tends to be very concentrated. B. Twenty of the largest finance companies account for more than 65% of the industry assets. C. Many of the largest finance companies tend to be wholly owned or are captive subsidiaries of major manufacturing firms. D. Finance companies specialize only in consumer loans and do not make business loans. E. Finance companies often provide captive financing for the purchase of products manufactured by their parent company.

Q: Finance companies have enjoyed very high rates of growth because they A. are willing to lend to riskier customers than commercial banks. B. charge higher rates on lower risk loans. C. do not have ties or affiliations with manufacturing firms. D. face very high levels of regulation, which assures their success. E. do not sell the loans that they originate.

Q: What is the primary function of finance companies? A. Protect individuals and corporations from adverse events. B. Make loans to both individuals and corporations. C. Extend loans to banks and other financial institutions. D. Pool the financial resources of individuals and companies and invest in diversified portfolios of assets. E. Assist in the trading of securities in the secondary markets.

Q: Finance companies operate more like nonfinancial, nonregulated companies than any other type of financial institution.

Q: The FDIC allows its member banks to participate in payday lending.

Q: The typical customer of a payday lender has income of between $25,000 and $50,000 per year.

Q: Finance companies have traditionally been subject to state-imposed usury ceilings on the maximum loan rate charged to any individual customers.

Q: As an industry, finance companies have escaped the merger and consolidation activity that has affected nearly every other sector of the financial services industry.

Q: Finance companies have had no significant downturns in economic performance over the last two decades.

Q: Choose among the following major banking laws.A. The McFadden Act of 1927B. The Glass-Steagall Act of 1933C. The Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980D. The Garn-St Germain Depository Institutions Act of 1982E. The Competitive Equality in Banking Act of 1987F. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989G. The Federal Deposit Insurance Corporation Improvement Act (FDICIA) of 1991H. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994I. Financial Services Modernization Act of 1999This legislation streamlined bank holding company supervision, with the Federal Reserve as the umbrella holding company supervisor.

Q: Choose among the following major banking laws.A. The McFadden Act of 1927B. The Glass-Steagall Act of 1933C. The Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980D. The Garn-St Germain Depository Institutions Act of 1982E. The Competitive Equality in Banking Act of 1987F. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989G. The Federal Deposit Insurance Corporation Improvement Act (FDICIA) of 1991H. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994I. Financial Services Modernization Act of 1999This legislation limited thrift investments in non-residential real estate.

Q: Choose among the following major banking laws.A. The McFadden Act of 1927B. The Glass-Steagall Act of 1933C. The Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980D. The Garn-St Germain Depository Institutions Act of 1982E. The Competitive Equality in Banking Act of 1987F. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989G. The Federal Deposit Insurance Corporation Improvement Act (FDICIA) of 1991H. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994I. Financial Services Modernization Act of 1999This law allows bank holding companies to convert out-of-state subsidiary banks into branches of a single interstate bank.

Q: Choose among the following major banking laws.A. The McFadden Act of 1927B. The Glass-Steagall Act of 1933C. The Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980D. The Garn-St Germain Depository Institutions Act of 1982E. The Competitive Equality in Banking Act of 1987F. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989G. The Federal Deposit Insurance Corporation Improvement Act (FDICIA) of 1991H. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994I. Financial Services Modernization Act of 1999This legislation phased out Regulation Q ceilings on deposit interest rates.

Q: Choose among the following major banking laws.A. The McFadden Act of 1927B. The Glass-Steagall Act of 1933C. The Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980D. The Garn-St Germain Depository Institutions Act of 1982E. The Competitive Equality in Banking Act of 1987F. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989G. The Federal Deposit Insurance Corporation Improvement Act (FDICIA) of 1991H. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994I. Financial Services Modernization Act of 1999Eliminated restrictions on banks, insurance companies, and securities firms from entering into each other's areas of business.

Q: Choose among the following major banking laws.A. The McFadden Act of 1927B. The Glass-Steagall Act of 1933C. The Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980D. The Garn-St Germain Depository Institutions Act of 1982E. The Competitive Equality in Banking Act of 1987F. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989G. The Federal Deposit Insurance Corporation Improvement Act (FDICIA) of 1991H. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994I. Financial Services Modernization Act of 1999This legislation permits bank holding companies to acquire banks in other states.

Q: Choose among the following major banking laws.A. The McFadden Act of 1927B. The Glass-Steagall Act of 1933C. The Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980D. The Garn-St Germain Depository Institutions Act of 1982E. The Competitive Equality in Banking Act of 1987F. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989G. The Federal Deposit Insurance Corporation Improvement Act (FDICIA) of 1991H. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994I. Financial Services Modernization Act of 1999This legislation introduced prompt corrective action requiring mandatory intervention by regulators when a bank's capital falls below certain levels.

Q: What is the defining characteristic of the dual banking system? A. Coexistence of parent and holding companies.B. Coexistence of both nationally chartered and state chartered banks.C. Control of nationally chartered and state chartered banks by the state regulators.D. Control of nationally chartered banks by both FRS and State bank regulators.E. Nonbanking companies carrying out both banking and other activities.

Q: Correspondent banking may involve A. providing banking services to other banks facing shortage of staff. B. providing foreign exchange trading services to individuals. C. holding and managing assets for individuals or corporations. D. acting as transfer and disbursement agents for pension funds. E. providing hedging services to corporations.

Q: Which of the following is NOT an off balance sheet activity for U.S. banks? A. Derivative contracts. B. Loan commitments. C. Standby letters of credit. D. Trust services. E. When-issued securities.

Q: Compared to banks and savings institutions, credit unions are able to pay a higher rate on the deposits of members because A. they intend to attract new members. B. they do not issue common stock. C. of their tax-exempt status. D. Regulation Q still applies to the industry. E. they are subject to the provisions of the Community Reinvestment Act.

Q: Which of the following observations concerning credit unions is NOT true? A. They invest heavily in corporate securities. B. Member loans constitute a majority of their total assets. C. They tend to invest more of their assets in U.S. Treasuries than other DIs. D. They engage in off-balance-sheet activities. E. They focus more on providing services and less on profitability.

Q: The most numerous of the institutions that define the depository institutions segment of the FI industry in the US is (are) A. savings associations. B. small commercial banks. C. large commercial banks. D. savings banks. E. credit unions.

Q: Credit Unions were generally less affected than other depository institutions by the recent financial crisis because A. they had relatively more assets in consumer loans than other DIs. B. they had relatively more residential mortgages. C. they hold more government and agency securities, on average. D. they hold less government and agency securities, on average. E. Answers A and C only.

Q: The largest liability on credit unions' balance sheet as of September 30, 2012 was A. small time and savings deposits. B. open-market paper. C. repurchase agreements. D. ownership shares. E. share advances.

Q: The largest asset class on credit unions' balance sheet as of September 30, 2012 was A. cash. B. investment securities. C. home mortgages. D. checkable deposits. E. consumer credit.

Q: The primary regulators of savings institutions are A. the Federal Reserve and the FDIC. B. the Office of Thrift Supervision and the FDIC. C. the FDIC and the Office of the Comptroller of the Currency. D. the Office of Thrift Supervision and the Comptroller of the Currency. E. the Federal Reserve and the Comptroller of the Currency.

Q: Which of the following is the most important source of funds for savings institutions? A. Borrowings from the Federal Home Loan Bank. B. Small time and savings deposits. C. Repurchase agreements. D. Direct federal fund borrowings. E. Negotiable certificates of deposit.

Q: The qualified thrift lender test is designed to ensure that A. a floor is set for the mortgage related assets held by savings institutions. B. a ceiling is set on the mortgage related assets held by commercial banks. C. savings associations are covered by risk-based deposit insurance premiums. D. an interest rate ceiling is imposed on small savings and time deposits at savings institutions. E. regulators could close thrifts and banks faster.

Q: These organizations were originated to avoid the legal definition of a bank. A. Money center banks. B. Savings associations. C. Nonbank banks. D. Financial services holding companies. E. Savings banks.

Q: What was the primary objective of the Bank Holding Company Act of 1956? A. Permitted bank holding companies to acquire banks in other states. B. Restricted the banking and nonbanking acquisition activities of multibank holding companies. C. Regulated foreign bank branches and agencies in the United States. D. Bank holding companies were permitted to convert out-of-state subsidiary banks into branches of a single interstate bank. E. Allowed for the creation of a financial services holding company.

Q: Which of the following currently manages the insurance funds for both commercial banks and savings institutions? A. FDIC. B. FSLIC. C. OCC. D. FRS. E. State authorities.

Q: Which of the following identifies the primary function of the Office of the Comptroller of the Currency? A. Manage the deposit insurance fund and carry out bank examinations. B. Regulate and examine bank holding companies as well as individual commercial banks. C. Charter national banks and approve their merger activity. D. Determine permissible activities for state chartered banks. E. Stand as the "lender of last resort" for troubled banks.

Q: Which of the following observations concerning trust departments is true? A. They are found only among smaller community banks. B. Only the largest banks have sufficient staff to offer trust services. C. They provide banking services to other banks. D. Pension fund assets are the largest category of assets managed by trust departments. E. They primarily handle assets for financially sophisticated investors.

Q: Which of the following is true of off-balance-sheet activities? A. They involve generation of fees without exposure to any risk. B. They include contingent activities recorded in the current balance sheet. C. They invite regulatory costs and additional "taxes." D. They have both risk-reducing as well as risk-increasing attributes. E. The risk involved is best represented by notional or face value.

Q: Which of the following dominates the loan portfolios of banks with assets less than one billion dollars? A. Commercial loans. B. Consumer loans. C. Real estate loans. D. Credit card debt. E. Industrial loans.

Q: This broad class of loans constitutes the highest percentage of total assets for all U.S. commercial banks as of the end of 2012. A. Commercial and industrial. B. Commercial and residential real estate. C. Individual loans. D. Credit card debt. E. Less developed country loans.

Q: Customer loans are classified on a DI's balance sheet as A. assets, because the DI's major asset is its client base. B. liabilities, because the customer may default on the loan. C. assets, because the DI earns servicing fees on the loan. D. liabilities, because the DI must transfer funds to the borrower at the initiation of the loan. E. assets, because DIs originate and monitor loan portfolios.

Q: Holdings of U.S. Treasury securities are classified on a DI's balance sheet as A. assets, because U.S. Treasury securities are default risk-free. B. liabilities, because the DI must pay cash in order to acquire the securities. C. assets, because securities holdings represent a use of funds for investment. D. liabilities, because the Treasury securities must be pledged as collateral against discount window borrowing. E. assets, because the market for U.S. Treasury securities is the most liquid in the world.

Q: Customer deposits are classified on a DI's balance sheet as A. assets, because the DI uses deposit funds to earn profits. B. liabilities, because the DI uses deposits as a source of funds. C. assets, because customers view deposits as assets. D. liabilities, because the DI must meet reserve requirements on customer deposits. E. liabilities, because DIs are required to serve depositors.

Q: A primary advantage for a depository institution of belonging to the Federal Reserve System is A. direct access to correspondent banking services. B. the lower deposit reserves required under the Federal Reserve System. C. direct access to the discount window of the Fed. D. commission less trading of U.S. government securities. E. decreased costs of regulatory compliance.

Q: The FIRREA Act of 1989 introduced the qualified thrift lender test (QLT), which set the percentage of assets required for qualification to be no less than A. 50 percent. B. 55 percent. C. 60 percent. D. 65 percent. E. 68 percent.

Q: Regulatory forbearance refers to a policy of A. allowing insolvent banks to continue to operate. B. foreclosing real estate properties in the event on non-payments of mortgages. C. strict regulation of banks, closing them down as soon as they are insolvent. D. rescheduling of all loans of a client in the event of non-payment. E. Answers B and C only.

Q: One of the primary reasons that investment banks were allowed to convert to bank holding companies during the recent financial crisis was recognition that A. their operating activities were too risky and they needed the cushion of bank deposits to alleviate funding risks. B. the industry had acquired too much capital during the previous decade. C. bank holding companies needed the ability to underwrite new issues of corporate securities. D. it was the only way an investment bank could qualify for federal bailout funds. E. the Federal Reserve was unable to purchase troubled assets from investment banks, but they could from bank holding companies.

Q: A large number of the savings institution failures during the in the 1980s was a result of A. interest rate risk exposure. B. excessively risky investments. C. fraudulent behavior on the part of managers. D. All of the above. E. answers B and C only.

Q: Money center banks are considered to be any bank which A. has corporate headquarters in either New York City, Chicago, San Francisco, Atlanta, Dallas, or Charlotte. B. is a net supplier of funds on the interbank market. C. relies almost entirely on nondeposit and borrowed funds as sources of liabilities. D. does not participate in foreign currency markets. E. is not characterized by any of the above.

Q: The strong performance of commercial banks during the decade before 2007 was due to A. the stability of interest rates during this period. B. the ability of banks to shift credit risk from their balance sheets to financial markets. C. the contraction of the number of banks and thrifts. D. the growth in the number of thrifts and credit unions. E. All of the above.

Q: State-chartered commercial banks may be regulated by A. the FDIC only. B. the FDIC and the Federal Reserve System. C. the Federal Reserve System only. D. the FDIC, the Federal Reserve System, and the Comptroller of the Currency. E. the FDIC, the Federal Reserve System, the Comptroller of the Currency, and state banking commissions.

Q: National-chartered commercial banks are most likely to be regulated by A. the FDIC only. B. the FDIC and the Federal Reserve System. C. the Federal Reserve System only. D. the FDIC, the Federal Reserve System, and the Comptroller of the Currency. E. the Federal Reserve System and the Comptroller of the Currency.

Q: Traditionally, the percentage of depository institutions' assets funded by some form of liability is approximately A. 50 percent. B. 75 percent. C. 85 percent. D. 90 percent. E. 40 percent.

Q: The future viability of the savings association industry in traditional mortgage lending has been questioned because of A. securitization practices of other FIs. B. the additional risk exposure of long-term mortgage lending. C. intense competition from other FIs. D. the liquidity risks associated with mortgage lending. E. All of the above.

Q: The largest liability on FDIC-insured savings institutions' balance sheet as of year-end 2012 was A. commercial paper. B. small time and savings deposits. C. repurchase agreements. D. FHLBB advances. E. cash.

Q: The largest asset class on FDIC-insured savings institutions' balance sheet as of year-end 2012 was A. mortgage loans. B. cash. C. investment securities. D. deposits. E. non-mortgage Loans.

1 2 3 … 494 Next »

Subjects