Question 1

The purpose of creating the FDIC was to:

Accepted Answer

A)  restore confidence in banking institutions.
B)  serve as clearinghouses for transactions involving commercial banks and savings and loans.
C)  provide federally guaranteed insurance to small businesses at low cost.
D)  help the Federal Reserve enforce reserve requirements.E) None of the above
F) A) and D)

Question 2

Which of the following is a bank service provided to help companies conduct business in other countries?

Accepted Answer

A)  Transaction letters
B)  Certificates of deposit
C)  Banker's depositories
D)  Currency exchangeE) All of the above
F) A) and B)

Question 3

Due to federal regulations limiting their investment opportunities,pension funds play a minor role in U.S.financial markets.

Accepted Answer

A) True 
 B)False

Question 4

When the Fed increases the reserve requirement,banks:

Accepted Answer

A)  must increase the dollar volume of loans they make to customers.
B)  must pay more to borrow from the Fed.
C)  have fewer funds available for lending.
D)  will find their balance sheets temporarily out of balance.E) A) and B)
F) A) and C)

Question 5

Due to the fact that investors did not individually purchase MBSs mortgage-backed securities)in their investment accounts,they remained unaffected when the value of some of these investments became worthless.

Accepted Answer

A) True 
 B)False

Question 6

Barry has $22,000 in a savings account with the Scott Credit Union.While economic conditions have caused financial institutions to struggle,Barry feels that his money is safe due to the fact that the credit union's accounts are protected by the:

Accepted Answer

A)  Federal Deposit Insurance Corporation FDI
C)  .
B)  Credit Union Insurance Fund CUIF) .
C)  National Alliance of Credit Union Underwriters NACUU) .
D)  National Credit Union Administration NCU
A)  .E) B) and C)
F) A) and C)

Question 7

John searched for a new bank prior to filling out his direct deposit form at his new employer.He noted that Twenty/Four/Seven E-Bank,Inc. ,offered better interest rates on savings accounts and money market accounts;and it offered other amenities such as online banking and funds transfer that many traditional banks offer.What is the most logical reason that Twenty/Four/Seven can compete for customers by offering higher interest rates?

Accepted Answer

A)  Twenty/Four/Seven probably cannot compete this way,for long.In order to build its market share,it is offering this as a one-time promotion.
B)  Its bank reserve requirement is less,due to the fact that the assets it is holding are not as substantial as bigger,traditional banks.
C)  Twenty/Four/Seven has no buildings and locations.Due to low overhead,it is able to share the savings it realizes with its customers.
D)  Twenty/Four/Seven pay its employees less than other banks.E) A) and B)
F) All of the above

Question 8

Many S&Ls failed when capital gains taxes increased in the late 70s and early 80s,making it less attractive to invest in real estate and causing investors to walk away from their property loans.

Accepted Answer

A) True 
 B)False

Question 9

Barter involves the use of electronic payment systems,like Paypal.com,for online transactions.

Accepted Answer

A) True 
 B)False

Question 10

The IMF's goal is to maintain a global monetary system.

Accepted Answer

A) True 
 B)False

Question 11

The strength of the U.S.dollar relative to other currencies depends mainly on:

Accepted Answer

A)  the rate of inflation in the United States.
B)  the performance of the U.S.economy relative to other economies.
C)  how much gold backs the money supply.
D)  exchange rate decisions made by the International Monetary Fund.E) C) and D)
F) B) and C)

Question 12

Bank crises tend to correlate with economic recessions.

Accepted Answer

A) True 
 B)False

Question 13

It's no secret these days that the People's Bank of China is fat with cash from the increasing rate of Chinese exporting.As a smart player on the global stage,which of the following strategic decisions will the People's Bank of China probably do on a daily basis?

Accepted Answer

A)  Invest its free cash in the securities of other nations whose interest rates remain at a low and acceptable rate,for a long period of time.
B)  Limit its global investment of free cash,and continue to invest in the construction trade in China,to build more factories,while providing its clientele with the highest possible interest rates.
C)  Invest its free cash in the securities of other nations who do not participate in the same type of industries such as soft goods and electronics.
D)  Invest its free cash in the securities of other nations where it can get the highest available interest rate,for the shortest period of time.E) A) and B)
F) B) and C)

Question 14

The technical name for a savings account is a:

Accepted Answer

A)  time deposit.
B)  demand deposit.
C)  deferred account.
D)  retained income account.E) B) and C)
F) A) and B)

Question 15

A __________ represents an unconditional agreement by a bank to pay a specified amount at a particular time.

Accepted Answer

A)  certified trade acceptance
B)  banker's acceptance
C)  letter of credit
D)  guaranteed funds agreementE) A) and B)
F) None of the above

Question 16

Pleased with the service provided by a national brokerage house when he bought and sold stocks and bonds,Ted would like to have this brokerage firm handle more of his financial needs.If Ted explores the services offered by such firms in more depth,he will find that:

Accepted Answer

A)  federal laws prohibit brokerage firms from competing with banks,savings and loan associations,and credit unions.
B)  although brokerage firms can offer some banking services,they typically are less efficient at providing them than banks,because they specialize in buying and selling securities.
C)  brokerage firms are becoming serious competitors for banks and other depository institutions by offering high-yield combination savings and checking accounts and money market accounts,as well as certain types of loans.
D)  although brokerage firms offer attractive banking services,federal law prohibits individual investors from holding both a checking account and a securities account with the same firm.E) All of the above
F) A) and B)

Question 17

The currencies of some countries,although durable and portable are relatively unstable,which makes international exchanges difficult.

Accepted Answer

A) True 
 B)False

Question 18

Chipper's Golf Resort is in the process of purchasing rare Kauri wood from New Zealand to be made into an impressive mantle on the fireplace of its new clubhouse.Before disbursing payment to the New Zealand dealer,the director of the construction project is concerned about the timeliness of delivery as well as the quality of the slab of wood once it is delivered.As the representative of Chipper's bank,you suggest that the Golf Resort sign an) :

Accepted Answer

A)  Authorization of Conditional Acceptance
B)  Banker's Acceptance
C)  Fair Exchange Certificate
D)  Letter of CreditE) A) and C)
F) None of the above

Question 19

When the Federal Reserve wants to increase the money supply,they decrease the reserve requirement.

Accepted Answer

A) True 
 B)False

Question 20

News reports indicate that the Fed plans to announce its third increase in the discount rate in the past five months.Additional reports suggest that the Fed may also increase the reserve requirement in the near future.Apparently the Fed perceives the number one problem facing the economy is:

Accepted Answer

A)  the size of the federal deficit.
B)  unemployment.
C)  excessively high interest rates.
D)  inflation.E) A) and B)
F) A) and C)

Exam 20: Money,financial Institutions,and the Federal Reserve

Correct Answer
verified

Which of the following is a bank service provided to help companies conduct business in other countries?

Correct Answer
verified

Correct Answer
verified

The currencies of some countries,although durable and portable are relatively unstable,which makes international exchanges difficult.

Correct Answer
verified

It's no secret these days that the People's Bank of China is fat with cash from the increasing rate of Chinese exporting.As a smart player on the global stage,which of the following strategic decisions will the People's Bank of China probably do on a daily basis?

Correct Answer
verified

The purpose of creating the FDIC was to:

Correct Answer
verified

Bank crises tend to correlate with economic recessions.

Correct Answer
verified

The technical name for a savings account is a:

Correct Answer
verified

When the Federal Reserve wants to increase the money supply,they decrease the reserve requirement.

Correct Answer
verified

When the Fed increases the reserve requirement,banks:

Correct Answer
verified

A __________ represents an unconditional agreement by a bank to pay a specified amount at a particular time.

Correct Answer
verified

The strength of the U.S.dollar relative to other currencies depends mainly on:

Correct Answer
verified

News reports indicate that the Fed plans to announce its third increase in the discount rate in the past five months.Additional reports suggest that the Fed may also increase the reserve requirement in the near future.Apparently the Fed perceives the number one problem facing the economy is:

Correct Answer
verified

Many S&Ls failed when capital gains taxes increased in the late 70s and early 80s,making it less attractive to invest in real estate and causing investors to walk away from their property loans.

Correct Answer
verified

Barter involves the use of electronic payment systems,like Paypal.com,for online transactions.

Correct Answer
verified

Barry has $22,000 in a savings account with the Scott Credit Union.While economic conditions have caused financial institutions to struggle,Barry feels that his money is safe due to the fact that the credit union's accounts are protected by the:

Correct Answer
verified

Pleased with the service provided by a national brokerage house when he bought and sold stocks and bonds,Ted would like to have this brokerage firm handle more of his financial needs.If Ted explores the services offered by such firms in more depth,he will find that:

Correct Answer
verified

The IMF's goal is to maintain a global monetary system.

Correct Answer
verified

Due to the fact that investors did not individually purchase MBSs mortgage-backed securities)in their investment accounts,they remained unaffected when the value of some of these investments became worthless.

Correct Answer
verified

Due to federal regulations limiting their investment opportunities,pension funds play a minor role in U.S.financial markets.

Correct Answer
verified

Exam 20: Money,financial Institutions,and the Federal Reserve

Correct AnswerverifiedShow Answer

Which of the following is a bank service provided to help companies conduct business in other countries?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The currencies of some countries,although durable and portable are relatively unstable,which makes international exchanges difficult.

Correct AnswerverifiedShow Answer

It's no secret these days that the People's Bank of China is fat with cash from the increasing rate of Chinese exporting.As a smart player on the global stage,which of the following strategic decisions will the People's Bank of China probably do on a daily basis?

Correct AnswerverifiedShow Answer

The purpose of creating the FDIC was to:

Correct AnswerverifiedShow Answer

Bank crises tend to correlate with economic recessions.

Correct AnswerverifiedShow Answer

The technical name for a savings account is a:

Correct AnswerverifiedShow Answer

When the Federal Reserve wants to increase the money supply,they decrease the reserve requirement.

Correct AnswerverifiedShow Answer

When the Fed increases the reserve requirement,banks:

Correct AnswerverifiedShow Answer

A __________ represents an unconditional agreement by a bank to pay a specified amount at a particular time.

Correct AnswerverifiedShow Answer

The strength of the U.S.dollar relative to other currencies depends mainly on:

Correct AnswerverifiedShow Answer

News reports indicate that the Fed plans to announce its third increase in the discount rate in the past five months.Additional reports suggest that the Fed may also increase the reserve requirement in the near future.Apparently the Fed perceives the number one problem facing the economy is:

Correct AnswerverifiedShow Answer

Many S&Ls failed when capital gains taxes increased in the late 70s and early 80s,making it less attractive to invest in real estate and causing investors to walk away from their property loans.

Correct AnswerverifiedShow Answer

Barter involves the use of electronic payment systems,like Paypal.com,for online transactions.

Correct AnswerverifiedShow Answer

Barry has $22,000 in a savings account with the Scott Credit Union.While economic conditions have caused financial institutions to struggle,Barry feels that his money is safe due to the fact that the credit union's accounts are protected by the:

Correct AnswerverifiedShow Answer

Pleased with the service provided by a national brokerage house when he bought and sold stocks and bonds,Ted would like to have this brokerage firm handle more of his financial needs.If Ted explores the services offered by such firms in more depth,he will find that:

Correct AnswerverifiedShow Answer

The IMF's goal is to maintain a global monetary system.

Correct AnswerverifiedShow Answer

Due to the fact that investors did not individually purchase MBSs mortgage-backed securities)in their investment accounts,they remained unaffected when the value of some of these investments became worthless.

Correct AnswerverifiedShow Answer

Due to federal regulations limiting their investment opportunities,pension funds play a minor role in U.S.financial markets.

Correct AnswerverifiedShow Answer

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