Question 1

Which of the below statements is FALSE?

Accepted Answer

A)   Risk-based capital guidelines establish a credit risk weight for all assets where a weight depends on the credit risk associated with each asset.
B)   There are four credit risk classifications for banks: 0%, 20%, 50%, and 100%, arrived at on no particular scientific basis.
C)   The purpose of the Basel I Framework was to improve on the rules as set forth in the Basel I Framework by bringing risk-based capital requirements more in line with the underlying risks to which banks are exposed.
D)   The Basel Committee has several subcommittees whose stated purpose is to promote consistency in its implementation of the guidelines.

Question 2

To increase the ability of S&Ls to expand the sources of funding available to bolster their capital, legislation facilitated the conversion of mutually owned companies into a corporate stock ownership structure.

Accepted Answer

A) True 
 B)False

Question 3

Credit union assets consist of ________.

Accepted Answer

A)   small consumer loans, residential mortgage loans, and securities.
B)   large consumer loans, residential mortgage loans, and securities.
C)   small consumer loans, business mortgage loans, and securities.
D)   small consumer loans, residential auto loans, and securities.

Question 4

Which of the below statements is FALSE?

Accepted Answer

A)   Interest income and fee income are generated from mortgage lending and credit card financing.
B)   Fee income is generated from brokerage services and financial investment services.
C)   Loans to nonfinancial corporations, financial corporations, (such as life insurance companies) , and government entities (state and local governments in the United States and foreign governments)  fall into the category of institutional banking.
D)   Loans and leasing generate dividend income, and other services that banks offer institutional customers generate fee income.

Question 5

The principal source of funds for savings banks is ________.

Accepted Answer

A)   government bail-out funds.
B)   withdrawals.
C)   venture capital.
D)   deposits.

Question 6

In our financial system, commercial banks provide numerous services that can be broadly classified. Which of the below is NOT one of these broadly classified services?

Accepted Answer

A)   individual banking
B)   forthright banking
C)   institutional banking
D)   global banking

Question 7

Technically, because credit unions are ________ by their members, member deposits are called ________.

Accepted Answer

A)   managed; certificates
B)   owned; certificates
C)   managed; shares
D)   owned; shares

Question 8

A depository institution can accommodate withdrawal and loan demand by attracting additional deposits and raising short-term funds in the money market.

Accepted Answer

A) True 
 B)False

Question 9

Which of the below statements is TRUE?

Accepted Answer

A)   Depository institutions do not include commercial banks (or simply banks) , savings and loan associations (S&Ls) , savings banks, and credit unions.
B)   Since their funds are raised through deposits and other funding sources, depository institutions cannot make direct loans to various entities or invest in securities.
C)   Depository institutions derive their income from two sources: (1)  the income generated from the loans they make and the securities they purchase, and (2)  fee income.
D)   It is uncommon to refer to S&Ls, savings banks, and credit unions as thrifts, which are specialized types of depository institutions.

Question 10

Selling securities that it owns, requires that the depository institution invest a portion of its funds in securities that are both illiquid and have a lot of price risk.

Accepted Answer

A) True 
 B)False

Exam 3: Depository Institutions: Activities and Characteristics

Which of the below statements is FALSE?

Correct Answer
verified

Which of the below statements is FALSE?

Correct Answer
verified

Which of the below statements is TRUE?

Correct Answer
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Technically, because credit unions are by their members, member deposits are called .

Correct Answer
verified

Credit union assets consist of ________.

Correct Answer
verified

Selling securities that it owns, requires that the depository institution invest a portion of its funds in securities that are both illiquid and have a lot of price risk.

Correct Answer
verified

To increase the ability of S&Ls to expand the sources of funding available to bolster their capital, legislation facilitated the conversion of mutually owned companies into a corporate stock ownership structure.

Correct Answer
verified

The principal source of funds for savings banks is ________.

Correct Answer
verified

In our financial system, commercial banks provide numerous services that can be broadly classified. Which of the below is NOT one of these broadly classified services?

Correct Answer
verified

A depository institution can accommodate withdrawal and loan demand by attracting additional deposits and raising short-term funds in the money market.

Correct Answer
verified

Exam 3: Depository Institutions: Activities and Characteristics

Which of the below statements is FALSE?

Correct AnswerverifiedShow Answer

Which of the below statements is FALSE?

Correct AnswerverifiedShow Answer

Which of the below statements is TRUE?

Correct AnswerverifiedShow Answer

Technically, because credit unions are ________ by their members, member deposits are called ________.

Correct AnswerverifiedShow Answer

Credit union assets consist of ________.

Correct AnswerverifiedShow Answer

Selling securities that it owns, requires that the depository institution invest a portion of its funds in securities that are both illiquid and have a lot of price risk.

Correct AnswerverifiedShow Answer

To increase the ability of S&Ls to expand the sources of funding available to bolster their capital, legislation facilitated the conversion of mutually owned companies into a corporate stock ownership structure.

Correct AnswerverifiedShow Answer

The principal source of funds for savings banks is ________.

Correct AnswerverifiedShow Answer

In our financial system, commercial banks provide numerous services that can be broadly classified. Which of the below is NOT one of these broadly classified services?

Correct AnswerverifiedShow Answer

A depository institution can accommodate withdrawal and loan demand by attracting additional deposits and raising short-term funds in the money market.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Technically, because credit unions are by their members, member deposits are called .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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