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Exam 2: Financial Services: Depository Institutions

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Question 71

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In most countries,cash is required to be held in reserve against deposits.

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Question 72

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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.

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Question 73

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Nondepository financial institutions are represented by all of the following EXCEPT

As an asset transformer,the FI issues financial claims that are more attractive to household savers than the claims directly issued by corporations.

The concept of enterprise risk management encourages FIs to manage all of the risks to which they are exposed as a portfolio,rather than managing each risk individually.

Savers increasingly favor investments that closely imitate diversified investments in the direct securities markets over the transformed financial claims offered by traditional FIs.

Credit unions may be federally or state chartered.If a credit union is chartered at the federal level,it is subject to the regulations imposed by the

By diversifying investments,an FI is able to more accurately predict the expected return on its asset portfolio.

Which of the following identifies the primary function of the Office of the Comptroller of the Currency?

As of 2015,the number of nationally chartered banks was greater than the number of state chartered banks.

For the following problems, choose among the following major banking laws. -This legislation limited the use of "too big to fail" bailouts.

Financial institutions are subject to economies of scale in the collection of information.

One reason for the increasing proportion of total financial assets controlled by pension funds and investment companies is that these intermediaries exploit the comparative advantages of size and diversification.

The primary objective of the 1927 McFadden Act was to restrict interstate bank branching.

The goal of credit allocation is the encouragement of FIs to diversity the composition of their assets.

Because bank loans have a shorter maturity than most debt contracts,FIs typically exercise less monitoring power and control over the borrower.

As with other DIs,profits or return on assets (ROAs)is the primary goal of credit union management.

Safety and soundness regulations include all of the following layers of protection EXCEPT

The dual banking system in the U.S.refers to the operation and establishment of large regional as well as small community banks.

As of 2015,U.S.FIs held assets totaling over $29 trillion.