Question 1

1. The holding-company device to control two or more commercial banks:

Answer

has diminished in importance in recent years

has increased in importance in recent years

is limited to state chartered banks

is sometimes described as chain banking

2 points

Question 2

The Federal Deposit Insurance Corporation Improvement Act of 1991:

Answer

transferred the reserves and functions of the Federal Savings and Loan Insurance Corporation to the FDIC

required that failed banks be handled in such a way as to provide the lowest cost to the FDIC

increased federal deposit insurance from $40,000 to $100,000 for each account

extended federal deposit insurance to S&L depositors

2 points

Question 3

The Monetary Control Act:

Answer

extended the Fed’s control to thrift institutions and non-member commercial banks

has resulted in more competition among depository institutions

increased federal deposit insurance from $40,000 to $80,000 for each account

established minimum capital requirements for banks with federal charters

2 points

Question 4

The item on the assets side of a bank’s balance sheet that represents the largest proportion of bank assets is:

Answer

Deposits

owner’s capital    

securities

loans

2 points

Question 5

The item on the liabilities and equity section of a bank’s balance sheet that represents the largest proportion of a typical bank’s assets is:

Answer

deposits

owner’s capital

securities

federal funds

2 points

Question 6

The item on the liabilities and equity section of a bank’s balance sheet that represents the smallest proportion of bank’s assets is:

Answer

deposits

owner’s capital

securities

federal funds

2 points

Question 7

An organization that sells or markets new securities issued by businesses to individuals and institutional investors is called a (n)

Answer

mutual fund

investment bank

insurance company

brokerage firm

2 points 

Question 8

The primary purpose of this Act was to aid the savings and loan industry

Answer

Garn–St. Germain Depository Institutions Act

Glass-Steagall Act

Hunt Commission legislation

Depository Institutions Deregulation and Monetary Control Act        

2 points

Question 9

An organization that sells shares in their firms to individuals and others and invests the proceeds in corporate and government securities is called a (n)

Answer

investment company

investment bank

insurance company

brokerage firm

2 points

Question 10

An organization that received contributions from employees and/or their employers and invests the proceeds on behalf of the employees for use during their retirement years is called a (n)

Answer

mutual fund

savings bank

pension fund

retirement fund

2 points

Question 11

The __________________, passed in 1968, requires the clear explanation of consumer credit costs and garnishment procedures (taking wages or property by legal means) and prohibits overly high-priced credit transactions.

Answer

Consumer Credit Expansion Act

Credit Growth Act

Consumer Credit Protection Act

Consumer Safety Act

2 points

Question 12

The Board of Governors:

Answer

is elected by the member banks

is appointed by the Senate

has seven members appointed for 14-year terms

has seven members appointed for a term of 12 years

2 points

Question 13

The banking system of the United States is a ___________ reserve system because banks are required by the Fed to hold reserves equal to a specified percentage of their deposits.

Answer

Required

Fractional

proportional

multiplicative

2 points

Question 14

The dynamic actions of the Federal Reserve System:

Answer

contribute to the smooth everyday functioning of the economy

are designed to meet the credit needs of individuals and institutions    

support depositories and other institutions

stimulate or repress the level of prices or economic activity

2 points 

Question 15

The Federal Reserve Banks are owned by:

Answer

commercial banks

the U.S. Treasury

national member banks of the Federal Reserve System

member banks of the Federal Reserve System

2 points

Question 16

The Board of Governors publishes ________________, which carries articles of current interest and offers a convenient source of the statistics compiled by the Fed.

Answer

the Federal Reserve Magazine

the Federal Reserve Bulletin

the Federal Reserve Journal

the Federal Reserve News

2 points 

Question 17

The Fed shares its depository examining functions with:

Answer

the Federal Savings and Loan Insurance Corporation

the FDIC, Comptroller of the Currency, and state agencies

only the Comptroller of the Currency

National Credit Union administration and the FDIC

2 points 

Question 18

____________________________ requires disclosure of the finance charge and the annual percentage rate of credit along with certain other costs and terms to permit consumers to compare the prices of credit from differing sources.

Answer

Truth in Lending Act

Equal Credit Opportunity Act

Federal Trade Commission Improvement Act

Fair Credit Billing Act

2 points

Question 19

The percentage of deposits that must be held as reserves is called

Answer

the bank reserve percentage

the required reserve ratio

the excess reserve ratio

the fractional reserve percentage

2 points

Question 20

The purpose of Regulation Z is to:

Answer

make consumers aware of the costs of alternative forms of credit

prohibit garnishment

encourage depository institutions to help meet the credit needs of their communities for housing and other purposes

regulate the overseas activities of member banks of the Federal Reserve System