Question 1

The largest amount of pension assets are associated with

Accepted Answer

A)   private pension funds.
B)   social security.
C)   government-administered pension funds.
D)   insured pension plans with life insurance companies.
E)   None of the above.

Question 2

The major regulator of investment companies is the

Accepted Answer

A)   state in which they are incorporated.
B)   bank holding companies that own them.
C)   Securities and Exchange Commission.
D)   Federal Reserve System.
E)   U.S.Treasury.

Question 3

The most frequent common bond for credit union formation is

Accepted Answer

A)   occupational.
B)   church-related or religious affiliation.
C)   geographical.
D)   ethnicity factors.
E)   political affiliation.

Question 4

Suppose the Federal Reserve increases deposits at financial institutions by $50 billion through its open market operations.If the reserve requirement for all deposits is increased from 8% to 10% at the same time the Fed increases deposits, what is the maximum impact the Fed's actions can have on total deposits?

Accepted Answer

A)   $575 billion increase
B)   $450 billion increase
C)   $2.5 trillion increase
D)   Actually, deposits would decrease, but there is not enough information to determine by what amount.
E)   None of the above.

Question 5

Mutual funds that invest primarily in instruments that generate fairly constant annual cash flows such as bonds and preferred stocks are ____.

Accepted Answer

A)   income funds
B)   growth funds
C)   value funds
D)   money market funds
E)   social funds

Question 6

Which of the following is not a reason for the rapid expansion of U.S.banks overseas?

Accepted Answer

A)   the establishment of the Edge Act
B)   overall expansion of U.S.world trade
C)   the growth of multinational corporations
D)   the International Bank Act of 1978
E)   None of the above.

Question 7

The Federal Reserve's most influential policy is its reserve requirement policy.

Accepted Answer

A) True 
 B)False

Question 8

All else equal, the money supply should decrease when

Accepted Answer

A)   banks withdraw currency from the Fed.
B)   the Fed makes loans at the discount window.
C)   the Fed sells securities on the open market.
D)   the Fed buys securities on the open market.
E)   None of the above

Question 9

The primary function of the Federal Reserve is economic stabilization through control of the level and growth of the money supply.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not an asset of a bank?

Accepted Answer

A)   business deposits
B)   consumer loans
C)   deposits in other banks
D)   government securities
E)   All of the above are bank assets.

Question 11

Credit unions were originally organized with the idea that consumers could pool their funds together and thereby make low-cost consumer loans to any members of the local community.

Accepted Answer

A) True 
 B)False

Question 12

Early goldsmiths began to function as modern banks when they began to operate under a fractional reserve policy and

Accepted Answer

A)   loaned gold.
B)   issued receipts for gold deposited.
C)   issued deposit receipts to borrowers in return for a note (loan) .
D)   when they received a banking charter from the government.
E)   All of the above.

Question 13

The Federal Deposit Insurance Corporation (FDIC) approves and charters all federal, or national, banks and many state banks.

Accepted Answer

A) True 
 B)False

Question 14

The major asset of savings and loans is

Accepted Answer

A)   mortgage-backed securities.
B)   construction loans.
C)   residential (home)  mortgages.
D)   cash and investment accounts.
E)   government securities.

Question 15

A(n)  ____ is an investment company that accepts money from savers and then use these funds to buy various types of financial assets.

Accepted Answer

A)   savings and loans
B)   insurance company
C)   mutual savings bank
D)   mutual fund
E)   commercial bank

Question 16

The liabilities of financial institutions primarily consist of loans.

Accepted Answer

A) True 
 B)False

Question 17

When the Federal Reserve sells an asset to the private sector, the money supply declines.

Accepted Answer

A) True 
 B)False

Question 18

The percentage of financial assets held by individuals located in banks has doubled over the past thirty-five years.

Accepted Answer

A) True 
 B)False

Exam 4: Financial Intermediaries and the Banking System

A(n) ____ is an investment company that accepts money from savers and then use these funds to buy various types of financial assets.

Correct Answer
verified

The percentage of financial assets held by individuals located in banks has doubled over the past thirty-five years.

Correct Answer
verified

The primary function of the Federal Reserve is economic stabilization through control of the level and growth of the money supply.

Correct Answer
verified

Which of the following is not a reason for the rapid expansion of U.S.banks overseas?

Correct Answer
verified

All else equal, the money supply should decrease when

Correct Answer
verified

The major asset of savings and loans is

Correct Answer
verified

Mutual funds that invest primarily in instruments that generate fairly constant annual cash flows such as bonds and preferred stocks are ____.

Correct Answer
verified

Early goldsmiths began to function as modern banks when they began to operate under a fractional reserve policy and

Correct Answer
verified

The major regulator of investment companies is the

Correct Answer
verified

The largest amount of pension assets are associated with

Correct Answer
verified

When the Federal Reserve sells an asset to the private sector, the money supply declines.

Correct Answer
verified

The Federal Deposit Insurance Corporation (FDIC) approves and charters all federal, or national, banks and many state banks.

Correct Answer
verified

The most frequent common bond for credit union formation is

Correct Answer
verified

Correct Answer
verified

Credit unions were originally organized with the idea that consumers could pool their funds together and thereby make low-cost consumer loans to any members of the local community.

Correct Answer
verified

The Federal Reserve's most influential policy is its reserve requirement policy.

Correct Answer
verified

The liabilities of financial institutions primarily consist of loans.

Correct Answer
verified

Which of the following is not an asset of a bank?

Correct Answer
verified

Exam 4: Financial Intermediaries and the Banking System

A(n) ____ is an investment company that accepts money from savers and then use these funds to buy various types of financial assets.

Correct AnswerverifiedShow Answer

The percentage of financial assets held by individuals located in banks has doubled over the past thirty-five years.

Correct AnswerverifiedShow Answer

The primary function of the Federal Reserve is economic stabilization through control of the level and growth of the money supply.

Correct AnswerverifiedShow Answer

Which of the following is not a reason for the rapid expansion of U.S.banks overseas?

Correct AnswerverifiedShow Answer

All else equal, the money supply should decrease when

Correct AnswerverifiedShow Answer

The major asset of savings and loans is

Correct AnswerverifiedShow Answer

Mutual funds that invest primarily in instruments that generate fairly constant annual cash flows such as bonds and preferred stocks are ____.

Correct AnswerverifiedShow Answer

Early goldsmiths began to function as modern banks when they began to operate under a fractional reserve policy and

Correct AnswerverifiedShow Answer

The major regulator of investment companies is the

Correct AnswerverifiedShow Answer

The largest amount of pension assets are associated with

Correct AnswerverifiedShow Answer

When the Federal Reserve sells an asset to the private sector, the money supply declines.

Correct AnswerverifiedShow Answer

The Federal Deposit Insurance Corporation (FDIC) approves and charters all federal, or national, banks and many state banks.

Correct AnswerverifiedShow Answer

The most frequent common bond for credit union formation is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Credit unions were originally organized with the idea that consumers could pool their funds together and thereby make low-cost consumer loans to any members of the local community.

Correct AnswerverifiedShow Answer

The Federal Reserve's most influential policy is its reserve requirement policy.

Correct AnswerverifiedShow Answer

The liabilities of financial institutions primarily consist of loans.

Correct AnswerverifiedShow Answer

Which of the following is not an asset of a bank?

Correct AnswerverifiedShow Answer

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