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Tarleton ECO303 quiz 3

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Question;? Question 1;6.6666 out of 6.6666;points;Disintermediation refers to the;Answers: failure of financial intermediaries due to;moral hazard problems.;failure of financial intermediaries;due to adverse selection problems.;movement of savers and;borrowers from banks to financial markets.;removal of government regulations of;financial intermediaries.;? Question 2;6.6666 out of 6.6666;points;Explicit provisions in a loan;agreement that prohibit the borrower from engaging in certain activities is;called;Answers: credit rationing;restrictive covenants;credit-risk analysis;adverse selection;? Question 3;6.6666 out of 6.6666;points;If you have a checking account at;First National Bank, the account is;Answers: an asset to both you and First National.;a liability to both you and First;National.;an asset to First National and a;liability to you.;an asset to you and a;liability to First National.;? Question 4;6.6666 out of 6.6666;points;A stress test of banks, such as that;undertaken in the Spring of 2009, is designed to;Answers: ensure that banks have followed proper;accounting standards;make sure that banks are properly;managed;gauge how well banks;would fare if the economy worsens;estimate the impact of a bank panic on;the overall economy;? Question 5;6.6666 out of 6.6666;points;The Federal Reserve System was created;in response to;Answers: the stock market crash of 1929.;the ending of the Civil War.;the banking panic of;1907.;difficulties of the free-banking era.;? Question 6;0 out of 6.6676 points;On a bank's balance sheet, assets are;Answers;the uses of acquired;funds.;the sources of acquired funds.;those items owed by the bank to;depositors and others.;by definition equal to the bank's;liabilities.;? Question 7;0 out of 6.6666 points;NOW accounts were developed in order;to;Answers;circumvent Regulation;Q.;provide banks with a checkable deposit;on which they did not have to pay interest.;provide banks with a liquid;interest-earning asset.;provide banks with a means of earning;interest on the funds in their reserve accounts with the;? Question 8;0 out of 6.6666 points;Sovereign debt refers to;Answers: debt owned by the government.;bonds issued by the;government.;debt owed to the government.;debt only issued by nations with kings;or queens.;? Question 9;0 out of 6.6666 points;A cash item in the process of;collection is;Answers: a U.S. Treasury bill that has matured, but;for which the bank has not yet received payment.;a car loan payment that is due but not;yet received by the bank.;a check drawn against another bank;from whom the funds have not yet been collected.;currency that has been;deposited in the bank, but not yet formally counted and entered into the bank's;balance sheet.;? Question 10;0 out of 6.6666 points;The third stage in the regulatory;process is;Answers: a crisis.;response by the;financial system.;regulation.;regulatory response.;? Question 11;0 out of 6.6666 points;Bank capital is;Answers: the current market value of the bank's;physical assets.;the historical or original value of;the bank's physical assets.;the capital;contributed by the bank's shareholders plus accumulated retained profits.;the sum of the value of the bank's;assets plus the value of the bank's liabilities.;? Question 12;6.6666 out of 6.6666;points;A person takes out a car loan at a;bank, but actually uses the money to play the lottery. This situation is an;example of which problem banks face in lending?;Answers: adverse selection;moral hazard;interest rate risk;illiquidity;? Question 13;6.6666 out of 6.6666;points;A bank panic occurs when;Answers: a bank is worried that its loans will not be;repaid.;an individual bank cannot meet its;reserve requirements.;a bank lacks sufficient funds with;which to make loans.;the situation in which;many banks experience a bank run simultaneously.;? Question 14;0 out of 6.6666 points;In what way did Dodd-Frank Act reduce;bank revenue?;Answers: it increased the amount that banks have to;pay their depositors;it reduced fees banks could charge when;customers took out loans.;it reduced the amount of interest;banks could charge on mortgages.;it capped the fees;that banks could charge stores for debit card transacations;? Question 15;0 out of 6.6666 points;Regulation Q;Answers: prohibited interstate banking.;placed ceilings on;allowable interest rates on time and savings deposits.;required all banks to hold reserves;against demand deposits.;broadened the basis on which the Fed;could make discount loans.

 

Paper#56677 | Written in 18-Jul-2015

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