Banking and Financial Markets
Exam Questions
Course Introduction
This course provides a comprehensive introduction to the structure, functions, and operations of banking institutions and financial markets. Students will explore the role of banks in the financial system, the types and characteristics of financial markets, and the instruments traded within them. Key topics include financial intermediation, interest rate determination, risk management, banking regulation, and recent developments in global financial systems. The course also examines the interaction between central banks, commercial banks, and other financial intermediaries, as well as the impact of monetary policy on the functioning of financial markets. Through case studies and real-world examples, students will gain practical insights into the challenges and opportunities within modern banking and finance.
Recommended Textbook
Bank Management and Financial Services 9th Edition by Peter S. Rose
Available Study Resources on Quizplus
20 Chapters
2365 Verified Questions
2365 Flashcards
Source URL: https://quizplus.com/study-set/2681
Page 2
Chapter 1: An Overview of the Changing Financial-Services Sector
Available Study Resources on Quizplus for this Chatper
92 Verified Questions
92 Flashcards
Source URL: https://quizplus.com/quiz/53502
Sample Questions
Q1) Managing the financial affairs and property of individuals and business firms falls under the type of banking service line known as cash management services.
A)True
B)False
Answer: False
Q2) The banking services that include marketing new securities to raise funds for corporations and other institutions is referred to:
A)comprehensive packaging.
B)wrap-around accounts.
C)investment banking.
D)professional banking.
E)None of the options are correct.
Answer: C
Q3) A greater proportion of major corporations have deserted the banking system in recent years to raise borrowed funds directly from the open market.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: The Impact of Government Policy and Regulation
on the Financial-Services Industry
Available Study Resources on Quizplus for this Chatper
90 Verified Questions
90 Flashcards
Source URL: https://quizplus.com/quiz/53501
Sample Questions
Q1) The Gramm-Leach-Bliley Act of 1999 essentially repeals the Glass-Steagall Act passed in the 1930s.
A)True
B)False
Answer: True
Q2) The act which requires financial institutions to share information about customer identities with government agencies is:
A)the Sarbanes-Oxley Act.
B)the National Banking Act.
C)the Garn-St Germain Depository Institutions Act.
D)the USA Patriot Act.
E)the Gramm-Leach-Bliley Act.
Answer: D
Q3) The federal bank regulatory agency which examines the most banks is the _____________.
Answer: FDIC
Q4) In 1980,the __________________________ was passed,which lifted U.S government ceilings on deposit interest rates in favor of free-market interest rates.
Answer: DIDMCA
Page 4
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: The Organization and Structure of Banking and the Financial-Services Industry
Available Study Resources on Quizplus for this Chatper
92 Verified Questions
92 Flashcards
Source URL: https://quizplus.com/quiz/53500
Sample Questions
Q1) What is a bank holding company?
A)It is a bank that offers all of its services out of one office
B)It is a bank that offers all of its services out of several offices
C)It is a corporation formed to hold the stock of one or more banks
D)It is a merchant bank
E)None of the options are correct
Answer: C
Q2) Nearly three quarters of all U.S.banks exceed $100 million in asset size apiece.
A)True
B)False
Answer: False
Q3) Agency theory suggests that bank management will always pursue the goal of maximizing returns of the bank's shareholders.
A)True
B)False
Answer: False
Q4) A(n)_____________________ is one which offers its full range of banking services from several locations.
Answer: branch bank
5
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: Establishing
New Banks, Branches, ATMs, Telephone Services, and Websites
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/53499
Sample Questions
Q1) ______________________ is demonstrated by organizers of new banks by showing that local banks are not conveniently located or fail to offer some key services.
Q2) A customer can use a POS terminal at a store to pay for his purchases through a debit or a credit card.
A)True
B)False
Q3) Most new U.S.banks are chartered in:
A)small communities where there is very little existing competition.
B)relatively large urban areas where organizers can earn higher expected rates of return on their investment.
C)rural areas where they will be more convenient for customers.
D)All of the options are correct
E)small communities where there is very little existing competition and provides more convenience for the customers.
Q4) ____________________ reduces a bank's overall risk exposure by establishing service facilities in different market areas.
Q5) The acronym ACH stands for _____________.
Page 6
Q6) The ______________________ issues charters for new national banks.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: The Financial Statements of Banks and Their Principal Competitors
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/53498
Sample Questions
Q1) The experience method of accounting for future loan loss reserves allows a bank to deduct from their income statement up to 0.6 percent of their eligible loans.
A)True
B)False
Q2) Securities income is a financial output listed on a financial institution's Report of Condition.
A)True
B)False
Q3) A bank sells shares of its common stock with a par value of $100 for $200 in the market.Which two accounts on the bank's balance sheet are going to be affected?
A)Retained earnings and surplus accounts
B)Subordinated notes and debentures and commons stock outstanding accounts
C)Retained earnings and common stock outstanding accounts
D)Common stock outstanding and surplus accounts
E)Only the common stock outstanding account
Q4) __________________________ is a noncash expense on the bank's income statement which allows the bank to account for future bad loans.
Q5) One part of __________ arises from fees charged for ATM and POS transactions.
Page 7
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Measuring and Evaluating the Performance of Banks
and Their Principal Competitors
Available Study Resources on Quizplus for this Chatper
118 Verified Questions
118 Flashcards
Source URL: https://quizplus.com/quiz/53497
Sample Questions
Q1) A bank's ROE equals its ROA times its:
A)net profit margin.
B)total assets divided by total equity capital.
C)total operating revenues divided by total assets.
D)ratio of net after-tax income to total operating revenues.
E)None of the options is correct.
Q2) The employee productivity ratio for a bank is equal to:
A)net operating revenue less total interest expenses per employee.
B)total interest and noninterest expense per employee.
C)net operating income per full-time-equivalent employee.
D)total operating earnings less salaries and wages expense per employee.
E)None of the options is correct.
Q3) __________________________ is the risk that the value of the financial institution's asset portfolio will decline due to falling market prices.
Q4) ROA measures how capably the management of a financial institution has been converting the institution's assets into net earnings.
A)True
B)False
Page 8
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Risk Management for Changing Interest Rates:
Asset-Liability Management and Duration Techniques
Available Study Resources on Quizplus for this Chatper
155 Verified Questions
155 Flashcards
Source URL: https://quizplus.com/quiz/53496
Sample Questions
Q1) The interest-rate measure often quoted on short-term loans and money market securities such as U.S.Treasury bills is the
A)bank discount rate.
B)yield to maturity.
C)annual percentage rate.
D)net interest margin.
E)None of the options is correct.
Q2) A bank with a positive duration gap experiencing a rise in interest rates will experience an increase in its net worth.
A)True
B)False
Q3) Convexity is the idea that the rate of change of an asset's price varies with the change in interest rates depending on the prevailing interest rates.
A)True
B)False
Q4) Financial institutions laden with home mortgages tend be immune to interest-rate risk.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 14: Investment Banking,Insurance,and Other
Sources of Fee Income
Available Study Resources on Quizplus for this Chatper
148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/53495
Sample Questions
Q1) The person who executes orders in the futures market for the public is called a: A)day trader.
B)floor broker.
C)clearing member.
D)speculator.
E)scalper.
Q2) A currency swap is where two parties agree to exchange interest payments in order to hedge against interest rate risk.
A)True
B)False
Q3) A(n)_________________________ is a new swap agreement which offsets the original interest rate swap contract.
Q4) Current selling price on a futures contract reflects what investors in the market expect cash prices to be:
A)at the end of the day.
B)at the end of the week.
C)at the end of the month.
D)at the end of the year.
E)at the time of delivery.
Chapter 9: Risk Management: Asset-Backed Securities,
Loan Sales, Credit Standbys, and Credit Derivatives
Available Study Resources on Quizplus for this Chatper
114 Verified Questions
114 Flashcards
Source URL: https://quizplus.com/quiz/53494
Sample Questions
Q1) _________________________ allow the banks to generate fee income after they have sold a loan.The bank continues to collect interest and principal from the borrowers and passes these collections to the loan buyers.
Q2) When an issuer of securitized loans divides them into different risk classes or tranches,they are providing an:
A)internal credit enhancement
B)external credit enhancement
C)internal liquidity enhancement
D)external liquidity enhancement
E)None of the options is correct.
Q3) Banks are the principal sellers of credit derivatives.
A)True
B)False
Q4) The advantage of a credit swap is that it allows each bank in the swap to broaden its market area and spread out its credit risk on its loans.
A)True
B)False
Q5) The customer that is requesting a standby letter of credit is known as the
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: The Investment Function in Financial-Services Management
Available Study Resources on Quizplus for this Chatper
113 Verified Questions
113 Flashcards
Source URL: https://quizplus.com/quiz/53493
Sample Questions
Q1) A $1,000 bond has three years to maturity and has a coupon rate of 15 percent.Coupon payments are made annually.The bond is currently selling in the market for $1,072 and has a yield-to-maturity of 12%.What is the duration of this bond?
A)3 years
B)1 year
C)1.92 years
D)2.45 years
E)2.64 years
Q2) Range notes are:
A)securities that usually pay low interest rates.
B)securities that pay interest only if the underlying index moves out of the predetermined range.
C)securities that pay interest only if the underlying index stays in the predetermined range.
D)usually issued as putable securities.
E)securities with pay-off similar to a financial future.
Q3) Claims against the expected income and principal generated by a pool of similar type of loans are known as ________________________.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Liquidity and Reserves Management: Strategies and Policies
Available Study Resources on Quizplus for this Chatper
119 Verified Questions
119 Flashcards
Source URL: https://quizplus.com/quiz/53492
Sample Questions
Q1) The Taylor Treadwell Bank has just calculated the ratio of its net loans and leases to total assets.Which liquidity indicator is this?
A)Cash position indicator
B)Liquid securities indicator
C)Net federal funds and repurchase agreement position
D)Capacity ratio
E)None of the options is correct
Q2) Which of the following is not a reason for banks to hold liquid assets?
A)To meet customers' needs for currency
B)To meet capital requirements
C)To meet required reserves
D)To compensate for correspondent bank services
E)To assist in the check clearing process
Q3) A person responsible for overseeing an institution's legal reserve account is called:
A)reserve manager.
B)money market manager.
C)money position manager.
D)legal counselor.
E)None of the options is correct.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Managing and Pricing Deposit Services
Available Study Resources on Quizplus for this Chatper
129 Verified Questions
129 Flashcards
Source URL: https://quizplus.com/quiz/53491
Sample Questions
Q1) While demand deposits have about the same gross expenses per dollar of deposit as time deposits do,the _____________ levied against transaction account customers help to lower the net cost of checkable deposits.
A)higher account opening fees
B)higher service fees
C)higher pre-closure fees
D)lower interest rates
E)less number of services
Q2) For decades,depository institutions offered only one type of savings plan-____________.One that could be opened with as little as $5 and withdrawal privileges were unlimited.
Q3) Legally imposed interest-rate ceilings on deposits were first set in place in the United States after passage of the Bank Holding Company Act.
A)True
B)False
Q4) The _______________,which was created under Tax Relief Act of 1997,allows individuals to make non-tax-deductible contributions to a retirement fund that can grow tax free and also pay no taxes on their investment earnings when withdrawn.
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Managing Nondeposit Liabilities
Available Study Resources on Quizplus for this Chatper
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/53490
Sample Questions
Q1) A bank promises an annual return of 7.75 percent on a 180 day,$250,000 CD.What will be the total amount due the customer at the end of the six-month period?
A)$269,375.00
B)$259,687.50
C)$9,687.50
D)$250,000.00
E)None of the options is correct
Q2) Which of the following laws restricts Federal Reserve lending to undercapitalized banks and allows for long-term Fed support only to borrowing institutions that are considered "viable entities"?
A)Riegle Community Development and Regulatory Improvement Act
B)FDIC Improvement Act
C)Financial Institutions Reform,Recovery,and Enforcement Act
D)Depository Institutions Deregulation and Monetary Control Act
E)None of the options is correct
Q3) In recent years,deposits have been growing faster than nondeposit sources of funds among U.S.banks.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Investment Banking, insurance, and Other
Sources of Fee Income
Available Study Resources on Quizplus for this Chatper
73 Verified Questions
73 Flashcards
Source URL: https://quizplus.com/quiz/53489
Sample Questions
Q1) The trust department can be a significant source of ____________ for a bank or financial holding company.
Q2) __________________ are one of the earliest services provided by banks and involves the management of customer's property and other assets.
Q3) A company that offers shares in a pool of securities and the returns to the shareholders flow through any earnings generated is called:
A)a mutual fund.
B)an annuity.
C)the net asset value.
D)a leveraged buyout.
E)None of the options is correct.
Q4) A trust department's activities often center around establishing:
A)an independent relationship with the customer.
B)a partnership relationship with the customer.
C)a fiduciary relationship with the customer.
D)a subservient relationship with the customer.
E)None of the options is correct.
Q5) The most rapidly growing source of income for banks is ________ income.
Page 16
To view all questions and flashcards with answers, click on the resource link above.
Chapter 15: The Management of Capital
Available Study Resources on Quizplus for this Chatper
129 Verified Questions
129 Flashcards
Source URL: https://quizplus.com/quiz/53488
Sample Questions
Q1) __________________ is the amount in excess of stock's par value paid by the bank's shareholders.
Q2) The First National Bank of Tucson has determined that the value of their property in Tucson has tripled in the last three years.They decide that they would like to use this property to raise funds and will rent space from the new owners of the building.What way of meeting their capital needs is the bank taking?
A)Issuing common stock
B)Issuing preferred stock
C)Issuing subordinated notes and debentures
D)Selling assets and leasing facilities
E)Swapping stock for debt instruments
Q3) Which of the following is an internal assessment tool that is used by the participating banks to ensure that they are prepared for the possibly damaging impact of ever changing market conditions?
A)Backtesting
B)Risk aggregation
C)Stress testing
D)Systemic testing
E)Damage testing
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Lending Policies and Procedures: Managing Credit Risk
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/53487
Sample Questions
Q1) A(n)______________ is a written contract signed by a borrower and states the principal amount of the loan,the interest rate on the loan,and the terms under which repayment must take place.
Q2) ____________________________ loans are ones that are extended to farmers and ranchers to assist in planting crops,harvesting crops,and to support the feeding and care of livestock.
Q3) The First State Bank of Duncan buys railroad cars and rents them to the Santa Fe Railroad Company.What type of loan has this bank made?
A)Financial institution loan
B)Commercial and industrial loan
C)Loan to an individual
D)Miscellaneous loan
E)Lease financing receivables
Q4) Loans that have minor weaknesses because a bank has not followed its written loan policy or which have missing documentation are called ______________ loans.
Q5) Risk in banking tends to be concentrated in a bank's loan portfolio.
A)True
B)False
Page 18
To view all questions and flashcards with answers, click on the resource link above.
Chapter 17: Lending to Business Firms and Pricing Business Loans
Available Study Resources on Quizplus for this Chatper
158 Verified Questions
158 Flashcards
Source URL: https://quizplus.com/quiz/53486
Sample Questions
Q1) Self-liquidating business loans are designed to take advantage of the normal cash cycle in a business firm.
A)True
B)False
Q2) The increasingly popular type of financing,in which merchants receive cash advances and pay them off from their credit card sales,is called:
A)asset-based financing.
B)retailer credit financing.
C)operating capital credit financing.
D)credit card receivables financing.
E)revolving credit financing.
Q3) According to the textbook,small business lending by banks is on the decline.
A)True
B)False
Q4) When the title to accounts receivables pledged in an asset-based loan is passed to the lender and the lender takes the responsibility of collecting the accounts receivables of one of its business customers,this is called ____________________.
Q5) SNCs are also known as _____________ loans.
Page 19
To view all questions and flashcards with answers, click on the resource link above.
Chapter 18: Consumer Loans, Credit Cards, and Real Estate
Lending
Available Study Resources on Quizplus for this Chatper
155 Verified Questions
155 Flashcards
Source URL: https://quizplus.com/quiz/53485
Sample Questions
Q1) If Mark makes the minimum down payment on the car,what is the amount of the loan that Mark will receive?
A)$18,900
B)$14,850
C)$16,500
D)$14,400
E)None of the options is correct
Q2) A bank is considering making a loan to Sean Finnigan.Sean owns his own home and has lived there for the past four years.What aspect of evaluating a consumer loan application is this fact most concerned with?
A)Character and purpose
B)Income level
C)Deposit balance
D)Employment and residential stability
E)Pyramiding of debt
Q3) Traditional home equity loans are usually priced using _______-term interest rates while home equity lines of credit are priced using _________-term interest rates.
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Acquisitions and Mergers in Financial-Services Management
Available Study Resources on Quizplus for this Chatper
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/53484
Sample Questions
Q1) The most important goal of any merger should be to increase the market value of the surviving firm.
A)True
B)False
Q2) _________________ is a danger faced by the stockholders of an acquiring firm in a merger if excessive numbers of new shares are issued relative to the value of their old shares.
A)Earnings volatility
B)Reduction of the exchange ratio
C)Dilution of ownership
D)Increased risk of bankruptcy
E)None of the options is correct
Q3) When a bank expands the number of service options it offers after acquiring another financial firm,they have practiced __________________ diversification.
Q4) Mergers with anticompetitive effects can only be approved at the federal level if one of the banks involved is failing.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 21
Q5) A large metropolitan or money center bank is often called a(n)______________.
Chapter 20: International Banking and the Future of Banking and Financial Services
Available Study Resources on Quizplus for this Chatper
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/53483
Sample Questions
Q1) A foreign currency contract that obligates the holder of the contract to make delivery of a foreign currency sometime in the future is called a:
A)call currency option.
B)put currency option.
C)long-hedge currency futures contract.
D)short-hedge currency futures contract.
E)None of options is correct.
Q2) Banks have been heavily involved in selling their services across national boundaries since:
A)the industry's very beginning.
B)the 1950s.
C)the 1980s.
D)the turn of the century.
E)None of the options is correct.
Q3) When dealers speculate on trends in the prices of selected currencies,it is called ______________.
Q4) When an international bank acquires majority ownership of a separate,legally incorporated foreign bank under host-country rules,this foreign bank is called a(n)______________________ of the international bank.
Page 22
To view all questions and flashcards with answers, click on the resource link above.