Question 1

A brokerage firm is an example of a depository financial institution.

Accepted Answer

A) True 
 B)False  False

Question 2

State banks are:

Accepted Answer

A)  required by law to belong to the Federal Reserve System
B)  chartered by the state in which they are based
C)  more closely regulated than national banks
D)  either the same or larger than national banks
E)  are accurately described by all of the above

Question 3

In its role as lender to member banks, the Federal Reserve is called the:

Accepted Answer

A)  national bank
B)  customized bank
C)  national creditor
D)  banker's bank
E)  government exchange D

Question 4

To stimulate the economy, the Federal Reserve can:

Accepted Answer

A)  lower the reserve requirement
B)  raise the prime rate
C)  raise the discount rate
D)  sell government bonds on the open market
E)  buy stocks listed on the New York Stock Exchange

Question 5

Margin requirements tell the minimum amount of cash an investor must put up when borrowing from a bank or brokerage firm to purchase stock.

Accepted Answer

A) True 
 B)False

Question 6

_____ benefits the check writer by allowing it to retain the funds until the funds are actually withdrawn from its account.

Accepted Answer

A)  Interest accrual
B)  Transfer financing
C)  Float
D)  Process financing
E)  Delayed funding

Question 7

National banks:

Accepted Answer

A)  are chartered by the Comptroller of the Currency
B)  must belong to the Federal Reserve System
C)  must carry insurance on their deposits from the Federal Deposit Insurance Corporation
D)  are more closely regulated than state chartered banks
E)  are accurately described by all of the above

Question 8

Which of the following statements about the Federal Deposit Insurance Corporation (FDIC)  is true?

Accepted Answer

A)  The ceiling on the size of account insured by the FDIC is $10,000.
B)  The FDIC bank examiner looks at banks' loan quality, management practices, earnings, liquidity, and whether the bank has enough equity to safely support its activities.
C)  Only state banks, not national banks, are required by law to be insured by the FDIC.
D)  The FDIC charges each bank the same flat rate for deposit insurance.
E)  All of the above statements about the FDIC are true.

Question 9

Depository financial institutions include commercial banks, thrift institutions, and credit unions.

Accepted Answer

A) True 
 B)False

Question 10

In terms of financial intermediation, the couple who went to a bank and took out a $200,000 loan to buy a new house is an example of a:

Accepted Answer

A)  channel of exchange
B)  demander of funds
C)  transaction partner
D)  monetary conduit
E)  fiscal activist

Question 11

Which of the following statements about international banking is true?

Accepted Answer

A)  International banks are extremely risk-aversive.
B)  East Asian countries have proven one of the most profitable areas for U.S.banks.
C)  It is illegal for U.S.banks to provide loans to foreign governments.
D)  Foreign banks are subject to fewer regulations than U.S.banks.
E)  All of the above statements about international banking are true.

Question 12

Which of the following is NOT one of the key characteristics required in order for money to be an acceptable medium of exchange?

Accepted Answer

A)  scarcity
B)  durability
C)  divisibility
D)  profitability
E)  portability

Question 13

TD Ameritrade is a company that buys and sells stocks and bonds as well as providing its customers with advice on when to buy and when to sell.TD Ameritrade is an example of a _____, a type of nondepository financial institution.

Accepted Answer

A)  finance company
B)  stock insurance company
C)  brokerage firm
D)  commodity broker
E)  mutual broker

Question 14

Financial institutions can be divided into two broad categories.These are ______ institutions.

Accepted Answer

A)  depository and fiduciary
B)  currency and loan
C)  depository and nondepository
D)  credit and debt
E)  consumer and business C

Question 15

The Federal Reserve controls the minimum amount that a purchaser of securities must deposit with a stock brokerage firm in order to purchase stock.This minimum amount is called the _____ requirement.

Accepted Answer

A)  stakeholder
B)  discount
C)  margin
D)  security
E)  reserve

Question 16

The Banking Act of 1933 gave the Federal Reserve System the authority to:

Accepted Answer

A)  allow banks to set their own interest rates
B)  ban interest on demand deposits
C)  require customers to have minimum deposits before they can use many of the bank's services
D)  declare that credit cards can and do replace money
E)  do all of the above

Question 17

For a college student who needs to buy an $80 textbook, the money she received from her parents for the purchase of school supplies would be used as a:

Accepted Answer

A)  store of value
B)  medium of exchange
C)  measure of wealth
D)  commodity of exchange
E)  measure of value

Question 18

_____ are large pools of money set aside by corporations, unions, and governments for later use in paying retirement benefits to their employees or members.

Accepted Answer

A)  Pension funds
B)  Slush funds
C)  Unemployment benefits
D)  Workers' compensation funds
E)  Floats

Question 19

What are the broad categories of commercial banks in the United States?

Accepted Answer

A)  centralized and decentralized banks
B)  rural and urban banks
C)  national and federal banks
D)  state and national banks
E)  depository and nondepository banks

Question 20

_____ is cash held in the form of coins and paper money.

Accepted Answer

A)  A time deposit
B)  Capital
C)  Revenue
D)  An account receivable
E)  Currency

Exam 15: Understanding Money and Financial Institutions

A brokerage firm is an example of a depository financial institution.

Correct AnswerverifiedFalse

State banks are:

Correct AnswerverifiedShow Answer

In its role as lender to member banks, the Federal Reserve is called the:

Correct AnswerverifiedD

To stimulate the economy, the Federal Reserve can:

Correct AnswerverifiedShow Answer

Margin requirements tell the minimum amount of cash an investor must put up when borrowing from a bank or brokerage firm to purchase stock.

Correct AnswerverifiedShow Answer

_____ benefits the check writer by allowing it to retain the funds until the funds are actually withdrawn from its account.

Correct AnswerverifiedShow Answer

National banks:

Correct AnswerverifiedShow Answer

Which of the following statements about the Federal Deposit Insurance Corporation (FDIC) is true?

Correct AnswerverifiedShow Answer

Depository financial institutions include commercial banks, thrift institutions, and credit unions.

Correct AnswerverifiedShow Answer

In terms of financial intermediation, the couple who went to a bank and took out a $200,000 loan to buy a new house is an example of a:

Correct AnswerverifiedShow Answer

Which of the following statements about international banking is true?

Correct AnswerverifiedShow Answer

Which of the following is NOT one of the key characteristics required in order for money to be an acceptable medium of exchange?

Correct AnswerverifiedShow Answer

TD Ameritrade is a company that buys and sells stocks and bonds as well as providing its customers with advice on when to buy and when to sell.TD Ameritrade is an example of a _____, a type of nondepository financial institution.

Correct AnswerverifiedShow Answer

Financial institutions can be divided into two broad categories.These are ______ institutions.

Correct AnswerverifiedC

The Federal Reserve controls the minimum amount that a purchaser of securities must deposit with a stock brokerage firm in order to purchase stock.This minimum amount is called the _____ requirement.

Correct AnswerverifiedShow Answer

The Banking Act of 1933 gave the Federal Reserve System the authority to:

Correct AnswerverifiedShow Answer

For a college student who needs to buy an $80 textbook, the money she received from her parents for the purchase of school supplies would be used as a:

Correct AnswerverifiedShow Answer

_____ are large pools of money set aside by corporations, unions, and governments for later use in paying retirement benefits to their employees or members.

Correct AnswerverifiedShow Answer

What are the broad categories of commercial banks in the United States?

Correct AnswerverifiedShow Answer

_____ is cash held in the form of coins and paper money.

Correct AnswerverifiedShow Answer

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False

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D

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C

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