Question 1 � Deposit insurance has a limit of: Question 2 � The moral hazard problem is minimized when deposit insurance premiums are Question 3 � The Glass-Steagall Act of 1933 prevented Question 4 � Which banking act allowed for the creation of NOW accounts? Question 5 � The potential risk that financial problems can spread through financial institutions and the financial system is referred to as: Question 6 � Commercial banks ____ restricted to a maximum percentage of their capital to loan to a single customer, and ____ allowed to use borrowed or deposited funds to purchase common stock. Question 7 � Commercial banks that are not members of the Federal Reserve System ____ borrow from the Fed, and ____ subject to the Fed’s reserve requirements. Question 8 � Which of the following is an “off-balance-sheet commitment?” Question 9 � Which banking act allowed interstate banking? Question 10 � ____ is not a characteristics used by the Federal Deposit Insurance Corporation (FDIC) to rate banks. Question 11 � National banks are regulated by ____, and state banks are regulated by ____. Question 12 � The key reason for regulatory examinations (such as CAMELS ratings) is to Question 13 � Which of the following is not a specific criterion the FDIC uses to monitor banks? Question 14 � During the 2008-2010 period, the ____ was implemented to alleviate the financial problems experienced by banks and other financial institutions with excessive exposure to mortgages or mortgage-backed securities. Question 15 � The fee banks pay to the FDIC for deposit insurance is now Question 16 � A gap ratio of less than one suggests that Question 17 � Which of the following is not a likely method used by a bank to reduce interest rate risk? Question 18 � ____ is (are) least likely to be used as a method of reducing interest rate risk. Question 19 � When cash outflows temporarily exceed cash inflows, banks are most likely to experience Question 20 � A bank’s net interest margin will likely decline if it has a large amount of Question 21 � In a regression of a bank’s stock return on an interest rate proxy and market returns, a ____ coefficient for the interest rate variable suggests that bank performance is ____ affected by ____ interest rates. Question 22 � The risk of a loss due to closing out a transaction is referred to as ____ risk. Question 23 � A bank’s net interest margin is commonly defined as Question 24 � ____ is (are) least likely to be used as a method of reducing interest rate risk. Question 25 � If a bank that relies heavily on short-term deposits expects interest rates to consistently decrease over time, it would allocate most of its loans with ____ rates if it desires to maximize its expected returns. It could reduce its exposure to interest rate risk by setting ____ rates on its loans. Question 26 � As the secondary market for loans has become active, banks are more able to satisfy their liquidity needs with a ____ proportion of loans while achieving ____ profitability. Question 27 � A bank that holds a greater percentage of traditional demand deposits and loans will likely incur ____ non-interest expenses and have a ____ net interest margin than other banks of the same size (assuming that its loan losses are no higher than those at other banks). Question 28 � The risk of a loss due to closing out a transaction is referred to as ____ risk. Question 29 � The greater the ____, the greater the amount of assets per dollar’s worth of equity. Question 30 � If a bank desired to maximize its net interest margin, it would best achieve its goal by attempting to obtain most of its funds through ____ and use most of its funds for ____ (assuming that all loans will be repaid). posits; consumer loans
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