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28 Cards in this Set
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- Back
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15. Which of the following trends in the number and industry assets of savings institutions is/are correct? I. The number of savings institutions has fallen over time. II. The number of savings institutions has increased over time. III. Total industry assets fell during the recession of the late 2000s. IV. Total industry assets are falling over time. V. Total industry assets are stable but the number of savings institutions has fallen. A. II and III only B. I and III only C. I and IV only D. II and IV only E. V only |
B. I and III only
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The QTL test requires that thrifts A. limit the amount of mortgage-related assets on the balance sheet to improve diversification. B. invest in a minimum percentage of government-backed securities to protect their mortgage loans. C. lend no more than 80% of the value of a home to a borrower to ensure mortgage safety. D. keep 35% of their assets in safe liquid investments to ensure adequate deposit liquidity. E. invest at least 65% of their assets in mortgages or mortgage-related assets. |
E. invest at least 65% of their assets in mortgages or mortgage-related assets. |
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17. Which one of the following has the highest concentration of mortgage-related assets on the balance sheet? A. Savings institutions B. Commercial banks C. Credit unions D. Finance companies E. Pension funds |
A. Savings institutions
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After 1989, savings institutions have primarily been regulated by A. Federal Home Loan Bank Board B. Federal Deposit Insurance Corporation C. Office of Thrift Supervision D. National Credit Union Administration |
C. Office of Thrift Supervision
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19. In 2010, the largest U.S. savings institution was A. ING Bank B. Washington Mutual C. Navy Federal D. Hudson City Bancorp E. HSBC Financial |
A. ING Bank
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20. The predominant liabilities for savings institutions are A. commercial deposits and FHLB borrowings. B. wholesale money market notes and reserves at the Fed. C. small time and savings deposits and FHLB borrowings. D. checking accounts and money market mutual funds. |
C. small time and savings deposits and FHLB borrowings.
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21. Historically, most savings institutions were established as A. mutual organizations B. stockholder organizations C. partnerships D. charitable organizations E. banks |
A. mutual organizations
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22. Deposits at savings banks are backed by the _______________ and deposits at savings institutions are backed by the ______________. A. BIF; BIF B. BIF; SAIF C. SAIF; BIF D. SAIF; SAIF E. DIF; DIF |
E. DIF; DIF |
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23. _____________ are the most diversified of depository institutions and ______________ are on average the largest depository institutions. A. Banks; savings institutions B. Credit unions; banks C. Credit unions; credit unions D. Banks; banks E. Savings institutions; banks |
D. Banks; banks
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24. Credit unions are I. Mutual associations II. Not open to the general public III. For profit institutions A. I only B. II only C. I and II only D. I, II, and III E. II and III only |
C. I and II only
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The U.S. central credit union and the corporate credit union A. are the primary regulators of the credit union industry. B. pool funds and provide investment services to local credit unions. C. serve as the trade organization for the industry. D. charter credit unions. E. provide deposit insurance for credit unions. |
B. pool funds and provide investment services to local credit unions.
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Credit unions have several advantages over banks. These include I. Credit unions are not taxed. II. Credit unions are better diversified than banks. III. Credit unions can collectively pool funds. IV. Due to regulations, credit unions have better economies of scale and scope than banks. V. Because of their ties to employers credit unions have better personnel expertise than banks. A. I and II only B. I and III only C. III and IV only D. III, IV, and V only E. I, III, and V only |
B. I and III only
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27. As a percentage of total assets, credit unions invest _______________ in securities than banks and ______________ in consumer loans than banks. A. more; more B. less; less C. more; less D. less; more E. less; about the same |
A. more; more
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28. SI profitability declined in the mid-2000s due to I. the yield curve becoming more positively sloped. II. decreases in the NIM ratio. III. increases in the NIM ratio. IV. the yield curve becoming flatter and even inverted. A. I and II only B. II and III only C. II and IV only D. III and IV only E. I and III only |
C. II and IV only
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29. Rank the following from greatest to smallest in terms of industry asset size in 2010. I. Banks II. Savings institutions III. Credit unions IV. Finance companies A. IV, I, II, III B. I, IV, II, III C. I, II, IV, III D. I, II, III, IV E. II, IV, III, I |
B. I, IV, II, III
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30. In 2010, _______________ had on average the greatest amount of equity as a percentage of assets and ______________ had the lowest. A. savings institutions; credit unions B. banks; credit unions C. credit unions; finance companies D. finance companies; credit unions E. finance companies; banks |
D. finance companies; credit unions
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31. Factoring is A. equipment leasing. B. servicing mortgage factors. C. purchasing corporate accounts receivables at a discount. D. financing automobile purchases. E. making installment loans to customers. |
C. purchasing corporate accounts receivables at a discount.
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32. Sales finance companies A. specialize in making loans to customers of a specific retailer or manufacturer. B. specialize in making installments and other loans to whatever consumers are interested. C. specialize in providing loans to businesses. D. specialize in international factoring and forfaiting. E. none of the above |
A. specialize in making loans to customers of a specific retailer or manufacturer.
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33. A finance company that makes loans to high risk customers is called a A. subprime lender B. commercial bank C. factor D. warehouse lender E. credit lender |
A. subprime lender
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34. Finance companies enjoy several advantages over banks. These include all but which one of the following? A. Finance companies can offer various types of products and services without regulatory interference. B. Many finance companies have considerable knowledge and expertise about specific industries and products. C. Finance companies can accept riskier customers than banks. D. Finance companies generally have lower overhead than banks. E. Finance companies have lower funds costs than banks. |
E. Finance companies have lower funds costs than banks. |
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35. A captive finance company is one that A. is owned by a retailer or manufacturer. B. is owned by a bank holding company. C. is owned by its depositors. D. lends only to high-risk individuals that cannot obtain loans elsewhere (i.e., captives). E. is regulated at the federal level. |
A. is owned by a retailer or manufacturer.
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36. A loan agreement between Ford Motor Credit and a local Ford dealer is an example of A. floor planning. B. business equipment loan. C. factoring of receivables. D. depreciation loan. E. none of the above |
A. floor planning |
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37. Home equity loans are popular with finance companies. Which one of the following statements about home equity loans is not correct? A. These loans allow customers to borrow on a line of credit secured with a second mortgage. B. Interest payments on home equity loans are not tax deductible. C. Bad debt expense on home equity loans are lower than on many other types of finance company loans. D. The average outstanding balance on home equity loans was $85,472 in 2007. E. If the borrower defaults on the home equity loan, the finance company can seize the house. |
B. Interest payments on home equity loans are not tax deductible.
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38. For the finance company industry as a whole, the largest single loan type is A. business loans B. consumer loans C. real estate loans D. high-risk consumer loans E. credit card loans |
B. consumer loans
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39. Aggregate finance company profitability was poor in the late 2000s primarily due to which segment of the finance company industry? A. Business factoring B. Equipment loans C. Equipment leasing D. Securitization of auto loans E. Subprime lending |
E. Subprime lending |
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40. Which one of the following utilizes the least amount of deposits as a source of funds? A. Banks B. Credit unions C. Finance companies D. Savings associations E. Savings banks |
C. Finance companies
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41. Finance companies obtain a significant portion of their short-term financing from A. time and savings deposits. B. transaction accounts. C. long-term bonds. D. issuing commercial paper. E. equity. |
D. issuing commercial paper.
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42. Which one of the following institutions is the least regulated? A. Banks B. Credit unions C. Finance companies D. Savings associations E. Savings banks |
C. Finance companies
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