Sie sind auf Seite 1von 2

Review Questions

1. Dual Banking System is


A. A system that requires clear separation of commercial and
investment banking functions.
B. A system that requires ceilings on interest rates of both loans and
demand deposits.
C. A system where banks may be chartered at either the state or
national level.
D. A system where both assets and liabilities of a bank are subject to
regulation.
2. An example of the problem of asymmetry of information in banking is
A. Banks do not disclose to depositors information about the amount
of loans and to whom they were made.
B. Banks are not subject to insider trading rules.
C. Banks do not know which entities are regulating them.
D. Banks are not subject to contract enforcement.
3. One of the problems with banning interstate banking is:
A. There will be too much competition in large states.
B. There will be very low fees for banks operating in densely
populated states and much higher fees for banks operating in
sparsely populated states.
C. It is very difficult for banks to identify their regulators
D. Asset diversification is difficult.
4. The development of Money Market Funds and the rise in their use:
A. Allowed investors to avoid taxes on investment returns.
B. Was a response to the wide spread inflationary pressures of the
period.
C. Was an alternative to the conventional mortgage markets.
D. Allowed banks to engage in predatory lending.
5. The older Mortgage Pass Through differed from a Collateralized
Mortgage Obligation (CMO) in what way?
A. The Mortgage Pass Through was not an investment option.

B. The participants in the Mortgage Pass Through all face the same
level of risk.
C. They are exactly the same instrument.
D. The traditional Mortgage Pass Through only exists for Subprime
mortgage markets.
6. The subprime mortgage market:
A. Did not exist prior to 2004.
B. Was a problem for banks because of the below market interest
rates they were forced to charge.
C. Was a government creation to offer bank holding companies shortterm liquidity.
D. Used to finance borrowers with a poor credit history but
demonstrated ability to pay.
7. The Efficient Market Hypothesis holds that:
A. Prices need not represent market value.
B. Inefficiencies in asset prices cannot last long.
C. Income and substitution effects between competing parties are
exactly equal.
D. Price discovery mechanisms lead to market contractions.
8. Much of the justification for bank regulation is due to
A. The presence of negative externalities in the system.
B. The presence of a persistent free rider problem in the system.
C. The asset transformation role played by banks.
D. The problems that are caused by a dual banking system.
9. Which is not a solution to the Adverse Selection problem?
A. Information collection
B. Government required Disclosure
C. Interest rate ceilings
D. Screening

Das könnte Ihnen auch gefallen