1CORRECT From 1975 to year 2000, the number of U.S.

commercial banks and the average

size of a U.S. bank have changed as follows:
A)The total number of commercial banks has been dropping and the average size of a U.S.
bank has been increasing.

B)The total number of commercial banks has been dropping and the average size of a U.S.
bank has been decreasing.

C)The total number of commercial banks has been increasing and the average size of a U.S.
bank has been increasing.

D)The total number of commercial banks has been increasing and the average size of a U.S.
bank has been decreasing.

E)None of the above

2INCORRECT The road to complete European economic and financial unity will not be an
easy journey because:
A)Differences in national economies, concern over unemployment and the welfare needs of
citizens, and strong feelings of national identity and independence pose major problems for
the newly formed European Union of 11 nations.

B)Unlike the United States, the new union currently has no common fiscal policy that can
redistribute income and productive resources out of economically robust areas toward
economically depressed areas.

C)Both of the above.

D)None of the above.

3CORRECT The vast majority of U.S. banks are:
A)FDIC insured.

B)members of the Federal Reserve System.

C)facing default.

D)all of the above.

4INCORRECT The reason(s) American banks and other American financial institutions
dominate the top ten of the world's largest banks and financial institutions is that:
A)America is the world's largest economy

B)American savers are the thriftiest among the developed world

C)America invented international banking

D)all of the above

 E)none of the above, the statement is untrue
5INCORRECT A relatively new fund-raising device used by banks and a few other financial
intermediaries in recent years in which better quality loans are packaged into asset pools as
collateral for bank security issues sold to investors is known as:
A)security hypothecation

B)securitization

C)loan transfers

D)co-managed loan trusts

E)none of the above

6INCORRECT The increase in nonbanking activity by bank holding companies is an attempt
to:
A)diversify

B)reduce risk

C)gain access to a broader market

D)all of the above

E)none of the above

7INCORRECT Recent changes in the banking community have caused:
A)greater stability.

B)more profits for industry.

C)more failures.

D)none of the above.

8CORRECT If a bank issues a standby credit letter for XYZ Corporation and XYZ
Corporation files for bankruptcy,
A)the bank will be liable for the loss covered by the standby credit letter

B)the bank sells the standby credit letter

C)the bank will receive preferential treatment in bankruptcy court

D)Banks rarely issue standby credit letters because the default rate is so high

E)none of the above

9INCORRECT Recent bank service expansion has resulted in the development or franchising
of which of the following service offerings?
A)Security brokerage
 B)Sales of insurance policies

C)Networking arrangements

D)Account relocation

E)Financial counseling

F)all of the above

10INCORRECT Most loans granted by the U.S. commercial banks fit under which of the loan
categories shown below?
A)Installment loans to individuals and families

B)Commercial and industrial loans

C)Lease financing

D)Real estate loans

E)Loans to securities dealers and other banks

11INCORRECT All of the following are reasons U.S. banks have expanded overseas except:
A)corporate customers have expanded overseas.

B)less competition.

C)less regulation.

D)the Eurodollar market.

E)none of the above.

12INCORRECT The NAFTA Agreement provides banks in North America with national
treatment which means:
A)U.S. and Canadian banks cannot branch into Mexico.

B)foreign investment is subject to domestic laws.

C)regulations of the home country are dominant.

D)foreign banks operate under same rules as domestic banks.

E)none of the above

13INCORRECT Which of the following reasons account for the recent increase in the failure
of U.S. banks?
A)willingness of bankers to accept greater risk in their operations
 B)increased volatility of economic and financial conditions

C)leniency in the interpretation and enforcement of regulations

D)all of the above

E)none of the above

14INCORRECT Approximately _____ percent of all U.S. banks are branch banking
organizations.
A)10

B)20

C)80

D)70

E)30
15INCORRECT A bank chartered by the federal government in the United States is known as
a:
A)universal bank

B)merchant bank

C)member bank

D)national bank

E)none of the above

16INCORRECT U.S. banks have penetrated overseas markets for which of the following
reasons?
A)Financial needs of their corporate customers expanding abroad

B)Access to funds from the Eurodollar markets

C)Fewer regulatory barriers and less competition

D)all of the above

E)none of the above

17INCORRECT The agreement that pledged Europe to a single currency and unified financial
system was the:
A)Basle Agreement

B)Maastricht Treaty
 C)Treaty of Rome

D)European Monetary Treaty

E)EC Memorandum
18INCORRECT Consolidation in the banking industry:
A)will clearly lead to a small number of banks and monopoly.

B)has been possible because of the profitability of the industry

C)is less necessary as technology improves

D)is a response to more volatile interest rates and increasing competition

E)none of the above

19INCORRECT An institution providing services such as clearing of checks, management of
security portfolios, tax advice, and computer processing is called a:
A)leasing company

B)Federal Reserve bank

C)correspondent bank

D)money market fund

E)banking commission
20CORRECT Customers have not readily accepted POS terminals because:
A)of the loss of checking account float.

B)they are not readily available.

C)they are expensive to use.

D)all of the above.

E)none of the above.