Question 1

As a way of stemming the decline in the number of savings and loans and mutual savings banks, the Garn-St. Germain Act of 1982 allowed

Accepted Answer

A)  money market certificates.
B)  money market mutual funds.
C)  money market deposit accounts.
D)  negotiable order of withdrawal accounts.E) A) and C)
F) None of the above

Question 2

Moral hazard is an important consequence of insurance arrangements because the existence of insurance

Accepted Answer

A)  provides increased incentives for risk taking.
B)  impedes efficient risk taking.
C)  causes the private cost of the insured activity to increase.
D)  does both A and B of the above.
E)  does both B and C of the above.F) A) and D)
G) None of the above

Question 3

The chartering process is especially designed to deal with the ________ problem, and regular bank examinations help to reduce the ________ problem.

Accepted Answer

A)  adverse selection; adverse selection
B)  adverse selection; moral hazard
C)  moral hazard; adverse selection
D)  moral hazard; moral hazardE) B) and D)
F) C) and D)

Question 4

Regular bank examinations and restrictions on asset holdings indirectly help to ________ the adverse selection problem because, given fewer opportunities to take on risk, risk-prone entrepreneurs will be ________ from entering the banking industry.

Accepted Answer

A)  increase; encouraged
B)  increase; discouraged
C)  reduce; encouraged
D)  reduce; discouragedE) B) and C)
F) C) and D)

Question 5

"Truth in lending" was mandated under the Consumer Protection Act of 1969 and requires all lenders to reveal the annual percentage rate, or APR, on loans.

Accepted Answer

A) True 
 B)False

Question 6

The existence of deposit insurance can increase the likelihood that depositors will need deposit protection, as banks with deposit insurance

Accepted Answer

A)  are likely to take on greater risks than they otherwise would.
B)  are likely to be too conservative, reducing the probability of turning a profit.
C)  are likely to regard deposits as an unattractive source of funds due to depositors' demands for safety.
D)  are placed at a competitive disadvantage in acquiring funds.E) A) and D)
F) B) and D)

Question 7

Discuss some of the problems of Basel 2 that the 2007-2009 financial crisis revealed.

Accepted Answer

The 2007-2009 financial crisis revealed ...

Question 8

World Bank research on the effects of deposit insurance concludes that

Accepted Answer

A)  adoption of deposit insurance will promote stability and efficiency in the banking systems of emerging-market economies.
B)  adoption of explicit government deposit insurance is associated with a higher incidence of banking crises.
C)  adoption of deposit insurance has the greatest benefits in countries that have weaker institutional environments.
D)  none of the above are true.E) B) and D)
F) A) and B)

Question 9

The "too-big-to-fail" policy reduces the adverse selection problem in bank regulation.

Accepted Answer

A) True 
 B)False

Question 10

An impact of the Garn-St. Germain Act of 1982 has been to

Accepted Answer

A)  put savings and loans at a competitive disadvantage.
B)  make the banking system more competitive.
C)  give money market mutual funds a competitive advantage.
D)  do both A and B of the above.
E)  do both A and C of the above.F) C) and D)
G) None of the above

Question 11

Although the FDIC was created to prevent bank failures, its existence encourages banks to

Accepted Answer

A)  take too much risk.
B)  hold too much capital.
C)  open too many branches.
D)  buy too much stock.E) A) and B)
F) None of the above

Question 12

A better capitalized bank has more to lose when it fails and is less likely to take less risk.

Accepted Answer

A) True 
 B)False

Question 13

The Depository Institutions Deregulation and Monetary Control Act of 1980

Accepted Answer

A)  approved NOW accounts nationwide.
B)  restricted the use of ATS accounts.
C)  imposed interest rate ceilings on bank loans.
D)  did all of the above.E) B) and C)
F) A) and B)

Exam 18: Financial Regulation

A better capitalized bank has more to lose when it fails and is less likely to take less risk.

Correct Answer
verified

The Depository Institutions Deregulation and Monetary Control Act of 1980

Correct Answer
verified

As a way of stemming the decline in the number of savings and loans and mutual savings banks, the Garn-St. Germain Act of 1982 allowed

Correct Answer
verified

"Truth in lending" was mandated under the Consumer Protection Act of 1969 and requires all lenders to reveal the annual percentage rate, or APR, on loans.

Correct Answer
verified

Discuss some of the problems of Basel 2 that the 2007-2009 financial crisis revealed.

Correct Answer
Answered by ExamLex AI
The 2007-2009 financial crisis revealed ...
View Answer

Regular bank examinations and restrictions on asset holdings indirectly help to the adverse selection problem because, given fewer opportunities to take on risk, risk-prone entrepreneurs will be from entering the banking industry.

Correct Answer
verified

World Bank research on the effects of deposit insurance concludes that

Correct Answer
verified

Although the FDIC was created to prevent bank failures, its existence encourages banks to

Correct Answer
verified

An impact of the Garn-St. Germain Act of 1982 has been to

Correct Answer
verified

The existence of deposit insurance can increase the likelihood that depositors will need deposit protection, as banks with deposit insurance

Correct Answer
verified

The "too-big-to-fail" policy reduces the adverse selection problem in bank regulation.

Correct Answer
verified

Moral hazard is an important consequence of insurance arrangements because the existence of insurance

Correct Answer
verified

The chartering process is especially designed to deal with the problem, and regular bank examinations help to reduce the problem.

Correct Answer
verified

Exam 18: Financial Regulation

A better capitalized bank has more to lose when it fails and is less likely to take less risk.

Correct AnswerverifiedShow Answer

The Depository Institutions Deregulation and Monetary Control Act of 1980

Correct AnswerverifiedShow Answer

As a way of stemming the decline in the number of savings and loans and mutual savings banks, the Garn-St. Germain Act of 1982 allowed

Correct AnswerverifiedShow Answer

"Truth in lending" was mandated under the Consumer Protection Act of 1969 and requires all lenders to reveal the annual percentage rate, or APR, on loans.

Correct AnswerverifiedShow Answer

Discuss some of the problems of Basel 2 that the 2007-2009 financial crisis revealed.

Correct AnswerAnswered by ExamLex AIThe 2007-2009 financial crisis revealed ...View AnswerShow Answer

Regular bank examinations and restrictions on asset holdings indirectly help to ________ the adverse selection problem because, given fewer opportunities to take on risk, risk-prone entrepreneurs will be ________ from entering the banking industry.

Correct AnswerverifiedShow Answer

World Bank research on the effects of deposit insurance concludes that

Correct AnswerverifiedShow Answer

Although the FDIC was created to prevent bank failures, its existence encourages banks to

Correct AnswerverifiedShow Answer

An impact of the Garn-St. Germain Act of 1982 has been to

Correct AnswerverifiedShow Answer

The existence of deposit insurance can increase the likelihood that depositors will need deposit protection, as banks with deposit insurance

Correct AnswerverifiedShow Answer

The "too-big-to-fail" policy reduces the adverse selection problem in bank regulation.

Correct AnswerverifiedShow Answer

Moral hazard is an important consequence of insurance arrangements because the existence of insurance

Correct AnswerverifiedShow Answer

The chartering process is especially designed to deal with the ________ problem, and regular bank examinations help to reduce the ________ problem.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
Answered by ExamLex AI
The 2007-2009 financial crisis revealed ...
View Answer

Regular bank examinations and restrictions on asset holdings indirectly help to the adverse selection problem because, given fewer opportunities to take on risk, risk-prone entrepreneurs will be from entering the banking industry.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The chartering process is especially designed to deal with the problem, and regular bank examinations help to reduce the problem.

Correct Answer
verified