In this type of arrangement, any balances above a certain amount in a corporation's checking account at the end of the business day are "removed" and invested in overnight securities that pay the corporation interest. This innovation is referred to as a
- A) sweep account.
- B) share draft account.
- C) removed-repo account.
- D) stockman account.
New computer technology has
- A) increased the cost of financial innovation.
- B) increased the demand for financial innovation.
- C) reduced the cost of financial innovation.
- D) reduced the demand for financial innovation.
The presence of so many commercial banks in the United States is most likely the result of
- A) consumers' strong desire for dealing with only local banks.
- B) adverse selection and moral hazard problems that give local banks a competitive advantage over larger banks.
- C) prior regulations that restricted the ability of these financial institutions to open branches.
- D) consumers' preference for state banks.
Currency circulated by banks that could be redeemed for gold was called
- A) junk bonds.
- B) banknotes.
- C) gold bills.
- D) state money.
Which regulatory body charters national banks?
- A) the Federal Reserve
- B) the FDIC
- C) the Comptroller of the Currency
- D) the U.S. Treasury
Today the United States has a dual banking system in which banks supervised by the ________ and by the ________ operate side by side.
- A) federal government; municipalities
- B) state governments; municipalities
- C) federal government; states
- D) municipalities; states
The McFadden Act of 1927
- A) effectively prohibited banks from branching across state lines.
- B) required that banks maintain bank capital equal to at least 6 percent of their assets.
- C) effectively required that banks maintain a correspondent relationship with large money center banks.
- D) separated the commercial banks and investment banks.
The modern commercial banking system began in America when the
- A) Bank of United States was chartered in New York in 1801.
- B) Bank of North America was chartered in Philadelphia in 1782.
- C) Bank of United States was chartered in Philadelphia in 1801.
- D) Bank of North America was chartered in New York in 1782.
The development of money market mutual funds contributed to the growth of ________ since the money market mutual funds need to hold liquid, high-quality, short-terms assets.
- A) the commercial paper market
- B) the municipal bond market
- C) the corporate bond market
- D) the junk bond market
Financial instruments whose payoffs are linked to previously issued securities are called
- A) grandfathered bonds.
- B) financial derivatives.
- C) hedge securities.
- D) reversible bonds.
The government institution that has responsibility for the amount of money and credit supplied in the economy as a whole is the
- A) central bank.
- B) commercial bank.
- C) bank of settlement.
- D) monetary fund.
- A) federally-chartered banks had regulatory advantages not granted to state-chartered banks.
- B) the number of federally-chartered banks grew at a much faster rate than at any other time since the end of the Civil War.
- C) banks acquired funds by issuing banknotes.
- D) banks were required to maintain 100% of their deposits as reserves.
Prior to 1863, all commercial banks in the United States
- A) were chartered by the U.S. Treasury Department.
- B) were chartered by the banking commission of the state in which they operated.
- C) were regulated by the Federal Reserve.
- D) were regulated by the central bank.
Disintermediation resulted from
- A) interest rate ceilings combined with inflation-driven increases in interest rates.
- B) elimination of Regulation Q (the regulation imposing interest rate ceilings on bank deposits).
- C) increases in federal income taxes.
- D) reserve requirements.
Prior to 1980, the Fed set an interest rate ________, a maximum limit, on the interest rate that could be paid on time deposits.
- A) floor
- B) ceiling
- C) wall
- D) window