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FIN 342 Final Exam Verified Study Questions And Answers 2024|2025
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FIN 342 Final Exam Verified Study Questions And Answers 2024|2025
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FIN 342 Final Exam Verified StudyQuestions And Answers 2024|2025
Banking may be subdivided into at least three categories of banks. Match the definitions
with the appropriate name.
I. A bank that specializes in retail or consumer banking in a local market
II. A bank that engages in a complete array of wholesale commercial banking activities
and usually also provides retail banking services
III. A bank that is located in a financial center and relies on nondeposit or borrowed
sources of funds for a significant portion of its liabilities CORRECT ANSWERS E)
Community bank; superregional bank; money center bank
Bank assets tend to have _____________ maturities and _____________ liquidity
than/asbank liabilities CORRECT ANSWERS B) longer; lower
In comparison to small banks, larger banks typically have: CORRECT ANSWERS C)
more off-balance-sheet activities
Which of the following could result in a negative NIM? CORRECT ANSWERS C)
Decline in net interest income
Most of the changes in size, structure, and composition of the banking industry in recent
years are due to: CORRECT ANSWERS E) mergers and acquisitions.
Nationally chartered banks receive chartering and merger approval from the:
CORRECT ANSWERS B) Office of Comptroller of the Currency.
State chartered banks ________________ be members of the Federal Reserve System
and nationally chartered banks ________________ be members of the Federal
Reserve System. CORRECT ANSWERS C) may; must
The provision of banking services to other banks, such as check clearing, foreign
exchange trading, and so forth, is an example of: CORRECT ANSWERS A)
correspondent banking.
Reasons behind the drop in bank profitability in the late 2000s include:
1.I. flattening of the yield curve.
2.II. increase in competitive pressures on asset pricing.
3.III. increases in foreclosures in the mortgage market.
4.IV. increases in net interest margin. CORRECT ANSWERS C) I, II, and III only
, Loans past due 90 days or more and loans that are not accruing interest because of
problems of the borrower are called: CORRECT ANSWERS D) noncurrent loans.
Which of the following is the primary regulator of bank holding company activities?
CORRECT ANSWERS C) Federal Reserve
Suppose you deposit $100 in a bank, which of the following will occur? CORRECT
ANSWERS A) The bank's assets will increase by $100.
Open-end mutual funds guarantee: CORRECT ANSWERS C) to redeem investor's
shares upon demand at the current NAV.
ETFs are a direct competitor to ___________. CORRECT ANSWERS D) index funds
As the economy weakens, one would expect investment in ____________ funds to
increase and investment in _____________ funds to decrease, all else held constant.
CORRECT ANSWERS A) money market mutual; equity
Hybrid mutual funds normally invest significant amounts in: CORRECT ANSWERS E)
both common stock and long-term bonds.
Money market mutual funds (MMMFs) have caused disintermediation at banks at times.
This is because MMMFs: CORRECT ANSWERS A) sometimes pay higher interest
rates than bank deposits.
Actively managed funds find it difficult to consistently earn higher risk-adjusted returns
than a broad stock market index. The difference in return between actively managed
funds and passively managed index funds can be explained by which of the following?
I. Lower expense ratios for index funds
II. Higher turnover ratios for index funds
III. Differences in returns in sectors of the market and the overall market return
CORRECT ANSWERS B) I and III only
By type of fund, there are more ______________ funds than any other. CORRECT
ANSWERS A) equity
The largest proportion of long-term mutual fund assets is held by
__________________. CORRECT ANSWERS B) the household sector
The market value of a mutual fund's assets divided by the number of fund shares
outstanding is equal to the: CORRECT ANSWERS B) NAV.
A fund has an NAV of $30 per share but the shares are currently selling for $32. This
fund must be: CORRECT ANSWERS B) a closed-end fund.
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