Bank Management 8th edition by Timothy W. Koch Test bank

At the end of 2013, there were approximately ______ independent banks and thrifts in operation in the United States.

1.    300
2. 1,800
3. 4,200
4. 4,500
5. 6,300

Answer: b

 

11. What is the primary motivation today of forming a financial holding company?

1. To increase speculation.
2. To branch across state lines.
3. To engage in activities not permitted in a bank holding company.
4. To branch within a particular states boundaries.
5. To reduce the risk of bank failures.

Answer: c
 

12. Bank holding companies and financial holding companies generally do not pay income tax because:

1. they are always chartered as non-profit corporations.
2. most of their income is subsidiary paid dividends, of which 80% is tax-exempt.
3. the subsidiaries always operate at a net loss.
4. bank holding companies must carry deposit insurance.
5. bank holding companies are not subject to Internal Revenue Service regulations.

Answer: b



 

13. Controlling interest in a bank is defined as ownership or indirect control of ____ of the voting shares in the bank.

1. 15%
2. 20%
3. 25%
4. 30%
5. 51%

Answer: c
 

14. Today, the primary motivation behind forming a bank holding company is:

1. to reduce competition.
2. the ability to circumvent restrictions on branching.
3. to broaden the scope of products the bank can offer.
4. to increase deposit concentration.
5. All of the above are motivating factors today for forming a bank holding company.

Answer: c
 

15. A __________ controls at least two commercial banks.

1. one-bank holding company
2. state holding company
3. national holding company
4. multibank holding company
5. financial holding company

Answer: d
 

16. The _________ gave regulatory responsibility over financial holding companies to the Federal Reserve..

1. Riegle-Neal Interstate Banking and Branching Efficiency Act
2. Gramm-Leach-Bliley Act
3. Financial Institutions Reform, Recovery and Enforcement Act
4. Federal Deposit Insurance Corporation Improvement Act
5. Depository Institutions Deregulation and Monetary Control Act

Answer: b

 

17. Many insurance companies have formed __________ to operate banks as part of their financial services efforts.

1. one-bank holding companies
2. multibank holding companies
3. retail subsidiaries
4. finance companies
5. financial holding companies

Answer: a
 

18. Banks created Section 20 affiliates to:

1. engage in investment banking activities.
2. make international loans.
3. purchase savings and loans.
4. invest in junk bonds.
5. compete with general-purpose finance companies.

Answer: a
 

19. The _______________ repealed the restriction on banks affiliating with securities firms under the Glass-Steagall Act.