Financial Institutions Management: A Risk Management Approach 10th Edition by Anthony Saunders Test

 
A. Financial Institutions Reform Recovery and Enforcement Act (1989).
 
B. Financial Services Modernization Act (1999).
 
C. Competitive Equality in Banking Act (1987).
 
D. The Bank Holding Company Act (1956).
 
E. Garn-St. Germain Depository Institutions Act (1982).
 
 
100. A significant recent trend in the provision of financial services is that households increasingly prefer denomination intermediation and information services provided by 
 
A. mutual funds and money market mutual funds.
 
B. commercial banks.
 
C. insurance companies.
 
D. hedge funds.
 
E. investment banks.
 
101. Investment companies are successful in attracting business away from banks and insurance companies primarily because they 
 
A. guarantee higher rates of return on savers' funds.
 
B. remove interest rate risk for the saver.
 
C. have no liquidity risk.
 
D. give savers cheaper access to the direct securities markets.
 
E. offer lower loan rates.
 
 
102. When a DI makes a shift from an "originate-to-hold" banking model to an "originate-to-distribute" model, the change is likely to result in 
 
A. increased operating costs.
 
B. increased interest rate risk.
 
C. increased liquidity risk.
 
D. decreased monitoring costs.
 
E. decreased fee income.
 
103. As DIs made a shift from an "originate-to-hold" banking model to an "originate-to-distribute" model over the last decade, 
 
A. banks became more financially stable.
 
B. it became easier to measure the riskiness of individual loans.
 
C. there was a dramatic increase in systematic risk of the financial system.
 
D. the Federal Reserve decreased the number of services that banks could provide.
 
E. it became more difficult for households to obtain credit.
 
 
104. All of the following are examples of participants in the shadow banking system EXCEPT 
 
A. money market mutual funds (MMMFs).
 
B. structured investment vehicles (SIVs).
 
C. credit hedge funds.
 
D. limited-purpose finance companies.
 
E. credit unions.
 
105. The housing bubble that began building in 2001 was primarily the result of 
 
A. the availability of low-cost affordable homes.
 
B. low interest rates and increased liquidity provided by the Federal Reserve.
 
C. a change in income tax policy that favored home ownership.
 
D. increased demand for U.S. real estate by international investors.
 
E. lack of available residential rental property.
 
 
106. In what year did housing prices begin to deteriorate leading to a jump in defaults in the subprime mortgage markets and the onset of the recent financial crisis? 
 
A. 2001.
 
B. 2003.
 
C. 2006.
 
D. 2008.
 
E. 2010.
 
107. The recent financial crisis highlighted, in retrospect, how heavily households and businesses had come to rely on FIs to act as specialists in 
 
A. generating profits and lowering costs.
 
B. risk measurement and management.
 
C. investment advice and brokerage services.
 
D. time intermediation and denomination mediation.
 
E. derivative securities and interbank borrowing.
 
 
108. Prior to the most recent financial crisis, the risks faced by FIs have traditionally been measured and managed by
A. outside agencies such as Moody’s or Standard and Poor’s.
B. functional risk area such as liquidity risks, price risk, or credit risk.
C. designated regulatory agencies for the industries in which the FI operates.
D. using enterprise risk management techniques.
E. None of the options. FIs did not monitor nor manage the risks that they face.
 
109. Adopting an enterprise risk management approach by an FI is likely to result in all of the following EXCEPT
A. prioritizing each risk and managing them as a portfolio of risks.
B. recognizing that risk-taking is rooted in subtle behavioral characteristics.
C. larger investments in risk management processes and systems.
D. encouraging a culture of risk awareness and decisions throughout the organization.
E. realignment of the stature and resources provided to risk management functions within the FI.