Question :
11) In the U.S., banks
A) cannot be forced to sell : 1303703
11) In the U.S., banks
A) cannot be forced to sell assets that the bank examiner deems too risky.
B) can be forced to sell assets that the bank examiner deems too risky.
C) can be forced to sell assets that the bank examiner deems too risky only after a court order.
D) can be forced to sell assets that the bank examiner deems too risky only after both examiners from the Fed and from the FDIC agree.
E) can be forced to trade assets that the bank examiner deems too risky.
12) In the U.S., banks
A) may not be forced by bank examiner to adjust their balance sheets by writing off loans the examiner thinks will not be repaid.
B) may be forced by bank examiner to adjust their balance sheets by writing off loans the examiner thinks will not be repaid.
C) may be forced by bank examiner to adjust their balance sheets by writing off loans the examiner thinks will not be repaid only if the Fed and the FDIC examiners agree.
D) may be forced by bank examiner to adjust their balance sheets by writing off loans the examiner thinks will not be repaid only if the Fed and the Office of the Comptroller of the Currency examiners agree.
E) may be forced by bank examiner to adjust their balance sheets by paying off loans the examiner thinks will not be repaid.
13) A bank faced with the wholesale loss of deposits is likely to shut down despite fundamentally sound balance sheet. Why could this be?
A) Banks have accountants that are too optimistic.
B) Banks purposely lie about their balance sheets in order to attract more clients.
C) Many bank assets are illiquid and cannot be sold quickly to meet deposit obligations without substantial loss to the bank.
D) Many banks operate on a budget that exceeds their actual reserves.
E) Many banks will shut down to preserve their interest profits.
14) Which statement is NOT true regarding emerging markets?
A) Emerging market financial institutions have generally proven to be weaker than those in industrialized countries.
B) Emerging markets are the capital markets of poorer, developing countries that have liberalized their financial system to allow private asset trade with foreigners.
C) Countries with emerging markets include Brazil, Mexico, and Thailand.
D) Countries with emerging markets have been unable to liberalize their financial systems to allow private trade with foreigners.
E) Emerging market financial institutions contributed to the financial crisis of 1997-1999.
15) The main problem with securitization is that
A) governments are no longer able to repackage bank assets.
B) securitized banks grow too large and create oligopolies.
C) There is no problem. Governments can still get an accurate picture of global financial flows by simply examining bank balance sheets.
D) governments are not able to monitor bank assets or to asses a bank’s risk to the soundness of the international banking system.
E) the bank assets are not marketable.
16) In the United States, which of the following safety precautions has the government NOT taken to reduce Bank failures?
A) implemented deposits insurance
B) bank reserve requirements
C) capital requirements and asset restrictions
D) required bank examination
E) forcibly closing poorly run banks
17) The purpose of the Basel Committee was to
A) achieve a better coordination of the surveillance exercised by national authorities over the international banking system.
B) achieve a better coordination of domestic banking systems.
C) achieve a better coordination between brokers and investment bankers.
D) achieve a better coordination between bond holder and bon issuers.
E) manipulate bank rates for more leverage profits.
18) The case where people purposely act in a careless way, for example, driving recklessly because they are insured, is called
A) asymmetric information.
B) risk aversion.
C) moral hazard.
D) bounded rationality.
E) thrill-seeking.
19) Capital markets of poor developing countries that liberalized their financial systems to allow private asset trade with foreigners are called
A) direct foreign markets.
B) foreign exchange markets.
C) stock & bond markets.
D) emerging markets.
E) fledgling financial markets.
20) U.S. reserve requirements
A) are rejected by half the banks operating in the United States.
B) show how regulatory asymmetries can operate to enhance the profitability of Eurocurrency trading.
C) tend to harm the bank’s business and decrease monetary aggregates.
D) force banks to hold a portion of its assets in a liquid form easily mobilized to meet sudden deposit outflows.
E) remain in place, but capital requirements have begin defaulting.
