Fin 420 Management Banking Midterm
(Chapters 1-4) LATEST UPDATES!!!
2026-2027 | CORRECT SOLUTIONS WITH
QUIZ & ANSWERS | HIGHLY GRADED A+
The "implicit guarantee" did result in Fannie Mae and Freddie Mac borrowing money in
the bond market at higher rates (yields) than other financial institutions.
(True or False) - CORRECT ANSWERS-False
A liquid secondary market for mortgages meant financial institutions could sell the
mortgages they originated, which freed up their funds to make additional mortgages
(True or False) - CORRECT ANSWERS-True
Investors avoided the sophisticated securities Wall Street created out of all the
mortgages it purchased from financial institutions and originators. (True or False) -
CORRECT ANSWERS-False
When home prices are rising, there is a higher risk of mortgage default. (True or False) -
CORRECT ANSWERS-False
A GSE is an entity under the direct supervision of the federal government (True or
False) - CORRECT ANSWERS-True
Adjustable-rate mortgages frequently had "exotic" characteristics such as interest-only
or even negative amortization features. In addition, they were frequently made with lax
underwriting guidelines such as stated income and/or stated assets. (True or False) -
CORRECT ANSWERS-True
Fannie Mae and Freddie Mac had a negative influence on the mortgage market by
decreasing homeownership rates in the United States (True or False) - CORRECT
ANSWERS-False
An "implicit guarantee" was the marketplace's perception that the federal government
would step in and bail these organizations out if either firm ever ran into financial
trouble. (True or False) - CORRECT ANSWERS-True
,Historically, most common type of mortgage was a fixed-rate mortgage and most of the
financial institutions originating mortgages held the mortgages that they originated on
their books. (True or False) - CORRECT ANSWERS-True
To remain competitive and maintain their market share, Fannie Mae and Freddie Mac
began purchasing and guaranteeing an increasing number of loans and securities with
low credit quality. (True or False) - CORRECT ANSWERS-True
The Great Depression has little impact on the number of commercial banks. (True or
False) - CORRECT ANSWERS-False
The decline is commercial banks from 1935 until the early 1960s was due almost
entirely by bank failures. (True or False) - CORRECT ANSWERS-False
The number of commercial banks more than doubled from 1901 to 1921. (True or
False) - CORRECT ANSWERS-True
After 1970, almost all of the commercial banks were FDIC-insured. (True or False) -
CORRECT ANSWERS-True
Since 1984, which of the following is true about the number of commercial banks [check
all that apply]?
-Bank failures and new-bank charters have almost ceased since 2015
-A large number of banks failed in the 1980s, 1990s, and the 2007 financial crisis.
-Bank mergers have increased
significantly
-The number of commercial banks continue to decline because mergers continue
-The number of new bank charters continues to increase
-The number of commercial banks have hit an all time high.
-Bank mergers have decreased significantly
-Bank failures and new-bank charters have almost ceased since 2015
-A large number of banks failed in the 1980s, 1990s, and the 2007 financial crisis.
-Bank mergers have increased significantly
-The number of commercial banks continue to decline because mergers continue -
CORRECT ANSWERS--Bank failures and new-bank charters have almost ceased since
2015
-A large number of banks failed in the 1980s, 1990s, and the 2007 financial crisis.
-Bank mergers have increased significantly
-The number of commercial banks continue to decline because mergers continue
Between 1984 and 2020, the number of commercial banks decreased by 70%. (True or
False) - CORRECT ANSWERS-True
,Although many commercial banks have disappeared, the majority of commercial banks
that have ever operated in the U.S. are still open. (True or False) - CORRECT
ANSWERS-False
Low capitalized banks have an incentive to issue more loans during a contraction to
help weaker borrowers so they can avoid loan losses. (True or False) - CORRECT
ANSWERS-True
Empirical results suggest that the COVID-19 shock was felt more by US banks than
banks located outside the US (True or False) - CORRECT ANSWERS-False
Government interventions to support their citizens and businesses has slightly muted
the immediate impact of the pandemic (True or False) - CORRECT ANSWERS-True
Most PPP loans were administered by commercial banks, and were completely
forgivable by the government, posing no risk to the bank. (True or False) - CORRECT
ANSWERS-True
Shadow bank institutions have stepped in to offset any restrictions in bank lending (True
or False) - CORRECT ANSWERS-True
One key area of future research should focus on how different policy measures
implemented across the world impacted bank lending decisions, the banks themselves,
and real economic outcomes. (True or False) - CORRECT ANSWERS-True
Larger banks have a comparative advantage to lending to small businesses (compared
to community banks). (True or False) - CORRECT ANSWERS-False
The collaboration among regulators and central banks has resulted in effective and
timely respones to unexpected and short-term financial changes associated with
COVID-19 (True or False) - CORRECT ANSWERS-True
The global financial crisis led to aa decrease in regional and global bank cooperation.
There was also less information sharing amongst national and international regulators.
(True or False) - CORRECT ANSWERS-False
One paper found that loan spreads shrank during the COVID-19 pandemic (True or
False) - CORRECT ANSWERS-False
Banks liquidity risks have increased as a result of COVID-19 (True or False) -
CORRECT ANSWERS-False
In the US, the impact on the firms choice between bank loans and the bond market
remain small. In Europe, the there appears to be a major expansion of smaller firms
, gaining access to the corporate bond market. (True or False) - CORRECT ANSWERS-
True
What is the primary motivation today of forming a financial holding company?
- To branch across state lines.
- To engage in activities not permitted in a bank holding company.
- To reduce the risk of bank failures.
- To increase speculation.
- To branch within a particular states boundaries. - CORRECT ANSWERS-To engage in
activities not permitted in a bank holding company.
The Glass-Stegall Act did which of the following?:
-Created financial holding companies
-Created bank holding companies
-Separated commercial banks and investment banks
-Allowed banks to merge in different states - CORRECT ANSWERS-Separated
commercial banks and investment banks
The U.S. government took all of the following actions to address the credit crisis in 2008
except:
-Passed the Troubled Asset Relief Program (TARP).
-Temporarily increased FDIC domestic deposit coverage to $250,000.
-putting Fannie Mae into conservatorship.
-created the Keep Banks Solvent (KBS) agency.
-Authorized the Federal Reserve to purchase commercial paper directly from
companies such as General Electric - CORRECT ANSWERS-Created the Keep Banks
Solvent (KBS) agency.
What are the characteristics of a subprime loan [check all that apply]?
-A home equity loan
(Chapters 1-4) LATEST UPDATES!!!
2026-2027 | CORRECT SOLUTIONS WITH
QUIZ & ANSWERS | HIGHLY GRADED A+
The "implicit guarantee" did result in Fannie Mae and Freddie Mac borrowing money in
the bond market at higher rates (yields) than other financial institutions.
(True or False) - CORRECT ANSWERS-False
A liquid secondary market for mortgages meant financial institutions could sell the
mortgages they originated, which freed up their funds to make additional mortgages
(True or False) - CORRECT ANSWERS-True
Investors avoided the sophisticated securities Wall Street created out of all the
mortgages it purchased from financial institutions and originators. (True or False) -
CORRECT ANSWERS-False
When home prices are rising, there is a higher risk of mortgage default. (True or False) -
CORRECT ANSWERS-False
A GSE is an entity under the direct supervision of the federal government (True or
False) - CORRECT ANSWERS-True
Adjustable-rate mortgages frequently had "exotic" characteristics such as interest-only
or even negative amortization features. In addition, they were frequently made with lax
underwriting guidelines such as stated income and/or stated assets. (True or False) -
CORRECT ANSWERS-True
Fannie Mae and Freddie Mac had a negative influence on the mortgage market by
decreasing homeownership rates in the United States (True or False) - CORRECT
ANSWERS-False
An "implicit guarantee" was the marketplace's perception that the federal government
would step in and bail these organizations out if either firm ever ran into financial
trouble. (True or False) - CORRECT ANSWERS-True
,Historically, most common type of mortgage was a fixed-rate mortgage and most of the
financial institutions originating mortgages held the mortgages that they originated on
their books. (True or False) - CORRECT ANSWERS-True
To remain competitive and maintain their market share, Fannie Mae and Freddie Mac
began purchasing and guaranteeing an increasing number of loans and securities with
low credit quality. (True or False) - CORRECT ANSWERS-True
The Great Depression has little impact on the number of commercial banks. (True or
False) - CORRECT ANSWERS-False
The decline is commercial banks from 1935 until the early 1960s was due almost
entirely by bank failures. (True or False) - CORRECT ANSWERS-False
The number of commercial banks more than doubled from 1901 to 1921. (True or
False) - CORRECT ANSWERS-True
After 1970, almost all of the commercial banks were FDIC-insured. (True or False) -
CORRECT ANSWERS-True
Since 1984, which of the following is true about the number of commercial banks [check
all that apply]?
-Bank failures and new-bank charters have almost ceased since 2015
-A large number of banks failed in the 1980s, 1990s, and the 2007 financial crisis.
-Bank mergers have increased
significantly
-The number of commercial banks continue to decline because mergers continue
-The number of new bank charters continues to increase
-The number of commercial banks have hit an all time high.
-Bank mergers have decreased significantly
-Bank failures and new-bank charters have almost ceased since 2015
-A large number of banks failed in the 1980s, 1990s, and the 2007 financial crisis.
-Bank mergers have increased significantly
-The number of commercial banks continue to decline because mergers continue -
CORRECT ANSWERS--Bank failures and new-bank charters have almost ceased since
2015
-A large number of banks failed in the 1980s, 1990s, and the 2007 financial crisis.
-Bank mergers have increased significantly
-The number of commercial banks continue to decline because mergers continue
Between 1984 and 2020, the number of commercial banks decreased by 70%. (True or
False) - CORRECT ANSWERS-True
,Although many commercial banks have disappeared, the majority of commercial banks
that have ever operated in the U.S. are still open. (True or False) - CORRECT
ANSWERS-False
Low capitalized banks have an incentive to issue more loans during a contraction to
help weaker borrowers so they can avoid loan losses. (True or False) - CORRECT
ANSWERS-True
Empirical results suggest that the COVID-19 shock was felt more by US banks than
banks located outside the US (True or False) - CORRECT ANSWERS-False
Government interventions to support their citizens and businesses has slightly muted
the immediate impact of the pandemic (True or False) - CORRECT ANSWERS-True
Most PPP loans were administered by commercial banks, and were completely
forgivable by the government, posing no risk to the bank. (True or False) - CORRECT
ANSWERS-True
Shadow bank institutions have stepped in to offset any restrictions in bank lending (True
or False) - CORRECT ANSWERS-True
One key area of future research should focus on how different policy measures
implemented across the world impacted bank lending decisions, the banks themselves,
and real economic outcomes. (True or False) - CORRECT ANSWERS-True
Larger banks have a comparative advantage to lending to small businesses (compared
to community banks). (True or False) - CORRECT ANSWERS-False
The collaboration among regulators and central banks has resulted in effective and
timely respones to unexpected and short-term financial changes associated with
COVID-19 (True or False) - CORRECT ANSWERS-True
The global financial crisis led to aa decrease in regional and global bank cooperation.
There was also less information sharing amongst national and international regulators.
(True or False) - CORRECT ANSWERS-False
One paper found that loan spreads shrank during the COVID-19 pandemic (True or
False) - CORRECT ANSWERS-False
Banks liquidity risks have increased as a result of COVID-19 (True or False) -
CORRECT ANSWERS-False
In the US, the impact on the firms choice between bank loans and the bond market
remain small. In Europe, the there appears to be a major expansion of smaller firms
, gaining access to the corporate bond market. (True or False) - CORRECT ANSWERS-
True
What is the primary motivation today of forming a financial holding company?
- To branch across state lines.
- To engage in activities not permitted in a bank holding company.
- To reduce the risk of bank failures.
- To increase speculation.
- To branch within a particular states boundaries. - CORRECT ANSWERS-To engage in
activities not permitted in a bank holding company.
The Glass-Stegall Act did which of the following?:
-Created financial holding companies
-Created bank holding companies
-Separated commercial banks and investment banks
-Allowed banks to merge in different states - CORRECT ANSWERS-Separated
commercial banks and investment banks
The U.S. government took all of the following actions to address the credit crisis in 2008
except:
-Passed the Troubled Asset Relief Program (TARP).
-Temporarily increased FDIC domestic deposit coverage to $250,000.
-putting Fannie Mae into conservatorship.
-created the Keep Banks Solvent (KBS) agency.
-Authorized the Federal Reserve to purchase commercial paper directly from
companies such as General Electric - CORRECT ANSWERS-Created the Keep Banks
Solvent (KBS) agency.
What are the characteristics of a subprime loan [check all that apply]?
-A home equity loan
