FINA 365 UNL JINSOOK LEE EXAM 1 10/07/2026
FINA 365 UNL Jinsook Lee Exam 1 | Questions with
Correct Answers 100% complete
True or False? Since 1990, commercial banks decreased the proportion of business loans and increased
the proportion of mortgages in their portfolios.
True
True or False? The growth of the commercial paper market has led to a decline in the demand for
business loans from commercial banks.
True
True or False? The securitization of mortgages involves the pooling of mortgage loans for sale in the
financial markets.
True
True or False? Because of the large amount of equity on a typical commercial bank balance sheet, credit
risk is not a significant risk to bank managers.
False
True or False? The maturity structure of the assets of commercial banks tends to be shorter than the
maturity structure of liabilities.
False
10/7/2026
1
, FINA 365 UNL JINSOOK LEE EXAM 1 10/07/2026
True or False? The Financial Services Modernization Act of 1999 allows commercial banking activities
and securities underwriting to operate simultaneously under the same ownership structure.
True
True or False? The primary objective of the Reigle-Neal Act (1994) was to ease branching across state
lines by banks.
True
The largest asset class on U.S. commercial banks' combined balance sheet as of September 30, 2018 was
A) deposits.
B) real estate loans.
C) cash.
D) commercial and industrial loans.
E) investment securities.
The strong performance of commercial banks during the decade before 2007 was due to
A) All of the options.
B) the growth in the number of thrifts and credit unions.
C) the stability of interest rates during this period.
D) the contraction of the number of banks and thrifts.
E) the ability of banks to shift credit risk from their balance sheets to financial markets.
Money center banks are considered to be any bank which
10/7/2026
A) has corporate headquarters in either New York City, Chicago, San Francisco, Atlanta, Dallas, or
Charlotte.
2
, FINA 365 UNL JINSOOK LEE EXAM 1 10/07/2026
B) does not participate in foreign currency markets.
C) is a net supplier of funds on the interbank marke.
D) relies almost entirely on nondeposit and borrowed funds as sources of liabilities.
E) is not characterized by any of the above.
Regulatory forbearance refers to a policy of
A) rescheduling of all loans of a client in the event of non-payment.
B) allowing insolvent banks to continue to operate.
C) foreclosing real estate properties in the event on non-payments of mortgages and strict regulation of
banks, closing them down as soon as they are insolvent.
D) strict regulation of banks, closing them down as soon as they are insolvent.
E) foreclosing real estate properties in the event on non-payments of mortgages.
A primary advantage for a depository institution of belonging to the Federal Reserve System is
A) direct access to correspondent banking services.
B) decreased costs of regulatory compliance.
C) the lower deposit reserves required under the Federal Reserve System.
D) direct access to the discount window of the Fed.
E) commission less trading of U.S. government securities.
Customer deposits are classified on a DI's balance sheet as
A) liabilities, because the DI must meet reserve requirements on customer deposits.
B) liabilities, because DIs are required to serve depositors.
C) assets, because customers view deposits as assets.
10/7/2026
D) liabilities, because the DI uses deposits as a source of funds.
E) assets, because the DI uses deposit funds to earn profits.
3
FINA 365 UNL Jinsook Lee Exam 1 | Questions with
Correct Answers 100% complete
True or False? Since 1990, commercial banks decreased the proportion of business loans and increased
the proportion of mortgages in their portfolios.
True
True or False? The growth of the commercial paper market has led to a decline in the demand for
business loans from commercial banks.
True
True or False? The securitization of mortgages involves the pooling of mortgage loans for sale in the
financial markets.
True
True or False? Because of the large amount of equity on a typical commercial bank balance sheet, credit
risk is not a significant risk to bank managers.
False
True or False? The maturity structure of the assets of commercial banks tends to be shorter than the
maturity structure of liabilities.
False
10/7/2026
1
, FINA 365 UNL JINSOOK LEE EXAM 1 10/07/2026
True or False? The Financial Services Modernization Act of 1999 allows commercial banking activities
and securities underwriting to operate simultaneously under the same ownership structure.
True
True or False? The primary objective of the Reigle-Neal Act (1994) was to ease branching across state
lines by banks.
True
The largest asset class on U.S. commercial banks' combined balance sheet as of September 30, 2018 was
A) deposits.
B) real estate loans.
C) cash.
D) commercial and industrial loans.
E) investment securities.
The strong performance of commercial banks during the decade before 2007 was due to
A) All of the options.
B) the growth in the number of thrifts and credit unions.
C) the stability of interest rates during this period.
D) the contraction of the number of banks and thrifts.
E) the ability of banks to shift credit risk from their balance sheets to financial markets.
Money center banks are considered to be any bank which
10/7/2026
A) has corporate headquarters in either New York City, Chicago, San Francisco, Atlanta, Dallas, or
Charlotte.
2
, FINA 365 UNL JINSOOK LEE EXAM 1 10/07/2026
B) does not participate in foreign currency markets.
C) is a net supplier of funds on the interbank marke.
D) relies almost entirely on nondeposit and borrowed funds as sources of liabilities.
E) is not characterized by any of the above.
Regulatory forbearance refers to a policy of
A) rescheduling of all loans of a client in the event of non-payment.
B) allowing insolvent banks to continue to operate.
C) foreclosing real estate properties in the event on non-payments of mortgages and strict regulation of
banks, closing them down as soon as they are insolvent.
D) strict regulation of banks, closing them down as soon as they are insolvent.
E) foreclosing real estate properties in the event on non-payments of mortgages.
A primary advantage for a depository institution of belonging to the Federal Reserve System is
A) direct access to correspondent banking services.
B) decreased costs of regulatory compliance.
C) the lower deposit reserves required under the Federal Reserve System.
D) direct access to the discount window of the Fed.
E) commission less trading of U.S. government securities.
Customer deposits are classified on a DI's balance sheet as
A) liabilities, because the DI must meet reserve requirements on customer deposits.
B) liabilities, because DIs are required to serve depositors.
C) assets, because customers view deposits as assets.
10/7/2026
D) liabilities, because the DI uses deposits as a source of funds.
E) assets, because the DI uses deposit funds to earn profits.
3
