Financial Institutions and Markets – Chapter 21, 2026 – Study Material
and Practice Questions
1. The insuring agency for savings institutions is the - correct answer ✔✔ a.
Securities and Exchange Commission (SEC).
b.
Federal Deposit Insurance Corporation (FDIC).
c.
U.S. Treasury.
d.
Deposit Insurance Fund (DIF).
ANS: D
2. The ____ savings institutions hold the most assets in aggregate. - correct answer ✔✔ a.
stock owned
b.
mutual
c.
closely-held
d.
privatized
ANS: A
,3. Which of the following statements is incorrect? - correct answer ✔✔ a.
A mutual-to-stock conversion allows savings institutions to obtain additional capital by issuing
stock.
b.
Because of the difference in owner control, mutual savings institutions are more susceptible to
unfriendly takeovers.
c.
When a mutual savings institution is involved in an acquisition, it first converts to a stock-owned
savings institution.
d.
Consolidation and acquisitions have caused the number of mutual and stock savings institutions
to decline consistently over the years.
ANS: B
4. Savings institutions use most of their funds for ____. Commercial banks use most of their
funds for ____. - correct answer ✔✔ a.
mortgages; mortgages
b.
mortgages; business loans and commercial real estate loans
c.
business loans; commercial real estate loans and mortgages
d.
commercial real estate loans and mortgages; business loans
,ANS: B
5. Federally-chartered savings institutions are regulated by the - correct answer ✔✔ a.
Securities and Exchange Commission (SEC).
b.
National Credit Union Administration.
c.
Office of Thrift Supervision (OTS).
d.
Comptroller of the Currency.
ANS: C
6. Savings institutions obtain most of their funds from - correct answer ✔✔ a.
savings and time deposits.
b.
loans.
c.
mortgages.
d.
repurchase agreements.
ANS: A
, 7. When savings institutions are unable to attract sufficient deposits, they can - correct answer
✔✔ a.
borrow in the federal funds market.
b.
borrow from the Federal Reserve.
c.
borrow through a repurchase agreement.
d.
all of the above
ANS: D
8. The capital of savings institutions is primarily composed of retained earnings and funds
obtained from issuing stock. - correct answer ✔✔ a. True
b. False
ANS: T
9. If depositors move money from their checking account to short-term CDs, this would ____
the rate-sensitivity of the savings institution's liabilities to interest rate movements. - correct
answer ✔✔ a.
increase
b.
have no effect on
c.
decrease
and Practice Questions
1. The insuring agency for savings institutions is the - correct answer ✔✔ a.
Securities and Exchange Commission (SEC).
b.
Federal Deposit Insurance Corporation (FDIC).
c.
U.S. Treasury.
d.
Deposit Insurance Fund (DIF).
ANS: D
2. The ____ savings institutions hold the most assets in aggregate. - correct answer ✔✔ a.
stock owned
b.
mutual
c.
closely-held
d.
privatized
ANS: A
,3. Which of the following statements is incorrect? - correct answer ✔✔ a.
A mutual-to-stock conversion allows savings institutions to obtain additional capital by issuing
stock.
b.
Because of the difference in owner control, mutual savings institutions are more susceptible to
unfriendly takeovers.
c.
When a mutual savings institution is involved in an acquisition, it first converts to a stock-owned
savings institution.
d.
Consolidation and acquisitions have caused the number of mutual and stock savings institutions
to decline consistently over the years.
ANS: B
4. Savings institutions use most of their funds for ____. Commercial banks use most of their
funds for ____. - correct answer ✔✔ a.
mortgages; mortgages
b.
mortgages; business loans and commercial real estate loans
c.
business loans; commercial real estate loans and mortgages
d.
commercial real estate loans and mortgages; business loans
,ANS: B
5. Federally-chartered savings institutions are regulated by the - correct answer ✔✔ a.
Securities and Exchange Commission (SEC).
b.
National Credit Union Administration.
c.
Office of Thrift Supervision (OTS).
d.
Comptroller of the Currency.
ANS: C
6. Savings institutions obtain most of their funds from - correct answer ✔✔ a.
savings and time deposits.
b.
loans.
c.
mortgages.
d.
repurchase agreements.
ANS: A
, 7. When savings institutions are unable to attract sufficient deposits, they can - correct answer
✔✔ a.
borrow in the federal funds market.
b.
borrow from the Federal Reserve.
c.
borrow through a repurchase agreement.
d.
all of the above
ANS: D
8. The capital of savings institutions is primarily composed of retained earnings and funds
obtained from issuing stock. - correct answer ✔✔ a. True
b. False
ANS: T
9. If depositors move money from their checking account to short-term CDs, this would ____
the rate-sensitivity of the savings institution's liabilities to interest rate movements. - correct
answer ✔✔ a.
increase
b.
have no effect on
c.
decrease
