FIN 461 FINALS ALL QUESTIONS AND ANSWERS
SURE A+
✔✔23. Credit Unions were generally less affected than other depository institutions by
the recent financial
crisis because
a. they had relatively more assets in consumer loans than other DIs.
b. they hold more government and agency securities, on average.
c. they hold less government and agency securities, on average.
d. they had relatively more residential mortgages.
e. they had relatively more assets in consumer loans than other DIs and they hold
more government and agency securities, on average. - ✔✔e. they had relatively more
assets in consumer loans than other DIs and they hold
more government and agency securities, on average.
✔✔24. Compared to banks and savings institutions, credit unions are able to pay a
higher rate on the
deposits of members because
a. of their tax-exempt status.
b. they intend to attract new members.
c. Regulation Q still applies to the industry.
d. they are subject to the provisions of the Community Reinvestment Act.
e. they do not issue common stock. - ✔✔a. of their tax-exempt status.
✔✔25. Correspondent banking may involve
a. holding and managing assets for individuals or corporations.
b. providing banking services to other banks facing shortage of staff.
c. providing hedging services to corporations.
d. providing foreign exchange trading services to individuals.
e. acting as transfer and disbursement agents for pension funds. - ✔✔e. acting as
transfer and disbursement agents for pension funds.
✔✔26. Each of the following falls into the category of bank assets except:
, a. loans.
b. investment securities.
c. demand deposits.
d. cash and due from banks.
e. other assets. - ✔✔c. demand deposits.
✔✔27. Which of the following adjustments are made to gross loans and leases to obtain
net loans and leases?
a. Loan and lease loss allowance is added to gross loans.
b. Unearned income is subtracted from gross interest received.
c. Investment income is added to gross interest received.
d. Loan and lease loss allowance and unearned income is subtracted from gross loans.
e. Loan and lease loss allowance is subtracted from gross loans and investment income
is
added to gross interest received. - ✔✔d. Loan and lease loss allowance and unearned
income is subtracted from gross loans.
✔✔28. An example of a contra-asset account is:
a. loan and lease loss allowance.
b. trading account assets.
c. buildings and equipment.
d. revenue bonds.
e. provision for loan loss. - ✔✔a. loan and lease loss allowance.
✔✔29. A financial institution's bad-debt reserve, as reported on its balance sheet, is
called:
a. unearned income or discount.
b. allowance for possible loan losses.
c. intangible assets.
d. customer liability on acceptances.
e. None of the options are correct. - ✔✔b. allowance for possible loan losses.
✔✔30. Nonperforming loans are credits on which any scheduled loan repayments and
interest payments are past due
for more than:
a. 30 days.
b. 60 days.
c. 90 days.
d. 180 days.
e. None of the options are correct. - ✔✔c. 90 days.
✔✔31. Banks depend heavily upon borrowed funds supplied by customers with little
owners' capital invested. This
means that banks make heavy use of:
a. financial leverage.
SURE A+
✔✔23. Credit Unions were generally less affected than other depository institutions by
the recent financial
crisis because
a. they had relatively more assets in consumer loans than other DIs.
b. they hold more government and agency securities, on average.
c. they hold less government and agency securities, on average.
d. they had relatively more residential mortgages.
e. they had relatively more assets in consumer loans than other DIs and they hold
more government and agency securities, on average. - ✔✔e. they had relatively more
assets in consumer loans than other DIs and they hold
more government and agency securities, on average.
✔✔24. Compared to banks and savings institutions, credit unions are able to pay a
higher rate on the
deposits of members because
a. of their tax-exempt status.
b. they intend to attract new members.
c. Regulation Q still applies to the industry.
d. they are subject to the provisions of the Community Reinvestment Act.
e. they do not issue common stock. - ✔✔a. of their tax-exempt status.
✔✔25. Correspondent banking may involve
a. holding and managing assets for individuals or corporations.
b. providing banking services to other banks facing shortage of staff.
c. providing hedging services to corporations.
d. providing foreign exchange trading services to individuals.
e. acting as transfer and disbursement agents for pension funds. - ✔✔e. acting as
transfer and disbursement agents for pension funds.
✔✔26. Each of the following falls into the category of bank assets except:
, a. loans.
b. investment securities.
c. demand deposits.
d. cash and due from banks.
e. other assets. - ✔✔c. demand deposits.
✔✔27. Which of the following adjustments are made to gross loans and leases to obtain
net loans and leases?
a. Loan and lease loss allowance is added to gross loans.
b. Unearned income is subtracted from gross interest received.
c. Investment income is added to gross interest received.
d. Loan and lease loss allowance and unearned income is subtracted from gross loans.
e. Loan and lease loss allowance is subtracted from gross loans and investment income
is
added to gross interest received. - ✔✔d. Loan and lease loss allowance and unearned
income is subtracted from gross loans.
✔✔28. An example of a contra-asset account is:
a. loan and lease loss allowance.
b. trading account assets.
c. buildings and equipment.
d. revenue bonds.
e. provision for loan loss. - ✔✔a. loan and lease loss allowance.
✔✔29. A financial institution's bad-debt reserve, as reported on its balance sheet, is
called:
a. unearned income or discount.
b. allowance for possible loan losses.
c. intangible assets.
d. customer liability on acceptances.
e. None of the options are correct. - ✔✔b. allowance for possible loan losses.
✔✔30. Nonperforming loans are credits on which any scheduled loan repayments and
interest payments are past due
for more than:
a. 30 days.
b. 60 days.
c. 90 days.
d. 180 days.
e. None of the options are correct. - ✔✔c. 90 days.
✔✔31. Banks depend heavily upon borrowed funds supplied by customers with little
owners' capital invested. This
means that banks make heavy use of:
a. financial leverage.
