Financial Institutions – Midterm Exam Practice Test
Study Guide
A bank that specializes in retail or consumer banking in a local market - correct answer ✔✔
Community bank
A bank that engages in a complete array of wholesale commercial banking activities and usually
also provides retail banking services - correct answer ✔✔ Super-regional bank
A bank that is located in a financial center and relies on nondeposit or borrowed sources of
funds for a significant portion of liabilities - correct answer ✔✔ Money center bank
Which of the following is not true?
A. Large, superregional banks rely more on nondeposit funding sources than small community
banks
B. The primary source of income for the typical commercial bank is interest income
C. All else equal, commercial banks always benefit form a low interest rate environment
D. Relative to money center banks, small community banks rely less on noninterst income
sources - correct answer ✔✔ C
Bank assets tend to have ______ maturities and ______ liquidity than/ as bank liabilities -
correct answer ✔✔ Longer
, Lower
Nationally chartered commercial banks are most likely to be regulated by: - correct answer ✔✔
The FDIC
The Federal Reserve System
The Office of the Comptroller of the Currency (OCC)
Which of the following is NOT true?
A.The fastest growing area of finance companies in recent years has been in the area of leasing
and business loans.
B.Consumer loans represent the largest portion of the loan portfolio of finance companies.
C.Finance companies rely on short-term commercial paper and customer deposits to finance
their assets.
D.Finance companies rely on short-term commercial paper and long-term debt to finance their
assets.
E.Finance companies are now the largest issuers of commercial paper in the U.S. - correct
answer ✔✔ C
Most of the changes in size, structure, and composition of the banking industry in recent years
are due to - correct answer ✔✔ Mergers and acquisitions
Study Guide
A bank that specializes in retail or consumer banking in a local market - correct answer ✔✔
Community bank
A bank that engages in a complete array of wholesale commercial banking activities and usually
also provides retail banking services - correct answer ✔✔ Super-regional bank
A bank that is located in a financial center and relies on nondeposit or borrowed sources of
funds for a significant portion of liabilities - correct answer ✔✔ Money center bank
Which of the following is not true?
A. Large, superregional banks rely more on nondeposit funding sources than small community
banks
B. The primary source of income for the typical commercial bank is interest income
C. All else equal, commercial banks always benefit form a low interest rate environment
D. Relative to money center banks, small community banks rely less on noninterst income
sources - correct answer ✔✔ C
Bank assets tend to have ______ maturities and ______ liquidity than/ as bank liabilities -
correct answer ✔✔ Longer
, Lower
Nationally chartered commercial banks are most likely to be regulated by: - correct answer ✔✔
The FDIC
The Federal Reserve System
The Office of the Comptroller of the Currency (OCC)
Which of the following is NOT true?
A.The fastest growing area of finance companies in recent years has been in the area of leasing
and business loans.
B.Consumer loans represent the largest portion of the loan portfolio of finance companies.
C.Finance companies rely on short-term commercial paper and customer deposits to finance
their assets.
D.Finance companies rely on short-term commercial paper and long-term debt to finance their
assets.
E.Finance companies are now the largest issuers of commercial paper in the U.S. - correct
answer ✔✔ C
Most of the changes in size, structure, and composition of the banking industry in recent years
are due to - correct answer ✔✔ Mergers and acquisitions
