Financial Institutions – Final Exam, Lecture Notes, 2026 – Comprehensive Study
and Practice Material
When banks obtain funds in the federal funds market, the providers of funds are:
other depository institutions
non financial corporations
consumers
the Federal Reserve - ANS✔✔ other depository institutions
The main use of bank funds is for:
loans
investment securities
fixed assets
repurchase agreements - ANS✔✔ loans
Which of the following is true?
The primary credit lending rate is set by the President of the United States
,The federal funds rate is set by the President of the United States
The primary credit lending rate is set by commercial banks
The primary credit lending rate is now set at a level above the federal funds rate - ANS✔✔ The
primary credit lending rate is now set at a level above the federal funds rate
The interest rate charged on loans from the Federal Reserve to banks is commonly referred to as
the _____ rate.
federal funds
primary credit lending
repo
none of these - ANS✔✔ primary credit lending
The intent of federal funds transactions is to:
correct short-term fund imbalances experienced by banks
correct long-term fund imbalances experienced by banks
serve as a permanent source of bank capital
, serve as the primary depository source of funds - ANS✔✔ correct short-term fund imbalances
experienced by banks
A _____ loan may be especially appropriate when a business wishes to avoid adding more debt
to its balance sheet.
term
bullet
direct lease
revolving credit - ANS✔✔ direct lease
The Federal Reserve provides loans to banks in order to:
resolve permanent shortages of funds experienced by banks
resolve temporary shortages of funds experienced by banks
finance the shortage of funds of finance companies
do none of these - ANS✔✔ resolve temporary shortages of funds experienced by banks
A ____ account provides checking services as well as interest .
demand deposit
and Practice Material
When banks obtain funds in the federal funds market, the providers of funds are:
other depository institutions
non financial corporations
consumers
the Federal Reserve - ANS✔✔ other depository institutions
The main use of bank funds is for:
loans
investment securities
fixed assets
repurchase agreements - ANS✔✔ loans
Which of the following is true?
The primary credit lending rate is set by the President of the United States
,The federal funds rate is set by the President of the United States
The primary credit lending rate is set by commercial banks
The primary credit lending rate is now set at a level above the federal funds rate - ANS✔✔ The
primary credit lending rate is now set at a level above the federal funds rate
The interest rate charged on loans from the Federal Reserve to banks is commonly referred to as
the _____ rate.
federal funds
primary credit lending
repo
none of these - ANS✔✔ primary credit lending
The intent of federal funds transactions is to:
correct short-term fund imbalances experienced by banks
correct long-term fund imbalances experienced by banks
serve as a permanent source of bank capital
, serve as the primary depository source of funds - ANS✔✔ correct short-term fund imbalances
experienced by banks
A _____ loan may be especially appropriate when a business wishes to avoid adding more debt
to its balance sheet.
term
bullet
direct lease
revolving credit - ANS✔✔ direct lease
The Federal Reserve provides loans to banks in order to:
resolve permanent shortages of funds experienced by banks
resolve temporary shortages of funds experienced by banks
finance the shortage of funds of finance companies
do none of these - ANS✔✔ resolve temporary shortages of funds experienced by banks
A ____ account provides checking services as well as interest .
demand deposit
