ABNORMAL PSYCHOLOGY MIDTERM STUDY GUIDE
Questions with Correct Answers (Grade A+)
Question 1: Nonbank financial-service institutions can offer deposits to the public, but these deposits
are not eligible for insurance coverage by the FDIC.
Answer: False
Question 2: According to the textbook, the largest banks tend to offer the widest range of services of
any financial service firm today.
Answer: True
Question 3: The role performed by banks in the economy in which they transform savings into credit is
known as the intermediation role.
Answer: True
Question 4: The role performed by banks in which they guarantee to make payments on behalf of their
customers when those customers are unable to pay a debt obligation is known as the guarantor role.
Answer: True
Question 5: The number of independently owned banks has risen in the United States over the last
decade.
Answer: False
Question 6: Money-center banks usually service local communities, towns, and cities, offering a narrow
menu of services to the public
Answer: False
Question 7: Lending institutions act as delegated monitors and can diversify and reduce their risk
exposure, resulting in increased safety for savers' funds.
Answer: True
Question 8: According to the textbook, traditional banking may be on the decline.
Answer: True
Question 9: Convergence refers to the fact that the number of bank mergers has increased in recent
years.
Answer: False
Page 1
, Question 10: Banks which offer virtually all financial services are known as universal banks.
Answer: True
Question 11: Banks have now expanded their service offerings into providing investment banking,
insurance protection, financial planning, and other services rather than restricting themselves to
traditional financial
Answer: True
Question 12: Federal Reserve Act authorized the creation of the Federal Deposit Insurance
Corporation
Answer: False
Question 13: In the United States, fixed fees charged for deposit insurance, regardless of how risky a
bank is, led to a problem known as moral hazard.
Answer: True
Question 14: The Bank Merger Act and its amendments require that Bank Holding Companies be
under the jurisdiction of the Federal Reserve.
Answer: False
Question 15: National banks cannot merge without the prior approval of the Comptroller of the
Currency.
Answer: True
Question 16: The Truth in Lending (or Consumer Credit Protection) Act was passed by the U.S.
Congress to outlaw discrimination in providing bank services to the public.
Answer: False
Question 17: The federal law that states individuals and families cannot be denied a loan merely
because of their age, sex, race, national origin, or religious affiliation is known as the Competitive
Equality in Banking
Answer: False
Question 18: Under the terms of the 1994 Riegle-Neal Interstate Banking and Branching Efficiency Act,
adequately capitalized and managed bank holding companies can acquire a bank anywhere inside the
United States.
Answer: True
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Questions with Correct Answers (Grade A+)
Question 1: Nonbank financial-service institutions can offer deposits to the public, but these deposits
are not eligible for insurance coverage by the FDIC.
Answer: False
Question 2: According to the textbook, the largest banks tend to offer the widest range of services of
any financial service firm today.
Answer: True
Question 3: The role performed by banks in the economy in which they transform savings into credit is
known as the intermediation role.
Answer: True
Question 4: The role performed by banks in which they guarantee to make payments on behalf of their
customers when those customers are unable to pay a debt obligation is known as the guarantor role.
Answer: True
Question 5: The number of independently owned banks has risen in the United States over the last
decade.
Answer: False
Question 6: Money-center banks usually service local communities, towns, and cities, offering a narrow
menu of services to the public
Answer: False
Question 7: Lending institutions act as delegated monitors and can diversify and reduce their risk
exposure, resulting in increased safety for savers' funds.
Answer: True
Question 8: According to the textbook, traditional banking may be on the decline.
Answer: True
Question 9: Convergence refers to the fact that the number of bank mergers has increased in recent
years.
Answer: False
Page 1
, Question 10: Banks which offer virtually all financial services are known as universal banks.
Answer: True
Question 11: Banks have now expanded their service offerings into providing investment banking,
insurance protection, financial planning, and other services rather than restricting themselves to
traditional financial
Answer: True
Question 12: Federal Reserve Act authorized the creation of the Federal Deposit Insurance
Corporation
Answer: False
Question 13: In the United States, fixed fees charged for deposit insurance, regardless of how risky a
bank is, led to a problem known as moral hazard.
Answer: True
Question 14: The Bank Merger Act and its amendments require that Bank Holding Companies be
under the jurisdiction of the Federal Reserve.
Answer: False
Question 15: National banks cannot merge without the prior approval of the Comptroller of the
Currency.
Answer: True
Question 16: The Truth in Lending (or Consumer Credit Protection) Act was passed by the U.S.
Congress to outlaw discrimination in providing bank services to the public.
Answer: False
Question 17: The federal law that states individuals and families cannot be denied a loan merely
because of their age, sex, race, national origin, or religious affiliation is known as the Competitive
Equality in Banking
Answer: False
Question 18: Under the terms of the 1994 Riegle-Neal Interstate Banking and Branching Efficiency Act,
adequately capitalized and managed bank holding companies can acquire a bank anywhere inside the
United States.
Answer: True
Page 2
