FHCE 3100 MOORMAN NEWEST EXAM 2025/2026 | ACTUAL
COMPLETE ALL REAL EXAM QUESTIONS AND CORRECT
ANSWERS | ALREADY GRADED A+ | LATEST VERSION .
What is Monthly Mortgage Payments (PITI)? - ANSWER-
Principal - what you borrowed - paid to bank
Interest- cost of borrowing - paid to bank
Taxes- support of government - held in escrow account
Insurance - protection of your dwellings and contents - held in
escrow account
What is done and who is able to see the CAMEL ratings? -
ANSWER-CAMELS ratings are disclosed to bank management,
but not to the public.
If the CAMELS rating for a bank is unfavorable, regulators can
take actions like these:
Require banks to disclose unfavorable information in their
public financial statements
Issue a "cease and desist" order requiring the bank to stop
doing things that cause financial troubles and to correct
problems.
Impose fines (up to $1,000,000 per day).
,What does the Truth in Lending Act do? - ANSWER-Requires
financial institution to reveal annual percentage yield/rate, fees
charged, information about the loan balance, payment due,
total amount charged
What happens if there is a bank failure? - ANSWER-the bank
goes out of business.
Bank depositors might lose some of their funds.
Bank creditors might lose some of their investment ◦ Bank
owners lose their capital.
If a bank suffered significant losses, what might happen? -
ANSWER-the government might have to intervene to help
What are the basics of the banking crisis of the 1930s? -
ANSWER-Banks loaned out more than they had coming in
This creates inherent fragility
No problem in normal times, i.e. when people
have problem when confidence disappears
What were two reasons for the banking crisis of the 1930s? -
ANSWER-The value of bank assets/investments/holdings falls,
so assets<liabilities. in debt
(insolvent)
,Deposit outflow: A large number of depositors withdraw their
funds from the bank, exhausting the bank's cash (reserves) and
other liquid assets. (run on the bank)
What was the Great Depression unemployment rate like? -
ANSWER-The unemployment rate soared to nearly 25 percent
during 1933.
The unemployment rate was 14 percent or more every year
throughout 19311939.
What were the institutional changes that were aimed at making
the banking system less failed as a result of the bank collapse
of the 1930s and the Great
Depression? - ANSWER-Central bank as lender of last resort
Deposit insurance
Separation of commercial banking and investment banking
(Glass-Steagall Act of 1933)
What is an example of Moral Hazard? - ANSWER-I have health
and life insurance, so now I do dumb stuff like sky diving
What did people who have health and life insurance tend to do
or not do? - ANSWER-General insight: agents who are insured
will tend to take fewer
precautions to avoid the risk they are insured against
, The insurance provided by central bank and governments gave
bankers strong incentives to take more risks
To counter this, authorities have to supervise and
regulate They did this for most of the post-war
period.
What was the Banking Crisis of the 1980s? - ANSWER-savings
and loans started having problems because of bad loans
Starting in the late 1970s, banks grew fast, with lots of loans to
businesses.
Poor quality loans
Too many loans to risky firms
High cost of funds
Large share of funds borrowed from other banks
Hundreds of savings and loan associations (S&L's) and banks
failed in the 1980s and early 1990s.
What did the 80s banking crisis illustrate? - ANSWER-how
changes in the market environment and a loosening of
regulations can lead to a bank crisis. how regulations and
supervisory standards must be improved to address new
problems.
How many banks and S&Ls failed from 1980-1994? - ANSWER-
over 2900
COMPLETE ALL REAL EXAM QUESTIONS AND CORRECT
ANSWERS | ALREADY GRADED A+ | LATEST VERSION .
What is Monthly Mortgage Payments (PITI)? - ANSWER-
Principal - what you borrowed - paid to bank
Interest- cost of borrowing - paid to bank
Taxes- support of government - held in escrow account
Insurance - protection of your dwellings and contents - held in
escrow account
What is done and who is able to see the CAMEL ratings? -
ANSWER-CAMELS ratings are disclosed to bank management,
but not to the public.
If the CAMELS rating for a bank is unfavorable, regulators can
take actions like these:
Require banks to disclose unfavorable information in their
public financial statements
Issue a "cease and desist" order requiring the bank to stop
doing things that cause financial troubles and to correct
problems.
Impose fines (up to $1,000,000 per day).
,What does the Truth in Lending Act do? - ANSWER-Requires
financial institution to reveal annual percentage yield/rate, fees
charged, information about the loan balance, payment due,
total amount charged
What happens if there is a bank failure? - ANSWER-the bank
goes out of business.
Bank depositors might lose some of their funds.
Bank creditors might lose some of their investment ◦ Bank
owners lose their capital.
If a bank suffered significant losses, what might happen? -
ANSWER-the government might have to intervene to help
What are the basics of the banking crisis of the 1930s? -
ANSWER-Banks loaned out more than they had coming in
This creates inherent fragility
No problem in normal times, i.e. when people
have problem when confidence disappears
What were two reasons for the banking crisis of the 1930s? -
ANSWER-The value of bank assets/investments/holdings falls,
so assets<liabilities. in debt
(insolvent)
,Deposit outflow: A large number of depositors withdraw their
funds from the bank, exhausting the bank's cash (reserves) and
other liquid assets. (run on the bank)
What was the Great Depression unemployment rate like? -
ANSWER-The unemployment rate soared to nearly 25 percent
during 1933.
The unemployment rate was 14 percent or more every year
throughout 19311939.
What were the institutional changes that were aimed at making
the banking system less failed as a result of the bank collapse
of the 1930s and the Great
Depression? - ANSWER-Central bank as lender of last resort
Deposit insurance
Separation of commercial banking and investment banking
(Glass-Steagall Act of 1933)
What is an example of Moral Hazard? - ANSWER-I have health
and life insurance, so now I do dumb stuff like sky diving
What did people who have health and life insurance tend to do
or not do? - ANSWER-General insight: agents who are insured
will tend to take fewer
precautions to avoid the risk they are insured against
, The insurance provided by central bank and governments gave
bankers strong incentives to take more risks
To counter this, authorities have to supervise and
regulate They did this for most of the post-war
period.
What was the Banking Crisis of the 1980s? - ANSWER-savings
and loans started having problems because of bad loans
Starting in the late 1970s, banks grew fast, with lots of loans to
businesses.
Poor quality loans
Too many loans to risky firms
High cost of funds
Large share of funds borrowed from other banks
Hundreds of savings and loan associations (S&L's) and banks
failed in the 1980s and early 1990s.
What did the 80s banking crisis illustrate? - ANSWER-how
changes in the market environment and a loosening of
regulations can lead to a bank crisis. how regulations and
supervisory standards must be improved to address new
problems.
How many banks and S&Ls failed from 1980-1994? - ANSWER-
over 2900
