金融市场与机构(第六版)测试银行ch194755.pdf

1 Financial Markets and Institutions,6e(Mishkin/Eakins)Chapter 19 Savings Associations and Credit Unions 19.1 Multiple Choice 1)Savings banks A)were first established in Scotland and England.B)were established to encourage saving by the poor.C)were very conservative with their funds,placing most of them in commercial banks.D)all of the above.E)only A and B of the above.Answer:D Question Status:Previous Edition 2)Which of the following statements about mutual savings banks are true?A)There are currently under 200 mutual savings banks in the United States.B)Most mutual savings banks are federally-chartered.C)Both A and B.D)None of the above.Answer:D Question Status:Previous Edition 3)Which of the following statements concerning the mutual form of ownership of savings banks are true?A)The mutual form of ownership accentuates the principal-agent problem that exists in corporations.B)More capital is available,contributing to the safety of mutual savings banks compared to other banking organizations.C)Managers of mutual savings banks are more risk averse than in the corporate form,because the value of their ownership does not increase if the firm does well.D)All of the above are true.E)Only A and B of the above are true.Answer:D Question Status:Previous Edition 4)Savings and loan associations A)were established by Congress to encourage home ownership.B)initially were not permitted to accept demand deposits.C)held about 85 percent of their assets in the form of mortgages prior to the Great Depression.D)all of the above.E)only A and B of the above.Answer:D Question Status:Previous Edition 2 5)Savings and loans associations A)initially were allowed to attract funds by offering savings accounts that paid a slightly higher interest rate than that offered by commercial banks.B)held about 85 percent of their total assets as mortgages prior to the Great Depression.C)did not weather the Great Depression well,as thousands of S&Ls failed in the 1930s.D)all of the above.E)only A and B of the above.Answer:D Question Status:Previous Edition 6)Thrifts A)fueled the home-building boom from 1934-1978.B)suffered in the 1970s as inflation rose above deposit interest rate ceilings.C)have grown in importance in attracting deposits relative to commercial banks since 1980.D)all of the above.E)only A and B of the above.Answer:E Question Status:Previous Edition 7)Thrifts suffered problems in the 1970s as A)market interest rates rose above the rates thrifts could pay on deposits and savings accounts.B)thrift customers moved their funds from thrifts to money market mutual funds.C)government regulators severely limited the scope of activities that thrifts could undertake to grow their way out of trouble.D)all of the above occurred.E)only A and B of the above occurred.Answer:E Question Status:Previous Edition 8)In the early stages of the 1980s banking crisis,financial institutions were especially hurt by A)the sharp increases in interest rates from late 1979 until 1981.B)the severe recession in 1981-82.C)the sharp decline in the price level from mid-1980 to early 1983.D)all of the above.E)only A and B of the above.Answer:E Question Status:Previous Edition 9)In the early stages of the 1980s banking crisis,financial institutions were especially harmed by A)declining interest rates from late 1979 until 1981.B)the severe recession in 1981-82.C)the disinflation from mid-1980 to early 1983.D)all of the above.Answer:B Question Status:Previous Edition 3 10)Savings and loans lost a total of$10 billion in 1981-1982 due to a combination of rising interest rates in 1979-1981 and A)the recession of 1981-1982 that reduced real estate prices enough to cause significant loan defaults.B)the regulatory restrictions enacted by Congress in 1981 and 1982.C)the loss of market share to commercial banks that were allowed to compete directly with thrifts in the real estate market.D)the acceleration of inflation in 1981-1982 that caused thrifts to lose additional funds to money market mutual funds.Answer:A Question Status:Previous Edition 11)In the 1980s,thrift institutions,which had been almost entirely restricted to making loans for home mortgages only,were allowed by regulators to A)finance acquisitions in commercial real estate.B)extend consumer loans.C)purchase junk bonds.D)do all of the above.E)do only A and B of the above.Answer:D Question Status:Previous Edition 12)The government granted thrifts greater powers in the early 1980s in hopes of turning the industrys problems around.These powers A)required greater expertise in managing risk than many thrift managers possessed.B)encouraged thrifts to expand lending rapidly in real estate,increasing their exposure to risk.C)expanded the scope and complexity of thrift lending activities that went beyond what regulators could effectively monitor,given their limited resources.D)did all of the above.E)did only A and B of the above.Answer:D Question Status:Previous Edition 13)When nearly half of the S&Ls in the United States had a negative net worth and were thus insolvent by the end of 1982,regulators adopted a policy of _,which amounted to _ capital requirements.A)regulatory forbearance;raising B)regulatory forbearance;lowering C)regulatory stringency;raising D)regulatory stringency;lowering Answer:B Question Status:Previous Edition 4 14)The policy of _ exacerbated _ problems as savings and loans took on increasingly huge levels of risk on the slim chance of returning to solvency.A)regulatory forbearance;moral hazard B)regulatory forbearance;adverse selection C)regulatory stringency;moral hazard D)regulatory stringency;adverse selection Answer:A Question Status:Previous Edition 15)Which of the following reasons explain why federal regulators adopted a policy of regulatory forbearance toward insolvent financial institutions in the early 1980s?A)The FSLIC lacked sufficient funds to cover insured deposits in the insolvent S&Ls.B)The regulators were reluctant to close the firms that justified their regulatory existence.C)The Federal Home Loan Bank Board and the FSLIC were reluctant to admit that they were in over their heads with problems.D)All of the above.E)Only A and B of the above.Answer:D Question Status:Previous Edition 16)The policy of regulatory forbearance A)meant delaying the closing of zombie S&Ls as their losses mounted during the 1980s.B)benefited zombie S&Ls at the expense of healthy S&Ls,as healthy institutions lost deposits to insolvent institutions.C)contributed to declining profitability in the S&L industry and an increase in the number of zombie S&Ls.D)all of the above.E)only A and B of the above.Answer:D Question Status:Previous Edition 17)The policy of regulatory forbearance A)meant delaying the closing of zombie S&Ls as their losses mounted during the 1980s.B)benefited zombie S&Ls at the expense of healthy S&Ls,as healthy institutions lost deposits to insolvent institutions.C)had the advantage of benefiting healthy S&Ls by giving them the opportunity to attract deposits that began to leave the zombie S&Ls.D)both A and B of the above.E)both A and C of the above.Answer:D Question Status:Previous Edition 5 18)Which of the following are reasons that explain why regulators pursued a policy of regulatory forbearance toward thrifts in the early 1980s?A)Regulators knew that the FSLIC did not have sufficient funds to close insolvent S&Ls and pay off their depositors.B)Regulators were probably too close to the people they were supposed to be regulating to close down thrifts and put them out of business.C)Regulators preferred to sweep the problems that thrifts were suffering under the rug in the hope that they would go away as the economy improved.D)All of the above explain regulatory forbearance.E)Only A and B of the above explain regulatory forbearance.Answer:D Question Status:Previous Edition 19)Examples of the huge risks that zombie S&Ls undertook include A)building shopping centers in the desert.B)buying manufacturing plants to convert manure to methane.C)purchasing billions of dollars of junk bonds.D)all of the above.E)only A and B of the above.Answer:D Question Status:Previous Edition 20)Zombie S&Ls A)paid above market interest rates to attract deposits to fuel their lending boom.B)offered loans at below market interest rates to expand their lending.C)drove down the profitability of solvent S&Ls,threatening to turn them into zombies too.D)did all of the above.E)did only A and B of the above.Answer:D Question Status:Previous Edition 21)According to the text,the Competitive Equality in Banking Act of 1987 A)turned the thrift industry around by providing the necessary funds to close the zombie S&Ls.B)lowered the cost of bailing out the S&Ls by quickly closing zombie S&Ls before they could cause other thrifts to fail.C)failed to provide the funds necessary to close ailing S&Ls,and actually encouraged regulators to continue to pursue regulatory forbearance.D)did both A and B of the above.Answer:C Question Status:Previous Edition 22)The Competitive Equality in Banking Act of 1987 A)discouraged regulators from pursuing regulatory forbearance.B)directed regulators to close zombie S&Ls as quickly as administratively possible.C)encouraged regulators to continue their policy of regulatory forbearance.D)did both A and B of the above.Answer:C Question Status:Previous Edition 6 23)The Competitive Equality in Banking Act of 1987 A)provided insufficient funds to the FSLIC to close down insolvent S&Ls.B)actually directed S&L regulators to continue to pursue regulatory forbearance,further delaying the closing of insolvent S&Ls.C)created a new agency,the Resolution Trust Corporation,to manage insolvent thrifts.D)did all of the above.E)did only A and B of the above.Answer:E Question Status:Previous Edition 24)The major provisions of the Competitive Equality in Banking Act of 1987 included A)expanding the responsibilities of the FDIC,which is now the sole administrator of the federal deposit insurance system.B)establishing the Resolution Trust Corporation to manage and resolve insolvent thrifts placed in conservatorship or receivership.C)directing the Federal Home Loan Bank Board to continue to pursue regulatory forbearance.D)all of the above.E)only A and B of the above.Answer:C Question Status:Previous Edition 25)The major provisions of the Competitive Equality in Banking Act of 1987 included A)abolishing the Federal Home Loan Bank Board and the FSLIC.B)transferring the regulatory role of the Federal Home Loan Bank Board to the Office of Thrift Supervision,a bureau within the U.S.Treasury Department.C)establishing the Resolution Trust Corporation to manage and resolve insolvent thrifts placed in conservatorship or receivership.D)all of the above.E)none of the above.Answer:E Question Status:Previous Edition 26)An analysis of the political economy of the savings and loan crisis helps one to understand A)why politicians hampered the efforts of thrift regulators,cutting regulatory appropriations and encouraging regulatory forbearance.B)why thrift regulators were reluctant to admit that any problem even existed in the thrift industry.C)why thrift regulators willingly acceded to pressures placed upon them by members of Congress.D)all of the above.E)only A and B of the above.Answer:D Question Status:Previous Edition 7 27)An analysis of the political economy of the savings and loan crisis helps one to understand A)why politicians aided the efforts of thrift regulators,raising regulatory appropriations and encouraging closing of insolvent thrifts.B)why thrift regulators were quick to inform Congress of the problems that existed in the thrift industry.C)why thrift regulators willingly acceded to pressures placed upon them by members of Congress.D)all of the above.Answer:C Question Status:Previous Edition 28)The political economy of the S&L crisis shows that the principal-agent problem occurs in politics.In this instance,the agent-regulators did not act to protect the principal-taxpayers because A)regulators wanted to escape blame,hoping the situation would improve before others discovered the problem.B)regulators responded to pressure to pursue regulatory forbearance from politicians who had accepted campaign donations from owners of S&Ls.C)Congress was unwilling to allocate the necessary funds regulators needed to close insolvent S&Ls.D)all of the above.E)only A and B of the above.Answer:D Question Status:Previous Edition 29)That taxpayers were poorly served by thrift regulators in the 1980s is now quite clear.This poor performance is explained by A)regulators desire to escape blame for poor performance,leading to a perverse strategy of regulatory gambling.B)regulators incentives to accede to pressures imposed by politicians,who sought to keep regulators from imposing tough regulations on institutions that were major campaign contributors.C)Congresss unwillingness to appropriate sufficient funds to permit regulators to examine the many thrift institutions that needed monitoring.D)all of the above.E)only A and B of the above.Answer:D Question Status:Previous Edition 8 30)That taxpayers were poorly served by thrift regulators in the 1980s is now quite clear.This poor performance cannot be explained by A)regulators desire to escape blame for poor performance,leading to a perverse strategy of regulatory gambling.B)regulators incentives to accede to pressures imposed by politicians,who sought to keep regulators from imposing tough regulations on institutions that were major campaign contributors.C)Congresss dogged determination to protect taxpayers from the unsound banking practices of managers at many of the nations savings and loans.D)any of the above.Answer:C Question Status:Previous Edition 31)That several hundred S&Ls were not even examined once in the period January 1984 through June 1986 can be explained by A)Congresss unwillingness to allocate the necessary funds to thrift regulators.B)regulators reluctance to find the specific problem thrifts that they knew existed.C)prohibitions against onerous regulatory restrictions against S&Ls as mandated in the Competitive Equality in Banking Act.D)all of the above.E)only A and B of the above.Answer:A Question Status:Previous Edition 32)Bureaucratic gambling refers to A)the belief of thrift managers that they would not be audited by thrift regulators in the 1980s due to the relatively weak bureaucratic power of the regulators.B)the risk that thrift regulators took in publicizing the plight of the S&L industry in the early 1980s.C)the strategy adopted by thrift regulators of lowering capital requirements and pursuing regulatory forbearance in the 1980s in the hope that conditions in the S&L industry would improve.D)none of the above.Answer:C Question Status:Previous Edition 33)Charles Keating A)was allowed to acquire Lincoln Savings and Loan of Irvine,California,even though he had been accused of fraud by the SEC only four and a half years earlier.B)fired Lincolns conservative lending officers an