Question 1

Which of the following is true about credit unions versus commercial banks and savings institutions?

Accepted Answer

A)  C redit unions are less able to quickly generate additional deposits.
B)  S avings institutions and commercial banks can borrow from the Central Liquidity Facility, but credit unions cannot.
C)  S avings institutions and commercial banks are less able to quickly generate additional deposits.
D)  Credit unions have more exposure to interest rate risk.

Question 2

In general, savings institutions are larger than commercial banks.

Accepted Answer

A) True 
 B)False

Question 3

The objective of a credit union is to act as an intermediary for its members by using members' deposited funds to provide loans to other members who are in need of funds.

Accepted Answer

A) True 
 B)False

Question 4

Credit unions use the majority of their funds to invest in the stock market.

Accepted Answer

A) True 
 B)False

Question 5

Money market deposit accounts (MMDAs) are

Accepted Answer

A)  trust accounts managed by savings institutions.
B)  checking accounts that do not pay interest.
C)  accounts offered primarily by money market funds.
D)  deposit accounts offering limited checking and close-to-market interest rates.

Question 6

A savings institution owned by its depositors is a ____ savings institution.

Accepted Answer

A)  mutual
B)  stock
C)  credit
D)  closed-end

Question 7

Credit unions obtain most of their funds from

Accepted Answer

A)  issuing common stock.
B)  retained earnings.
C)  share deposits by members.
D)  issuing long-term bonds.

Question 8

Because credit unions ____ stock, they are technically owned by the ____.

Accepted Answer

A)  issue; depositors
B)  do not issue; depositors
C)  issue; stockholders
D)  do not issue; management

Question 9

The majority of maturities on consumer loans offered by credit unions are ____ term, causing income generated on their asset portfolio to be ____ to interest rate movements.

Accepted Answer

A)  long; insensitive
B)  short or medium; sensitive
C)  long; sensitive
D)  short or medium; insensitive

Question 10

The Financial Reform Act of 2010 did all of the following EXCEPT

Accepted Answer

A)  strengthened the standards required to obtain a mortgage.
B)  required more disclosures by financial institutions regarding the quality of the underlying assets when they sell mortgage-backed securities.
C)  required savings institutions to sell off any holdings of junk bonds and prohibited them from investing in junk bonds in the future.
D)  established the Consumer Financial Protection Bureau.

Question 11

Stock-owned savings institutions ____ susceptible to unfriendly takeovers. Mutual savings institutions ____ susceptible to unfriendly takeovers.

Accepted Answer

A)  are; are not
B)  are; are
C)  are not; are
D)  are not; are not

Question 12

If a savings institution's assets have a considerably longer duration than its liabilities, it can reduce its exposure to interest rate risk by

Accepted Answer

A)  reducing its proportion of assets in the short duration categories.
B)  increasing its proportion of liabilities in the short duration categories.
C)  reducing its proportion of assets in the long duration categories .
D)  reducing its proportion of assets in the short duration categories AND increasing its proportion of liabilities in the short duration categories.

Question 13

To measure ____ risk, some savings institutions measure the duration of their respective assets and liabilities.

Accepted Answer

A)  credit
B)  interest rate
C)  liquidity
D)  None of these are correct.

Question 14

The National Credit Union Share Insurance Fund (NCUSIF) requires all

Accepted Answer

A)  federally chartered credit unions to obtain insurance from the NCUSIF.
B)  state-chartered credit unions to obtain insurance from the NCUSIF.
C)  credit unions to pay a supplemental insurance premium each year.
D)  depository institutions to pay a supplemental insurance premium each year.

Question 15

According to your text, about ____ percent of credit unions are insured by the National Credit Union Share Insurance Fund.

Accepted Answer

A)  20
B)  40
C)  60
D)  90

Question 16

The National Credit Union Administration (NCUA)is responsible for regulating savings institutions.

Accepted Answer

A) True 
 B)False

Question 17

____ do NOT represent an asset of credit unions.

Accepted Answer

A)  Mortgage-backed securities
B)  Home-equity loans
C)  Automobile loans
D)  Stocks

Question 18

To manage interest rate risk, a savings institution could use

Accepted Answer

A)  fixed-rate mortgages.
B)  currency options.
C)  interest rate futures contracts.
D)  letters of credit.

Question 19

Credit unions use the majority of their funds to

Accepted Answer

A)  purchase investment securities.
B)  provide commercial real estate loans.
C)  provide small business loans to members.
D)  provide consumer loans to members.

Question 20

Savings institutions commonly measure the gap between their rate-sensitive assets and rate-sensitive liabilities in order to determine their exposure to credit risk.

Accepted Answer

A) True 
 B)False

Exam 21: Thrift Operations

Money market deposit accounts (MMDAs) are

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The majority of maturities on consumer loans offered by credit unions are ____ term, causing income generated on their asset portfolio to be ____ to interest rate movements.

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Credit unions use the majority of their funds to invest in the stock market.

Correct AnswerverifiedShow Answer

In general, savings institutions are larger than commercial banks.

Correct AnswerverifiedShow Answer

To measure ____ risk, some savings institutions measure the duration of their respective assets and liabilities.

Correct AnswerverifiedShow Answer

The objective of a credit union is to act as an intermediary for its members by using members' deposited funds to provide loans to other members who are in need of funds.

Correct AnswerverifiedShow Answer

Which of the following is true about credit unions versus commercial banks and savings institutions?

Correct AnswerverifiedShow Answer

The National Credit Union Share Insurance Fund (NCUSIF) requires all

Correct AnswerverifiedShow Answer

The National Credit Union Administration (NCUA)is responsible for regulating savings institutions.

Correct AnswerverifiedShow Answer

Savings institutions commonly measure the gap between their rate-sensitive assets and rate-sensitive liabilities in order to determine their exposure to credit risk.

Correct AnswerverifiedShow Answer

Credit unions use the majority of their funds to

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To manage interest rate risk, a savings institution could use

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Stock-owned savings institutions ____ susceptible to unfriendly takeovers. Mutual savings institutions ____ susceptible to unfriendly takeovers.

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____ do NOT represent an asset of credit unions.

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Credit unions obtain most of their funds from

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Because credit unions ____ stock, they are technically owned by the ____.

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According to your text, about ____ percent of credit unions are insured by the National Credit Union Share Insurance Fund.

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A savings institution owned by its depositors is a ____ savings institution.

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The Financial Reform Act of 2010 did all of the following EXCEPT

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If a savings institution's assets have a considerably longer duration than its liabilities, it can reduce its exposure to interest rate risk by

Correct AnswerverifiedShow Answer

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The majority of maturities on consumer loans offered by credit unions are term, causing income generated on their asset portfolio to be to interest rate movements.

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Stock-owned savings institutions susceptible to unfriendly takeovers. Mutual savings institutions susceptible to unfriendly takeovers.

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Because credit unions stock, they are technically owned by the .

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