1) The modern commercial banking system began in America when the
(a) Bank of United States was chartered in New York in 1801.
(b) Bank of North America was chartered in Philadelphia in 1782.
(c) Bank of United States was chartered in Philadelphia in 1801.
(d) Bank of North America was chartered in New York in 1782.
2) A major controversy involving the banking industry in its early years was
(a) whether banks should both accept deposits and make loans or whether these functions should
be separated into different institutions.
(b) whether the federal government or the states should charter banks.
(c) what percent of deposits banks should hold as fractional reserves.
(d) whether banks should be allowed to issue their own bank notes.
3) The government institution that has responsibility for the amount of money and credit
supplied in the economy as a whole is the
(a) central bank.
(b) commercial bank.
(c) bank of settlement.
(d) monetary fund.
4) Because of the abuses by state banks and the clear need for a central bank to help the federal
government raise funds during the War of 1812, Congress created the
(a) Bank of United States in 1812.
(b) Bank of North America in 1814.
(c) Second Bank of the United States in 1816.
(d) Second Bank of North America in 1815.
5) The Second Bank of the United States was denied a new charter by
(a) President Andrew Jackson.
(b) Vice President John Calhoun.
(c) President Benjamin Harrison.
(d) President John Q. Adams.
6) To eliminate the abuses of the state-chartered banks, the _____ created a new banking system
of federally chartered banks, supervised by the _____.
(a) National Bank Act of 1863; Office of the Comptroller of the Currency
(b) Federal Reserve Act of 1863; Office of the Comptroller of the Currency
(c) National Bank Act of 1863; Office of Thrift Supervision
(d) Federal Reserve Act of 1863; Office of Thrift Supervision
7) Although the National Bank Act of 1863 was designed to eliminate state-chartered banks by
imposing a prohibitive tax on banknotes, these banks have been able to stay in business by
(a) issuing credit cards.
(b) ignoring the regulations.
(c) issuing deposits.
(d) branching into other states.
8) The belief that bank failures were regularly caused by fraud or the lack of sufficient bank
capital explains, in part, the passage of
(a) the National Bank Charter Amendments of 1918.
(b) the Garn-St. Germain Act of 1982.
(c) the National Bank Act of 1863.
(d) none of the above.
9) Before 1863,
(a) banks acquired funds by issuing bank notes.
(b) banks were chartered by state banking commissions.
(c) federally-chartered banks had regulatory advantages not granted to state-chartered banks.
(d) all of the above.
(e) only (a) and (b) of the above.
10) Before 1863,
(a) federally-chartered banks had regulatory advantages not granted to state-chartered banks.
(b) the number of federally-chartered banks grew at a much faster rate than at any other time
since the end of the Civil War.
(c) banks acquired funds by issuing bank notes.
(d) all of the above.
11) Before 1863,
(a) the Federal Reserve System regulated only federally-chartered banks.
(b) the Comptroller of the Currency regulated both state and federally-chartered banks.
(c) the number of federally-chartered banks grew at a much faster rate than at any other time
since the end of the Civil War.
(d) none of the above.
12) The National Bank Act of 1863, and subsequent amendments to it,
(a) created a banking system of federally-chartered banks.
(b) established the Office of the Comptroller of the Currency.
(c) broadened the regulatory powers of the Federal Reserve.
(d) did all of the above.
(e) did only (a) and (b) of the above.
13) The regulatory system that has evolved in the United States whereby banks are regulated at
the state level, the national level, or both, is known as a
(a) bilateral regulatory system.
(b) tiered regulatory system.
(c) two-tiered regulatory system.
(d) dual banking system.
14) Today the United States has a dual banking system in which banks supervised by the _____
and by the _____ operate side by side.
(a) federal government; municipalities
(b) state governments; municipalities
(c) federal government; states
(d) municipalities; states
15) The U.S. banking system is considered to be a dual system because
(a) banks offer both checking and savings accounts.
(b) it actually includes both banks and thrift institutions.
(c) it is regulated by both state and federal governments.
(d) it was established before the Civil War, requiring separate regulatory bodies for the North
and South.
(e) all of the above.
16) The Federal Reserve Act of 1913 required that
(a) state banks be subject to the same regulations as national banks.
(b) national banks establish branches in the cities containing Federal Reserve banks.
(c) national banks join the Federal Reserve System.
(d) all of the above be done.
17) Which bank regulatory agency has the sole regulatory authority over bank holding
companies?
(a) The FDIC
(b) The Comptroller of the Currency
(c) The FHLBS
(d) The Federal Reserve System
18) State banks that are not members of the Federal Reserve System are most likely to be
examined by the
(a) Federal Reserve System.
(b) FDIC.
(c) FHLBS.
(d) Comptroller of the Currency.
19) The Federal Reserve Act required all _____ banks to become members of the Federal
Reserve System, while _____ banks could choose to become members of the system.
(a) state; national
(b) state; municipal
(c) national; state
(d) national; municipal
20) Probably the most significant factor explaining the drastic drop in the number of bank
failures since the Great Depression has been
(a) the creation of the FDIC.
(b) rapid economic growth since 1941.
(c) the employment of new procedures by the Federal Reserve.
(d) better bank management.
21) Which regulatory body charters national banks?
(a) The Federal Reserve
(b) The FDIC
(c) The Comptroller of the Currency
(d) None of the above
22) Bank regulatory agencies include
(a) the Comptroller of the Currency.
(b) the Federal Reserve System.
(c) the Federal Deposit Insurance Corporation.
(d) all of the above.
(e) both (a) and (b) of the above.
23) With the creation of the Federal Deposit Insurance Corporation, member banks of the
Federal Reserve System _____ to purchase FDIC insurance for their depositors, while nonmember commercial banks _____ to buy deposit insurance.
(a) could choose; were required
(b) could choose; were given the option
(c) were required, could choose
(d) were required; were required
24) With the creation of the Federal Deposit Insurance Corporation,
(a) member banks of the Federal Reserve System were given the option to purchase FDIC
insurance for their depositors, while non-member commercial banks were required to buy
deposit insurance.
(b) member banks of the Federal Reserve System were required to purchase FDIC insurance for
their depositors, while non-member commercial banks could choose to buy deposit insurance.
(c) both member and non-member banks of the Federal Reserve System were required to
purchase FDIC insurance for their depositors.
(d) both member and non-member banks of the Federal Reserve System could choose, but were
not required, to purchase FDIC insurance for their depositors.
25) The Glass-Steagall Act, before its repeal in 1999,
(a) prohibited commercial banks from issuing equity to finance bank expansion.
(b) prohibited commercial banks from engaging in underwriting and dealing of corporate
securities.
(c) prohibited commercial banks from selling new issues of government securities.
(d) prohibited commercial banks from purchasing any debt securities.
26) Before it was repealed in 1999, the Glass-Steagall Act prohibited
(a) commercial banks from engaging in underwriting and dealing in corporate securities.
(b) investment banks from engaging in commercial banking activities.
(c) commercial banks from selling new issues of government securities.
(d) all of the above.
(e) only (a) and (b) of the above.
27) The legislation that separated investment banking from commercial banking until its repeal
in 1999 is known as the:
(a) National Bank Act of 1863.
(b) Federal Reserve Act of 1913.
(c) Glass-Steagall Act.
(d) McFadden Act.
28) Which of the following statements concerning bank regulation in the United States are true?
(a) The Office of the Comptroller of the Currency has the primary responsibility for the 4000
national banks.
(b) The Federal Reserve and the state banking authorities jointly have responsibility for the 1000
state banks that are members of the Federal Reserve System.
(c) The Fed has sole regulatory responsibility over bank holding companies.
(d) All of the above are true.
(e) Only (a) and (b) of the above are true.
29) Which of the following statements concerning bank regulation in the United States are true?
(a) The Office of the Comptroller of the Currency has the primary responsibility for state banks
that are members of the Federal Reserve System.
(b) The Federal Reserve and the state banking authorities jointly have responsibility for the 1000
state banks that are members of the Federal Reserve System.
(c) The Office of the Comptroller of the Currency has sole regulatory responsibility over bank
holding companies.
(d) All of the above are true.
(e) Only (a) and (b) of the above are true.
30) Which of the following are important factors in determining the degree and timing of
financial innovation?
(a) Changes in technology
(b) Changes in market conditions
(c) Changes in regulation
(d) All of the above
(e) Only (a) and (b) of the above
1-b
2-b
14-c
26-e
3-a
15-c
27-c
4-c
16-c
28-d
5-a
17d
29-b
6-a
18-b
30-d
7-c
19-c
8-c
20-a
9-e
21-c
10-c
22-d
11-d
23-c
12-e
24-b
13-d
25-b
1 __________ is concerned with the acquisition, financing, and management of assets with some
overall goal in mind.
a.
b.
c.
d.
Financial management
Profit maximization
Agency theory
Social responsibility
2 Jensen and Meckling showed that __________ can assure themselves that the __________ will
make optimal decisions only if appropriate incentives are given and only if the __________ are
monitored.
a.
b.
c.
d.
principals; agents; agents
agents; principals; principals
principals; agents; principals
agents; principals; agents
3 __________ is concerned with the maximization of a firm's earnings after taxes.
a.
b.
c.
d.
Shareholder wealth maximization
Profit maximization
Stakeholder maximization
EPS maximization
4 What is the most appropriate goal of the firm?
a.
b.
c.
d.
Shareholder wealth maximization.
Profit maximization.
Stakeholder maximization.
EPS maximization.
5 Which of the following statements is correct regarding profit maximization as the primary goal
of the firm?
a. Profit maximization considers the firm's risk level.
b. Profit maximization will not lead to increasing short-term profits at the expense of
lowering expected future profits.
c. Profit maximization does consider the impact on individual shareholder's EPS.
d. Profit maximization is concerned more with maximizing net income than the
stock price.
6 __________ is concerned with the branch of economics relating the behavior of principals and
their agents.
a.
b.
c.
d.
Financial management
Profit maximization
Agency theory
Social responsibility
7 A concept that implies that the firm should consider issues such as protecting the consumer,
paying fair wages, maintaining fair hiring practices, supporting education, and considering
environmental issues.
a. Financial management
b. Profit maximization
c. Agency theory
d. Social responsibility
8 Which of the following is not normally a responsibility of the treasurer of the modern
corporation but rather the controller?
a.
b.
c.
d.
Budgets and forecasts
Asset management
Investment management
Financing management
9 The __________ decision involves determining the appropriate make-up of the right-hand side
of the balance sheet.
a.
b.
c.
d.
asset management
financing
investment
capital budgeting
10 To whom does the Treasurer most likely report?
a.
b.
c.
d.
Chief Financial Officer.
Vice President of Operations.
Chief Executive Officer.
Board of Directors.
11 The authors of your textbook suggest that you need to understand financial management even
if you have no intention of becoming a financial manager. One reason is that the successful
manager of the not-too-distant future will need to be much more of a __________ who has the
knowledge and ability to move not just vertically within an organization but horizontally as well.
Developing __________ will be the rule, not the exception.
a.
b.
c.
d.
specialist; specialties
generalist; general business skills
technician; quantitative skills
team player; cross-functional capabilities
12 The __________ decision involves a determination of the total amount of assets needed, the
composition of the assets, and whether any assets need to be reduced, eliminated, or replaced.
a.
b.
c.
d.
asset management
financing
investment
accounting
13 How are earnings per share calculated?
a. Use the income statement to determine earnings after taxes (net income) and
divide by the previous period's earnings after taxes. Then subtract 1 from the
previously calculated value.
b. Use the income statement to determine earnings after taxes (net income) and
divide by the number of common shares outstanding.
c. Use the income statement to determine earnings after taxes (net income) and
divide by the number of common and preferred shares outstanding.
d. Use the income statement to determine earnings after taxes (net income) and
divide by the forecasted period's earnings after taxes. Then subtract 1 from the
previously calculated value.
14 According to the text's authors, what is the most important of the three financial management
decisions?
a.
b.
c.
d.
Asset management decision.
Financing decision.
Investment decision.
Accounting decision.
15 The __________ decision involves efficiently managing the assets on the balance sheet on a
day-to-day basis, especially current assets.
a.
b.
c.
d.
asset management
financing
investment
accounting
16 Which of the following is not a perquisite (perk)?
a.
b.
c.
d.
Company-provided automobile.
Expensive office.
Salary.
Country club membership.
17 Which of the following is not normally a responsibility of the controller of the modern
corporation?
a.
b.
c.
d.
Budgets and forecasts.
Asset management.
Financial reporting to the IRS.
Cost accounting.
18 All constituencies with a stake in the fortunes of the company are known as __________.
a.
b.
c.
d.
shareholders
stakeholders
creditors
customers
19 Which of the following statements is not correct regarding earnings per share (EPS)
maximization as the primary goal of the firm?
a.
b.
c.
d.
EPS maximization ignores the firm's risk level.
EPS maximization does not specify the timing or duration of expected EPS.
EPS maximization naturally requires all earnings to be retained.
EPS maximization is concerned with maximizing net income.
20 __________ is concerned with the maximization of a firm's stock price.
a.
b.
c.
d.
Shareholder wealth maximization
Profit maximization
Stakeholder welfare maximization
EPS maximization
1-a
2-a
14-c
3-b
15-a
4-a
16-c
5-d
17-b
6-c
18-b
7-d
19-d
8-a
20-a
9-b
10-a
11-d
12-c
13-c
1 Discuss the social purpose and organization of health care insurance.
Moral hazard by insurance companies can result in:
a.
b.
c.
d.
overutilization of health insurance.
risk pooling.
community rating.
adverse selection.
2 Define and relate the basic features of an insurance contract.
A person injured in a motor vehicle accident will have health care expenses paid by:
a.
b.
c.
d.
social insurance programs.
auto insurance.
workers compensation insurance.
employment- based insurance.
3 Describe insurance contracts using three methods of classification.
a. By Sponsorship
1. private insurance
2. self-insurance
3. direct contracting
b. By Method of Cost Sharing
1. indemnity
2. service benefit plans
c. By Covered Events/Services
1. long-term care insurance
2. workers’ compensation
3. casualty insurance
Payment of the provider by the patient with subsequent reimbursement of the patient by the
insurance company characterizes the ______________ form of insurance.
a.
b.
c.
d.
direct contracting
indemnity
service benefit plan
self-insurance
4 Which of the following characteristics/situations qualifies a patient for benefits under a long
term care insurance contract?
a.
b.
c.
d.
workplace injury
motor vehicle accident
limitation in ADL function
recent hospitalization
5 Discuss the rationale for the regulation of health care insurance markets.
Which of the following laws requires that employers offer continuation of health care insurance
after a person leaves employment?
a.
b.
c.
d.
1-d
2-b
ERISA
HIPAA
COBRA
state insurance statut
3-b
4-c
5-c
1 Organizational culture is best explained as organizational
A)
Personality
B)
Hierarchy
C)
Reporting relationships
D)
Background
E)
Management style
2 A good project management system provides for defining the interface between the project
team and the organization in all the following areas except
A)
Authority
B)
Allocation of resources
C)
Development of project team members
D)
Integration of the project into the organization
E)
All of these are provided
3 Which of the following is an advantage of a functional project management organization?
A)
Maximum flexibility in the use of staff
B)
Good integration across functional units
C)
Shorter project duration
D)
Strong motivation of project team members
E)
All of these are advantages
4 MegaComputers, Inc. has assigned a project manager for each of the five new-product teams.
The managers as well as the project team members work on the projects on a full-time basis. The
structure being used is ________ organization.
A)
Functional
B)
Balanced matrix
C)
Weak matrix
D)
Strong matrix
E)
Project
5 Elizabeth is considering how to structure a project team that will not directly disrupt ongoing
operations. The project needs to be done quickly and a high level of motivation will be needed in
order to do that. For this situation, the ______ organization would be the best choice.
A)
Functional
B)
Balanced matrix
C)
Weak matrix
D)
Strong matrix
E)
Project
6 A project management system provides a framework for launching and implementing project
activities within a ______ organization.
A)
Matrix
B)
Balanced
C)
Weak
D)
Sponsor
E)
Parent
7 In which of the following is the balance of authority strongly in favor of the functional
managers?
A)
Weak matrix
B)
Balanced matrix
C)
Strong matrix
D)
Strong
E)
Both C and D are correct
8 Matrix management violates the management principle of
A)
Span of control
B)
Unity of command
C)
Parity principle
D)
Empowerment
E)
All of these management principles
9 The project structure that is ranked as least effective is _______ organization.
A)
Functional
B)
Balanced matrix
C)
Weak matrix
D)
Strong matrix
E)
Project
10 From the list below, which is not a primary characteristic of organization culture?
A)
Control
B)
Team emphasis
C)
History
D)
Conflict tolerance
E)
Risk tolerance
11 Who is responsible for determining how tasks will be done in a matrix project management
structure?
A)
The functional manager
B)
The project manager
C)
Both are responsible
D)
This is no pattern of who takes responsibility
E)
None of these are true
12 The Macintosh development team at Apple is a good example of what kind of project
structure?
A)
Project
B)
Balanced Matrix
C)
Project Matrix
D)
Functional Matrix
E)
Functional
13 The Organizational Culture Diagnosis Worksheet classifies cultural characteristics into all of
the following except:
A)
Physical characteristics
B)
Public documents
C)
Behavior
D)
Folklore
E)
Ethics
14 Which of the following is not one of the typical forms of a project management office?
A)
Command center
B)
Control tower
C)
Resource pool
D)
Weather station
E)
All of these are typical forms of a project management office
15 Which of the following cultural characteristics relates to the degree to which management
focuses on outcomes rather than on techniques and processes used to achieve those results?
1-a
A)
Risk tolerance
B)
Reward criteria
C)
Conflict tolerance
D)
Means versus end orientation
E)
Open-systems focus
2-c
14-a
3-b
15-d
4-a
5-d
6-c
7-d
8-a
1. Bancassurance is a relationship between Bank and–
a.
Education
b.
Insurance Company
c.
Employee
d.
Customer
e.
All of these
2. BIM stands for–
a.
Bank Insurance Model
b.
Book In Management
c.
Bank In Money
d.
Bank Investment Model
e.
All of these
3. Effective Communication is–
9-b
10-c
11-a
12-a
13-e
a.
Good Vocabulary
b.
A sine–qua–non for marketing
c.
Not required of demand exceeds supply
d.
All of these
e.
None of these
4. Which is not a part of 7 ps of marketing?
a.
Price
b.
Policy
c.
Product
d.
People
e.
Process
5. Market Plan can be fora.
A brand
b.
2. A product
c.
3. Product line
d.
4. All of these
e.
5. None of these
6. Solid marketing strategy is the fundation of a–
a.
Sales
b.
Budget
c.
Well–written marketing plan
d.
Market
e.
All of these
7. Which is/are promotional content?
a.
Sales Promotion
b.
Branding
c.
Direct Marketing
d.
Advertising
e.
All of these
8. Marketing strategy means–
a.
To introduce in sales promotion scheme
b.
Population
c.
Perseverance
d.
Demands
e.
Networth
9. Customisation means–
a.
Making Few change according to client requirement to an already existing product
b.
Test
c.
Production
d.
Costing
e.
All of these
10. Marketing should be resorted–
a.
Only among rich person
b.
Depends on income
c.
Only in crowded areas
d.
Depends on the product
e.
Only among the poor
Ans. 1 to 10
1. b
2. a
3. b
4. c
5. d
6. c
7. c
8. a
9. a
10. d