Question 1

The major expenses of a finance company are salaries and loan losses.

Accepted Answer

A) True 
 B)False

Question 2

The major asset of thrift institutions is ______ ; ______ are the primary source of funds.

Accepted Answer

A)   home mortgages; small denomination deposits
B)   commercial mortgages; large denominations deposits
C)   home mortgages; large denomination deposits
D)   multifamily home mortgages; small denomination depositsE) A) and D)
F) All of the above

Question 3

When comparing high performing with low-performing thrifts, low-performing thrifts tend to have fewer:

Accepted Answer

A)   intangible assets.
B)   repossessed properties.
C)   high-yield securities.
D)   residential mortgages.E) A) and B)
F) A) and C)

Question 4

The thrift crisis of the 1980s was caused by a combination of unsound lending practices and inadequate interest rate risk management.

Accepted Answer

A) True 
 B)False

Question 5

The U.S. Central Credit Union is a principal regulator of credit unions.

Accepted Answer

A) True 
 B)False

Question 6

Mortgages remain the most important asset of savings institutions.

Accepted Answer

A) True 
 B)False

Question 7

Federal Home Loan Banks were disbanded year s ago.

Accepted Answer

A) True 
 B)False

Question 8

The sale of mortgages would offer the thrift institution all of the following except:

Accepted Answer

A)   a source of liquidity from the mortgage portfolio.
B)   a source of interest income.
C)   an opportunity to reduce a high negative GAP position.
D)   an opportunity to make additional mortgage loans.E) A) and D)
F) B) and C)

Question 9

A purpose of the FSLIC today is to:

Accepted Answer

A)   give financial historians something to study.
B)   insure federal S&Ls.
C)   regulate the capital position of S&Ls.
D)   monitor the activities of the 12 FHLBs.E) None of the above
F) A) and B)

Question 10

Which of the following will definitely increase an S&L's net worth, all else equal?

Accepted Answer

A)   a reduced GAP position
B)   conversion from stock to mutual charter
C)   sale of preferred stock
D)   increased reserve for loan lossesE) B) and C)
F) None of the above

Question 11

Credit risk may be reduced by selling credit life insurance to credit union members.

Accepted Answer

A) True 
 B)False

Question 12

Thrifts assume interest rate risk because maturities of their liabilities and assets are typically unmatched.

Accepted Answer

A) True 
 B)False

Question 13

Earnings of the S&L industry suffered in the 1980s from both maturity imbalances and

Accepted Answer

A)   loan losses related to new asset powers granted in 1980.
B)   high, sustained interest rates.
C)   the high rates paid on NOW accounts.
D)   higher yields from consumer credit card loans.E) A) and B)
F) A) and C)

Question 14

The Office of Thrift Supervision and the Resolution Trust Corporation were created by

Accepted Answer

A)   FIRRE Act of 1989.
B)   FDIC Improvement Act of 1991.
C)   Garn-St. Germain Act of 1982.
D)   DIDMCA Act of 1980.E) C) and D)
F) A) and B)

Question 15

Finance companies borrow in large amounts, lend in small amounts.

Accepted Answer

A) True 
 B)False

Question 16

The regulatory agency most directly concerned with supervising thrifts is the

Accepted Answer

A)   FHLBB.
B)   OTS.
C)   OCC.
D)   Fed.E) None of the above
F) A) and C)

Question 17

Almost all thrift financial institutions are insured by _________ deposit insurance.

Accepted Answer

A)   state
B)   federal
C)   private
D)   groupE) B) and D)
F) C) and D)

Question 18

S&Ls were originally established to take advantage of a tax loophole.

Accepted Answer

A) True 
 B)False

Question 19

The Office of Thrift Supervision does all the following except

Accepted Answer

A)   examines federally chartered S&L's.
B)   administers the Savings Association Insurance Fund (SAIF) .
C)   charters federal S&Ls.
D)   supervises S&L holding companies.E) A) and C)
F) A) and D)

Question 20

Credit union large certificates of indebtedness, $100,000 and above, are insured by

Accepted Answer

A)   NCUSIF.
B)   FDIC.
C)   SAIF.
D)   none of the aboveE) A) and C)
F) B) and C)

Exam 16: Thrift Institutions and Finance Companies

Which of the following will definitely increase an S&L's net worth, all else equal?

Correct AnswerverifiedShow Answer

The regulatory agency most directly concerned with supervising thrifts is the

Correct AnswerverifiedShow Answer

The Office of Thrift Supervision and the Resolution Trust Corporation were created by

Correct AnswerverifiedShow Answer

The thrift crisis of the 1980s was caused by a combination of unsound lending practices and inadequate interest rate risk management.

Correct AnswerverifiedShow Answer

Mortgages remain the most important asset of savings institutions.

Correct AnswerverifiedShow Answer

The sale of mortgages would offer the thrift institution all of the following except:

Correct AnswerverifiedShow Answer

Earnings of the S&L industry suffered in the 1980s from both maturity imbalances and

Correct AnswerverifiedShow Answer

The U.S. Central Credit Union is a principal regulator of credit unions.

Correct AnswerverifiedShow Answer

Federal Home Loan Banks were disbanded year s ago.

Correct AnswerverifiedShow Answer

The major expenses of a finance company are salaries and loan losses.

Correct AnswerverifiedShow Answer

Finance companies borrow in large amounts, lend in small amounts.

Correct AnswerverifiedShow Answer

Credit risk may be reduced by selling credit life insurance to credit union members.

Correct AnswerverifiedShow Answer

A purpose of the FSLIC today is to:

Correct AnswerverifiedShow Answer

The Office of Thrift Supervision does all the following except

Correct AnswerverifiedShow Answer

When comparing high performing with low-performing thrifts, low-performing thrifts tend to have fewer:

Correct AnswerverifiedShow Answer

Credit union large certificates of indebtedness, $100,000 and above, are insured by

Correct AnswerverifiedShow Answer

S&Ls were originally established to take advantage of a tax loophole.

Correct AnswerverifiedShow Answer

Almost all thrift financial institutions are insured by _________ deposit insurance.

Correct AnswerverifiedShow Answer

Thrifts assume interest rate risk because maturities of their liabilities and assets are typically unmatched.

Correct AnswerverifiedShow Answer

The major asset of thrift institutions is ______ ; ______ are the primary source of funds.

Correct AnswerverifiedShow Answer

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The major asset of thrift institutions is ; are the primary source of funds.

Correct Answer
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