1) The modern commercial banking system began in America when the. (b) Bank of North America was chartered in Philadelphia in 1782.

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1 1) The modern commercial banking system began in America when the (a) Bank of United States was chartered in New York in (b) Bank of North America was chartered in Philadelphia in (c) Bank of United States was chartered in Philadelphia in (d) Bank of North America was chartered in New York in ) 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 (b) Bank of North America in (c) Second Bank of the United States in (d) Second Bank of North America in 1815.

2 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 (b) the Garn-St. Germain Act of (c) the National Bank Act of 1863.

3 (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.

4 (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.

5 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

6 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 (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

7 (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.

8 27) The legislation that separated investment banking from commercial banking until its repeal in 1999 is known as the: (a) National Bank Act of (b) Federal Reserve Act of (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.

9 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 3-a 4-c 5-a 6-a 7-c 8-c 9-e 10-c 11-d 12-e 13-d 14-c 15-c 16-c 17d 18-b 19-c 20-a 21-c 22-d 23-c 24-b 25-b 26-e 27-c 28-d 29-b 30-d 1 is concerned with the acquisition, financing, and management of assets with some overall goal in mind. a. Financial management b. Profit maximization c. Agency theory d. 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. principals; agents; agents b. agents; principals; principals c. principals; agents; principals d. agents; principals; agents

10 3 is concerned with the maximization of a firm's earnings after taxes. a. Shareholder wealth maximization b. Profit maximization c. Stakeholder maximization d. EPS maximization 4 What is the most appropriate goal of the firm? a. Shareholder wealth maximization. b. Profit maximization. c. Stakeholder maximization. d. 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. Financial management b. Profit maximization c. Agency theory d. 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

11 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. Budgets and forecasts b. Asset management c. Investment management d. Financing management 9 The decision involves determining the appropriate make-up of the right-hand side of the balance sheet. a. asset management b. financing c. investment d. capital budgeting 10 To whom does the Treasurer most likely report? a. Chief Financial Officer. b. Vice President of Operations. c. Chief Executive Officer. d. 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. specialist; specialties b. generalist; general business skills c. technician; quantitative skills d. team player; cross-functional capabilities

12 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. asset management b. financing c. investment d. 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. Asset management decision. b. Financing decision. c. Investment decision. d. Accounting decision. 15 The decision involves efficiently managing the assets on the balance sheet on a day-to-day basis, especially current assets. a. asset management b. financing c. investment d. accounting

13 16 Which of the following is not a perquisite (perk)? a. Company-provided automobile. b. Expensive office. c. Salary. d. Country club membership. 17 Which of the following is not normally a responsibility of the controller of the modern corporation? a. Budgets and forecasts. b. Asset management. c. Financial reporting to the IRS. d. Cost accounting. 18 All constituencies with a stake in the fortunes of the company are known as. a. shareholders b. stakeholders c. creditors d. customers 19 Which of the following statements is not correct regarding earnings per share (EPS) maximization as the primary goal of the firm? a. EPS maximization ignores the firm's risk level. b. EPS maximization does not specify the timing or duration of expected EPS. c. EPS maximization naturally requires all earnings to be retained. d. EPS maximization is concerned with maximizing net income. 20 is concerned with the maximization of a firm's stock price. a. Shareholder wealth maximization b. Profit maximization c. Stakeholder welfare maximization d. EPS maximization

14 1-a 2-a 3-b 4-a 5-d 6-c 7-d 8-a 9-b 10-a 11-d 12-c 13-c 14-c 15-a 16-c 17-b 18-b 19-d 20-a 1 Discuss the social purpose and organization of health care insurance. Moral hazard by insurance companies can result in: a. overutilization of health insurance. b. risk pooling. c. community rating. d. 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. social insurance programs. b. auto insurance. c. workers compensation insurance. d. 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.

15 a. direct contracting b. indemnity c. service benefit plan d. self-insurance 4 Which of the following characteristics/situations qualifies a patient for benefits under a long term care insurance contract? a. workplace injury b. motor vehicle accident c. limitation in ADL function d. 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. ERISA b. HIPAA c. COBRA d. state insurance statut 1-d 2-b 3-b 4-c 5-c 1 Organizational culture is best explained as organizational A) Personality B) Hierarchy C) Reporting relationships

16 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

17 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

18 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

19 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

20 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? A) Risk tolerance B) Reward criteria C) Conflict tolerance D) Means versus end orientation E) Open-systems focus 1-a 2-c 3-b 4-a 5-d 6-c 7-d 8-a 9-b 10-c 11-a 12-a 13-e 14-a 15-d 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

21 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

22 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

23 b. Depends on income c. Only in crowded areas d. Depends on the product e. Only among the poor Ans. 1 to b 2. a 3. b 4. c 5. d 6. c 7. c 8. a 9. a 10. d