1. The result of the "too-big-to-fail" policy is that big banks will take on __________ risks, making failures ___________ likely.
a. fewer; less
b. greater; less
c. fewer; more
d. greater; more
2. The possibility that a borrower may engage in more risky behavior after a loan has been made best describes an example of:
a. the principal-agent problem
b. securitization
c. adverse selection
d. moral hazard
e.none of the above
3. The largest single earning asset of commercial banks in the U.S. is:
a. cash
b. Treasury securities
c. deposits
d. loans
e. commercial paper
4. The primary source of bank funds today is:
a. loans
b. borrowings
c. checkable deposits
d. nontransaction deposits
5. "Bank activities that involve trading financial instruments and the generation of income from fees-all of which affect bank profits" most likely describes:
a. collateralization
b. financial intermediation
c. moral hazard
d. off-balance-sheet activities
e. market segmentation
6. Prior to the current "financial crisis" and financial markets problem period, the most recent one during which there were significant (100 or more in a single year) numbers of bank failures and that posed the threat of "systemic risk" for the economy was (roughly relative to dates):
a. 1929 - 1934
b. 1964 - 1973
c. 1984 - 1994
d. 1996 - 2001