Question 1

Which of the following statements regarding the Interstate Banking and Branching Act (IBBEA) of 1994 is false?

Accepted Answer

The IBBEA of 1994 does not allow banks to use a branch to generate deposits without considering the implications of the Community Reinvestment Act. In fact, the IBBEA specifically includes provisions to ensure that banks that engage in interstate mergers or acquisitions do not neglect their obligations under the Community Reinvestment Act.

Question 2

Which of the following insures deposits in credit unions?

Accepted Answer

The National Credit Union Share Insurance Fund (NCUSIF) is the federal fund created by Congress in 1970 to insure deposits of credit union members in NCUA-approved credit unions. The NCUSIF is administered by the National Credit Union Administration (NCUA).

Question 3

Which of the following insures deposits in credit unions?

Accepted Answer

The National Credit Union Share Insurance Fund (NCUSIF) insures deposits in credit unions, not the U.S. Treasury, the Fed, or the FDIC.

Question 4

Which of the following was set up for self-regulation by the financial futures industry?

Accepted Answer

The National Futures Association was set up for self-regulation by the financial futures industry.

Question 5

Which of the following was set up by the financial options industry for self-regulation?

Accepted Answer

The Options Clearing Corporation (OCC) was established to act as a central counterparty for options trades, ensuring the fulfillment of obligations between buyers and sellers, thereby providing a form of self-regulation within the financial options industry.

Question 6

Financial options are regulated by which government agency?

Accepted Answer

Financial options are regulated by the Securities and Exchange Commission, which is responsible for protecting investors and maintaining fair and efficient markets. The Commodity Futures Trading Commission oversees futures trading, while the Federal Trade Commission focuses on consumer protection and antitrust activities. The Options Clearing Corporation provides centralized clearing, settlement, and servicing for exchange-traded options.

Question 7

Pension funds are regulated by

Accepted Answer

The Department of Labor regulates pension funds through the Employee Retirement Income Security Act (ERISA).

Question 8

The ________________________ insures the portfolio of retail customers of brokerage firms for up to $500,000 if the brokerage firm becomes insolvent.

Accepted Answer

The Securities Investor Protection Corporation (SIPC) is a nonprofit corporation created by Congress to insure the portfolios of retail customers of brokerage firms for up to $500,000 if the brokerage firm becomes insolvent. The Securities and Exchange Commission (SEC) oversees the securities industry and enforces regulations to protect investors, but does not insure investments or portfolios. The Federal Trade Commission (FTC) is responsible for promoting consumer protection and preventing anticompetitive business practices. The Federal Deposit Insurance Corporation (FDIC) insures deposits in banks and savings institutions, not investment accounts.

Question 9

The Investment Company Act of 1940 gave the Securities and Exchange Commission (SEC) regulatory control over which of the following?

Accepted Answer

The Investment Company Act of 1940 gave the SEC regulatory control over mutual funds. The Act requires mutual funds to register with the SEC and comply with certain disclosure and reporting requirements to ensure that investors are informed about the investment objectives, risks, and expenses of the funds. The Act also imposes limits on investment activities and transactions involving affiliated parties of the mutual funds.

Question 10

The Investment Company Act of 1940 gave the regulatory control over mutual funds to the

Accepted Answer

The Investment Company Act of 1940 gave the regulatory control over mutual funds to the Securities and Exchange Commission (SEC). This act set the rules and regulations for all investment companies, including mutual funds. It aims to protect investors by ensuring full disclosure of fees, expenses, and risks associated with investing in mutual funds.

Question 11

Mutual funds are regulated by the

Accepted Answer

Mutual funds are regulated by the Securities and Exchange Commission (SEC) to protect investors from fraudulent practices and ensure that they receive adequate information about the fund's strategy, risks, and fees. The SEC oversees registration, disclosure, reporting, and compliance requirements for mutual funds, as well as enforces laws that prohibit insider trading, market manipulation, and other misconduct. The Federal Reserve System (Fed) supervises banks and controls monetary policy, the Federal Deposit Insurance Corporation (FDIC) insures deposits in banks and thrifts, and the Federal Trade Commission (FTC) regulates advertising, marketing, and consumer protection.

Question 12

Insurance companies are regulated by the

Accepted Answer

Insurance companies are regulated by the insurance commissioner of the state in which they do business. This ensures that insurance companies comply with state insurance laws and regulations, and protects consumers from unfair practices by the insurance industry. The Federal Trade Commission and Securities and Exchange Commission oversee other industries, while the FDIC regulates banks.

Question 13

Trading by those who have access to information on new securities before they are made public is called which of the following?

Accepted Answer

The act of trading by individuals who have access to non-public information about a company, such as impending news, earnings, or developments, is known as insider trading. It is a form of unethical and illegal trading that can result in heavy fines and even imprisonment. The options A, B, and D are not appropriate and unrelated to insider trading.

Question 14

The Resolution Trust Corporation (RTC) was created to

Accepted Answer

The Resolution Trust Corporation (RTC) was created in 1989 to dispose of the properties of failed savings and loans (S&Ls) and help revitalize the troubled S&L industry. The RTC was responsible for selling off assets of failed S&Ls, resolving claims against failed institutions, and managing those institutions that were insolvent. The RTC effectively resolved the S&L crisis of the late 1980s and early 1990s, which had resulted in the failure of over 1,000 S&Ls and a bailout cost of over $100 billion to the taxpayers. Therefore, option D is the best choice.

Question 15

Which of the following is the agency that was in charge of the Resolution Trust Corporation (RTC)?

Accepted Answer

The FDIC (Federal Deposit Insurance Corporation) was in charge of the Resolution Trust Corporation. The RTC was created in the 1980s as a response to the savings and loan crisis to clean up and sell off failed savings and loans institutions.

Question 16

Which of the following set minimum capital requirement for the savings and loans?

Accepted Answer

The Financial Institutions Reform Recovery, and Enforcement Act of 1989 (FIRREA) set a minimum capital requirement for savings and loans. The other options either do not apply to savings and loans or do not specifically set a minimum capital requirement for them.

Question 17

The Office of Thrift Supervision (OTS) was created to

Accepted Answer

The Office of Thrift Supervision (OTS) was created in 1989 to oversee the savings and loan (S&L) industry. Its main function was to regulate and supervise federally chartered savings institutions to ensure their safety and soundness. The OTS was dissolved in 2011 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Question 18

The Federal Deposit Insurance Corporation Improvement Act (FDICIA) limited insurance coverage in regular accounts to a maximum of __________ per account until 2010.

Accepted Answer

FDICIA limited insurance coverage in regular accounts to a maximum of $100,000 per account until 2010.

Question 19

The practice of drawing a line around a certain area on a map and restricting the number or dollar amount of loans made in that area without regard to the credit worthiness of the borrower is called

Accepted Answer

The practice of drawing a line around a certain area on a map and restricting the number or dollar amount of loans made in that area without regard to the credit worthiness of the borrower is called redlining.

Question 20

Which of the following is not considered a current regulator of the banking system?

Accepted Answer

The Securities and Exchange Commission (SEC) is primarily responsible for regulating and overseeing securities markets, not the banking system. The other options listed are current regulators of the banking system, with the Fed being the primary regulator.

Quiz 12: Regulation of the Banking System and the Financial Services Industry

Which of the following statements regarding the Interstate Banking and Branching Act (IBBEA) of 1994 is false?

Which of the following insures deposits in credit unions?

Which of the following insures deposits in credit unions?

Which of the following was set up for self-regulation by the financial futures industry?

Which of the following was set up by the financial options industry for self-regulation?

Financial options are regulated by which government agency?

Pension funds are regulated by

The ________________________ insures the portfolio of retail customers of brokerage firms for up to $500,000 if the brokerage firm becomes insolvent.

The Investment Company Act of 1940 gave the Securities and Exchange Commission (SEC) regulatory control over which of the following?

The Investment Company Act of 1940 gave the regulatory control over mutual funds to the

Mutual funds are regulated by the

Insurance companies are regulated by the

Trading by those who have access to information on new securities before they are made public is called which of the following?

The Resolution Trust Corporation (RTC) was created to

Which of the following is the agency that was in charge of the Resolution Trust Corporation (RTC) ?

Which of the following set minimum capital requirement for the savings and loans?

The Office of Thrift Supervision (OTS) was created to

The Federal Deposit Insurance Corporation Improvement Act (FDICIA) limited insurance coverage in regular accounts to a maximum of __________ per account until 2010.

The practice of drawing a line around a certain area on a map and restricting the number or dollar amount of loans made in that area without regard to the credit worthiness of the borrower is called

Which of the following is not considered a current regulator of the banking system?