Regulation of financial institutions seeks to protect the...

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Intermediate Financial Management
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Chapter 18 / Exercise 07
Intermediate Financial Management
Brigham/Daves
Expert Verified
17 Student: ___________________________________________________________________________ 1. Regulation of financial institutions seeks to protect the small saver because he or she may lack the financial expertise and access to quality information needed to correctly judge the true condition of a financial institution. True False
2. Loss of public confidence in the financial system would slow the growth of the economy.
3. The creation of money is closely associated with inflation.
4. The regulation of money creation has become a key objective of government activity in the financial sector.
5. Regulation is often justified as the most direct way to aid so-called "disadvantaged" sectors of the economy, such as new home buyers, farmers and small businesses. True False
6. Governments frequently regulate financial institutions to assure that financial services needed by governments will continue to be provided.
7. Governments willing to impose sufficiently strict regulations can completely remove risk for savers.
8. There are no absolutely irrefutable arguments justifying the regulation of financial institutions.
9. There is a trend today toward gradually allowing private markets to discipline risk-taking by financial institutions and minimize the role of government. True False
10. Deregulation could bring about decreased profits for financial institutions.
11. Deregulation of a financial service industry could usher in greater risk and lead to more business bankruptcies.
12. The regulatory dialectic concept states that regulation of financial-service companies tends to lead to innovations in new services and to financial institutions aggressively looking for ways to lower their operating costs.
13. Regulation tends to result in an increased market share for the regulated industry and a smaller market share for unregulated firms offering the same products or services. True False
14. In the United States banking is more heavily regulated than is true in most other industrialized countries.
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The document you are viewing contains questions related to this textbook.
Intermediate Financial Management
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Chapter 18 / Exercise 07
Intermediate Financial Management
Brigham/Daves
Expert Verified
15. Most banks in the United States are subject to multiple regulatory jurisdictions.
16. Supervision of foreign banks operating in the United States is vested in the Office of the Comptroller of the Currency; a part of the U.S. Treasury Department.

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