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Unformatted text preview: Test 1 Sample Questions Chapter 1 1) Give an example of a financial institution that was too important to fail? Bear Stearns, AIG, Citigroup, among others. (2pts) 2) In most cases, what does the diversification do to FI risk (Increase , decrease or keep the same )? Decrease. (2pts) 3) In terms of liquidity and price risk, how does a loan to a steel mill compare to a transactions deposit? (two answers) Loan to a steel mill (primary security) is less liquid and riskier than a transactions deposit (secondary security). (4pts) 4) Which U.S. bank dropped out of top 20 banks in the world between August 2009 and September 2010 ? Citibank. (2pts) 5) What is the main incentive of banks to adhere to the Community Reinvestment Act? To get their future mergers and acquisitions (M&As) approved. (2pts) Chapter 2 6) Which commercial bank size class had substantially lower ROA and ROE than the other size classes as of 2006?...
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- Spring '11