Ch14 - Chapter 14 Other Lending Institutions: Savings...

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Chapter 14 Other Lending Institutions: Savings Institutions, Credit Unions, and Finance Companies 1. Thrifts are comprised of three types of depository institutions: savings banks, credit unions, and finance companies. Answer: False Page: 414-415 Level: Medium 2. Of all the depository institutions, as a percentage of assets credit unions rely the most on deposit sources of funds. Answer: True Page: 428-429 Level: Medium 3. Interest income minus interest expense divided by earning assets is called net interest margin. Answer: True Page: 417 Level: Easy 4. After deposits, the second largest source of funds at savings associations is FHLB loans. Answer: True Page: 421 Level: Easy 5. Savings associations must have at least 65% of their assets in mortgage related areas in order to maintain their favorable tax status and obtain FHLB loans. Answer: True Page: 420 Level: Medium 6. In a mutual organization the depositors and common stockholders are co-owners of the institution. Answer: False Page: 421 Level: Easy 7. Traditionally, most credit union members had a common employer, but increasingly the required commonality is a common location of either residence or workplace. Answer: True Page: 425,428 Level: Easy 8. A downward sloping yield curve is likely to improve the NIM of a savings association. Answer: False Page: 417 Level: Medium 9. The FDIC operates the bank insurance fund but has nothing to do with insuring thrifts. Answer: False Page: 423 Level: Medium 10. Credit unions are not taxed, as a result well run credit unions are often able to charge lower loan rates and pay slightly higher deposit rates than banks. Answer: True Page: 425 Level: Medium 11. The National Credit Union Administration is the primary regulator of federally chartered credit unions. Answer: True Page: 430 Level: Easy 12. There are more credit unions than other types of thrifts, but credit unions are generally quite small. Answer: True Page: 428 Level: Easy 13. The largest U.S. banks are larger than the entire credit union industry. Answer: True Page: 428 Level: Easy 14. Because of the differences in the makeup of their major loan types, finance companies typically have shorter term loans than banks. Answer: True Page: 433 Level: Medium 15. Sales finance institutions specialize in loan sales to banks and thrifts. Answer: False Page: 432 Level: Medium 16. Which type of thrift has the greatest percentage of commercial loans on their balance sheet? A) Mutual savings associations B) Stock savings associations C) Federal Credit unions 191
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D) Savings Banks E) State Credit unions Answer: D Page: 420 Level: Medium 17. The QTL test requires that thrifts A) Limit the amount of mortgage related assets on the balance sheet to improve diversification B) Invest in a minimum percentage of government backed securities to protect their mortgage loans C) Lend no more than 80% of the value of a home to a borrower to ensure mortgage safety D) Keep 35% of their assets in safe liquid investments to ensure adequate deposit liquidity
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Ch14 - Chapter 14 Other Lending Institutions: Savings...

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