Principle of Banking
Chapter 1
An Overview of the Changing Financial-Services Sector
Fill in the Blank Questions
1. _______________________ is a traditional service provided by banks in which the banks store the valuables of their customers and certify their true value.
Answer: Safekeeping of valuables
2. The fact that financial institutions make loans based on confidential information is the _______________________ theory of banking.
Answer: delegated monitoring
3. _______________________ refers to when a financial institution trades one form of currency for another. An example of this would be when the bank trades dollars for yen for a fee.
Answer: currency exchange
4. A(n) _______________________ is a traditional service which permits a depositor to write a draft in payment for goods and services.
Answer: demand deposit (checking account)
5. _______________________ is a service provided by banks where the bank lends money to individuals for the purchase of durable and other goods.
Answer: Consumer lending
6. The _______________________ of a bank is a traditional service where the bank manages the financial affairs and property of individuals (and in some cases businesses).
Answer: trust services
7. Companies such as Merrill Lynch and Sears which offered some but not all banking services in the 1980s were called _______________________.
Answer: nonbank banks
8. The loosening of government regulation and control of financial institutions is called _______________________.
Answer: deregulation
9. ___________________________ is an alternative to lending in which the financial institution purchases the equipment and rents it to its customers.
Answer: Equipment leasing services
10. The___________________________ is a landmark act which allows financial service providers to offer an expanded menu of financial services for the customer. This law allows banks to truly
An Overview of the Changing Financial-Services Sector
Fill in the Blank Questions
1. _______________________ is a traditional service provided by banks in which the banks store the valuables of their customers and certify their true value.
Answer: Safekeeping of valuables
2. The fact that financial institutions make loans based on confidential information is the _______________________ theory of banking.
Answer: delegated monitoring
3. _______________________ refers to when a financial institution trades one form of currency for another. An example of this would be when the bank trades dollars for yen for a fee.
Answer: currency exchange
4. A(n) _______________________ is a traditional service which permits a depositor to write a draft in payment for goods and services.
Answer: demand deposit (checking account)
5. _______________________ is a service provided by banks where the bank lends money to individuals for the purchase of durable and other goods.
Answer: Consumer lending
6. The _______________________ of a bank is a traditional service where the bank manages the financial affairs and property of individuals (and in some cases businesses).
Answer: trust services
7. Companies such as Merrill Lynch and Sears which offered some but not all banking services in the 1980s were called _______________________.
Answer: nonbank banks
8. The loosening of government regulation and control of financial institutions is called _______________________.
Answer: deregulation
9. ___________________________ is an alternative to lending in which the financial institution purchases the equipment and rents it to its customers.
Answer: Equipment leasing services
10. The___________________________ is a landmark act which allows financial service providers to offer an expanded menu of financial services for the customer. This law allows banks to truly