BB Assignment# 5 (Chapter 5)

1. All bank accounts are insured by FDIC to:

1. $50,000.
2. $100,000.
3. $200,000.
4. $250,000.

2. ABCCommercialBank'strustdepartmentwouldprobablyagreetoprovideanyofthe following services EXCEPT to

1. actasexecutorofwidowMartin'sestate.
2. serve as a guardian for 6-year old Susie Q.
3. manageasmallIRAaccountforBillyT.
4. act as trustee for the bond portfolio of the largest business in town.

3. UndertheFY2009OmnibusAppropriationsBill,commercialbanksareNOTallowedto perform which of the following services for their customers?

1. Marketannuities
2. Sell title insurance
3. Sell stocks and bonds
4. Actasrealestatebrokers

4. AnewfederallycharteredsavingsbankhasopenedinAnytown.Thisnewbankwill come under the regulation of the

1. Federal Home Loan Bank Board.
2. Office of Comptroller of the Currency.
3. FederalReserveSystem.
4. FDIC.

5. Savingsassociations,orthrifts,werefirstregulatedbythe

1. FederalReserve.
2. Federal Home Loan Bank System.
3. FederalNationalMortgageAssociation.
4. Federal Deposit Insurance Corporation.

6. Eachindividualaccountondepositwithasavingsassociationisinsuredbythe

1. FederalHousingAdministration(FHA).
2. Office of the Comptroller of the Currency (OCC).
3. Federal Home Loan Bank (FHLB).
4. FDIC.

7. TheSAFEActwaspassedtoprovideprotectionforthepublicfrom

1. Investmenttrusts.
2. Mortgageloanoriginators.
3. Municipalbondbrokers.
4. Realestatebrokers.

8. Lifeinsuranceandcasualtyinsurancecompaniesareregulatedby

1. theFederalReserve.
2. the Home Loan Bank Board.
3. statelawsandregulations.
4. federal laws and regulations.

9. Historically,pensionfundmonieshavebeeninvestedin

1. homemortgageloans.
2. participation financing of golf courses.
3. governmentsecuritiesandstocksandbonds.
4. mortgage-backed securities.

10.Harry Smith has joined his local teacher's credit union. Membership in the credit union will be open to all of the following EXCEPT

1. Harry'slive-innanny.
2. Harry'sson-in-lawMike.
3. theweeklylandscaperforHarry'shome.
4. his wife's boss at the FHA office where she works.

11.Regulation for enforcing the SAFE Act now falls under

a. HUD.

b. TheFED. c. TheCFPB. d. NMLS.

12. The Tax Reform Act of 1986 led to a greater interest by commercial banks in providing which of the following? (Hint: Interest deductibility)

a. Homeequityloans

b. Signature loans

c. Farmloans

d. Constructionloans

13.Traditionally, the savings and loan was the primary provider of which type of loan? a. Carloan

b. Home equity loan

c. Homemortgageloan d. Constructionloan

14.Life insurance companies and pension funds are most concerned with a. quickturn-aroundontheirmoney.

b. safety and stability of their investment.

c. chargingmaximuminterestrates.

d. FDIC-insured accounts.

15.A life insurance company would be most likely to provide financing for a a. condominium.

b. subdivision of 10 single-family homes.

c. shoppingcenter.

d. new high school.

16.Credit unions have been able to expand their services to include home mortgage loans due to

1. moreaggressiveadvertising.
2. legislation allowing for increased membership.
3. supportfromFannieMae.
4. demand from depositors

17.Which of the following was the first to be modeled after the concept of the mutual savings banks that originated in the industrial areas of the Northeast?

1. Savingsassociations
2. Creditunions
3. Mutualstockfunds
4. Pension funds

18.Which of the following would NOT be considered as a benefit that a credit union could offer its members?

1. Greatflexibilityinmakingloans
2. The ability to pay higher interest rates on deposits
3. Avarietyofloansoffered
4. Its limited membership base

19. Mortgage brokers are compensated by receiving a. mortgageinterest.

b. realty sale profits.

c. negotiatedplacementfees.

d. collection fees.

20. Mortgage banking companies receive the majority of their income from a. interestearnedondeposits.

b. fees charged for normal banking services.

c. theplacementofmortgageloanswithoutsideinvestors.

d. fees charged for originating and servicing real estate loans.

21. Tool Time, Inc. is selling unsecured bonds to raise money to completely retool their outdated manufacturing plant. These bonds are called

a. securedbonds.

b. debentures.

c. couponbonds. d. mortgagebonds.

22. The city of Houston wishes to finance the building of a toll bridge that will connect the main part of the city with the new area on the other side of the river. A toll will be charged for use of the bridge. They could appropriately issue what type of bonds?

a. Revenuebonds

b. Corporatebonds

c. Generalobligationbonds d. Industrial revenue bonds

23. An industrial revenue bond would most likely be used to finance which of the following?

1. Replacementoftheair-conditioningsysteminCityHall
2. Construction of a new toll bridge into the next county
3. Development an industrial park to attract new business
4. Operationofcityproject

24. Zero-coupon bonds, also called zero treasuries, are a new approach to an old idea in bond buying. The concept of paying a discounted price today, holding the bond until maturity, and then collecting the face value originated with

a. couponbonds.

b. World War II savings bonds. c. generalobligationbonds. d. mortgage revenue bonds.

25. Mr. and Mrs. Smith are ready to retire and move to Texas. Since they do not need the money from the sale of their home immediately, they might want to consider any of the following EXCEPT

1. holdafirstmortgagewithaminimumof20percentdownpayment.
2. hold a first mortgage with a minimum of 1 percent down payment.
3. carry back a second mortgage with a minimum of 10 percent down payment.

d carry back a second mortgage for half of the present equity in the home.

26. The one activity that differentiates between a mortgage broker and a mortgage banker is that a mortgage banker will

a. charge a higher rate of interest.

b. service the loan after settlement.

c. prepare the loan package for underwriting. d. receive payment for originating the loan.

27. Jennifer Lopez has recently invested in a REIT. The return on her investment will be based on

1. interest on mortgages.
2. profit from selling mortgages.
3. income from apartment houses, offices, and shopping centers.
4. a combination of mortgage interest and office rentals.

28. Michael and Katherine Douglas have made an application for a mortgage loan with Bobby Brown. Bobby will qualify Michael and Katherine, prepare the loan package, and submit it for underwriting to one of several investors. Bobby is a

a. b. c. d.

29. The a. b.

c. d.

mortgage banker. mortgage broker. real estate broker. financial fiduciary.

only banking service offered by a mortgage "banker" is a checking account.

savings account.

mortgage loan origination.

check cashing service.

30. Ricky Martin is interested in investing in a trust that derives income solely through mortgage interest and profits from buying and selling mortgages. He should invest in a

1. REIT.
2. REMT.
3. REMIC.
4. hybrid.