Question

39. The Federal Reserve Act required all banks to become members of the Federal Reserve System, while _banks could choose to become members of the system. (a) state; national (b) state; municipal (c) national; state (d) national, municipal 40. The Glass-Steagall Act prohibited commercial banks from (a) issuing equity to finance bank expansion. (b) engaging in underwriting of and dealing in corporate securities (c) selling new issues of government securities. (d) purchasing any debt securities 41. Which of the following are important factors in determining the degree and timing of financial innovation? (a) Changes in technology (b) Changes in financial market conditions (c) Changes in regulation (d) All of the above (e) Only (a) and (b) of the above 42. In the 1950s the interest rate on three-month Treasury bills fluctuated between 1.0% and 3.5%. In the 1980s, the three-month Treasury bill rate ranged from 5% to over 15%. From this one could predict that in the 1980s interest- rate risk was and the demand for financial innovation was (a) greater; lower (b) greater, greater (c) lower; lower (d) lower; greater 43. A firm issuing credit cards earns income from (a) loans it makes to credit card holders. (b) payments made to it by stores on credit card purchases. (c) payments made to it by manufacturers of the products sold in stores on credit card purchases. (d) all of the above. (e) only (a) and (b) of the above

Answer 1

39]

The Federal Reserve Act required all national banks to become members of the Federal Reserve system, while state banks could choose to become members

40]

The Glass-Steagal Act prohibited commercial banks from engaging in underwriting of and dealing in corporate securities.

The answer is (b)

41]

(d) - all of the above

All of these are factors in determining the timing and degree of financial innovation