Chapter 1 (3 points each)
1. All of the following may be used as collateral for a loan EXCEPT
a. tenant’s leasehold rights.
b. lender’s receivable mortgage rights.
c. farmer’s unharvested crops.
d. unsecured personal property.
2. Which of the following is NOT a primary market financial institution?
a. Commercial bank
b. Savings association
c. Credit union
d. Ginnie Mae
3. Double-digit interest rates in the 1980s led to all of the following EXCEPT
a. eliminating many participants in the real estate market.
b. creating broad range of creative financing tools.
c. encouraging participation financing between lenders and borrowers.
d. reducing capital gains tax rate.
4. The focus of lenders shifted in the 1990s to
a. jumbo loans.
b. adjustable-rate mortgages.
c. refinancing existing mortgage loans.
d. variable-payment loans.
5. Which of the following would have the LEAST effect on local real estate values?
a. Change in zoning to permit higher density
b. New legislation requiring environmental impact studies
c. Decline in the New York Stock Exchange
d. Stricter building codes in that area
6. Long-term cycles in real estate generally run from
a. 3 to 5 years.
b. 5 to 10 years.
c. 10 to 15 years.
d. 15 to 20 years.
7. All of the following are factors that affect the cycles of real estate EXCEPT
a. the supply of money for financing.
b. population growth.
c. changes in federal income tax structure.
d. the gross national debt.
8. A 45-year old bachelor has lived in his present home for three years and is planning to sell it. The Taxpayer
Relief Act of 1997 provides that he
a. will be exempt from capital gains tax on profit up to $250,000.
b. will be exempt from capital gains tax on profit up to $500,000.
c. is not exempt from capital gains because he has not lived there for five years.
d. is not exempt from capital gains because he must be at least 55 years old.
9. As a result of the tightened required qualifying standards because of the financial crisis, the predominant
lender for low-income mortgage loans became
a. Fannie Mae.
b. Freddie Mac.
c. the Federal Housing Administration (FHA).
d. the Department of Veterans Affairs (VA).
10. All of the following government programs have the potential to lower a homeowner’s monthly mortgage
payment EXCEPT
a. the Making Home Affordable program.
b. the Home Affordable Modification Program.
c. the Dodd-Frank Act.
d. the Home Affordable Refinance Program.
11. The American Taxpayer Relief Act of 2012 extended all of the following EXCEPT
a. mortgage debt cancellation relief.
b. deduction for mortgage insurance premiums.
c. current tax rates for households earning less than $450,000.
d. current tax rates for households earning more than $450,000.
12. The largest bulge in the population today is created by the
a. baby boomers.
b. Generation X.
c. echo boomers.
d. senior citizens.
Chapter 2 (3 points each)
13. Money can be viewed as all of the following EXCEPT
a. as a medium of exchange.
b. storehouse of purchasing power.
c. standard of value.
d. measure of personal worth.
14. The federal agencies empowered to control the supply and cost of money include all of the following
EXCEPT
a. the Federal Reserve.
b. the Department of the Treasury.
c. the Office Thrift Supervision.
d. the Federal Home Loan Bank.
15. Nationally chartered commercial banks must join the Federal Reserve System and are required to do all of
the following EXCEPT
a. purchase capital stock in a Federal Reserve district bank.
b. maintain required monetary reserves.
c. clear all checks through the system.
d. sell mortgage-backed securities to the Fed.
16. Member banks often borrow on a short-term basis from each other without requiring collateral. The
interest charged is called the
a. prime rate.
b. discount rate.
c. federal funds rate.
d. open-market rate.
17. The purchase and sale of government securities traded on the open-market by the Fed is regulated by the
a. Office of Thrift Supervision.
b. Federal Open-Market Committee (FOMC).
c. Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).
d. U.S. Treasury Department.
18. Which of the following statements would NOT trigger Regulation Z, requiring full disclosure of all aspects
of the financing involved?
a. 3 percent down payment
b. 7 percent, no points
c. Low down payment requirements
d. Monthly payments of only $600
19. The responsibility for supervising the thrifts has been transferred from the Office of Thrift Supervision to
the
a. Office of the Comptroller of the Currency (OCC).
b. Federal Deposit Insurance Corporation (FDIC).
c. Federal Home Loan Banks (FHLBs).
d. Federal Housing Administration (FHA).
20. Basic functions of the Department of the Treasury include all of the following EXCEPT
a. collecting income tax.
b. paying the country’s bills.
c. insuring depositor’s accounts.
d. prosecuting tax evaders.
21. A man has an account with a national commercial bank. His account of $98,000 is insured by what
insurance fund?
a. Federal Deposit Insurance Corporation (FDIC)
b. Fannie Mae
c. Ginnie Mae
d. The Fed
22. The Federal Home Loan Bank System was patterned after the
a. Federal Reserve System.
b. Farm Credit System.
c. Office of Thrift Supervision.
d. Federal Deposit Insurance Corporation (FDIC).
23. Changes made under the Dodd-Frank Act that affect truth-in-lending disclosure include all of the following
EXCEPT
a. raising the exemption threshold from $25,000 to $50,000.
b. setting an exact annual percentage rate (APR).
c. creating a new disclosure form that integrated both the RESPA and TILA disclosures.
d. transferring rulemaking authority of TILA to the Consumer Financial Protection Bureau.
24. Which of the following statements regarding the Federal Deposit Insurance Corporation (FDIC) is NOT
true?
a. The FDIC is funded through congressional appropriations.
b. The FDIC insures bank deposits up to $250,000 per title per account.
c. The FDIC does not insure securities, mutual funds, stocks, or bonds.
d. The FDIC responds immediately when a bank or thrift fails.
25. If the Fed is attempting to slow down a too rapidly growing economy they might
a. decrease the percentage of assets that member banks must keep in reserve.
b. raise the percentage of assets that member banks must keep in reserve.
c. lower the discount rate.
d. buy securities through the Federal Open Market.
Short Answers (13 and 12 points each)* Type or copy in answer on electronic answer sheet)
1. If the Fed wanted to stimulate (increase money supply) our economy, describe what they would do
with interest rates, reserve requirements and/or open market operations? (13)
2. How does the US Treasury raise money when it has to borrow? (12)
