Question

Which is the riskier action for a bank?

	A.	Making foreign exchange trades on behalf of customers
	B.	Making foreign exchange trades with bank assets

Governments require some banks to conduct stress tests of their financial situation. What type of financial regulation is this requirement?

	A.	Restrictions on competition
	B.	Consumer protection
	C.	Assessment of risk management
	D.	Disclosure requirements

Why are some banks considered too big to fail?

	A.	Very large banks have enough assets to prevent financial distress and cannot fail
	B.	The Glass-Steagal Act prohibits the failure of any bank wiht more than $5 billion in assets
	C.	Congress has always stepped in to bail out banks owned by politically connected individuals
	D.	These banks are so large that their failure may initiate a financial crisis in the broader economy

Answer 1

1. B.Making foreign exchange trades with bank assets
Using customers account for trading puts the risk liability on the customer rather than the bank

2. C.Assessment of risk management
Assesment of risk management is when an idustries risks are judged by taking into consideration the working of a large firms in that industry.

3.D These banks are so large that their failure may initiate a financial crisis in the broader economy

These banks hold assets so the public at large, a failure of such a bank could lead to a failure of economy.

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