Chapter 6

A limited service facility that can market services supplied by the home office of an international bank and identify new customers is known as a:

• Branch office
• Agency office
• Subsidiary
• Representative office
• None of the above

Separate corporate entities affiliated either with a U.S. bank or with a foreign bank operating in the U.S. that can cross state lines, but must devote the majority of their accounts to international activities are known as:

• Joint ventures
• Representative offices
• Subsidiaries
• Edge Act Corporations
• None of the above

An organizational form used by international banks that was created by U.S. regulations enforced by the Federal Reserve Board and consists of computerized account records is known as:

• International Banking Facility (IBF)
• Export Trading Company (ETC)
• Edge Acts
• Agencies
• None of the above

These specialized firms can be operated by U.S. banking companies and Edge Act Corporations and must receive over half their income from their roles in assisting exporting activities from the U.S. are called:

• International Banking Facility (IBF)
• Export Trading Company (ETC)
• Shell Branches
• Subsidiaries
• None of the above

Organizational devices used by international banks to take deposits offshore and avoid regulations (such as deposit insurance assessments) are known as:

• International Banking Facility (IBF)
• Export Trading Company (ETC)
• Shell Branches
• Subsidiaries
• None of the above

International banking activities are regulated for many of the same reasons that shape domestic banking regulation. These common reasons for regulation include:

• Restricting bank risk exposure.
• Limiting non-banking business activity.
• Promoting stable growth in money and credit.
• Specifying minimum amounts of owners' equity capital.
• All of the above.

International banking regulations that do not apply to most domestic banking activity include:

• A) Foreign exchange controls.
• B) Restricting the outflow of scarce capital.
• C) Protecting domestic financial institutions and markets from foreign competition.
• All of the above.
• B and C only.

The key components of the International Banking Act (IBA) of 1978 include which of the following:

• A) Required foreign banks to follow the same branching laws as U.S. banks.
• B) Required legal reserves against deposits accepted at U.S. branch or agency offices of foreign banks with consolidated assets of $1 billion or more.
• C) Required U.S. branches of foreign banks to obtain deposit insurance.
• D) All of the above.
• E) A and B only.

The Foreign Bank Supervision Enhancement Act of 1991 places the responsibility for supervising U.S. branches of foreign banks with the:

• A) Office of the Comptroller of the Currency.
• B) Federal Reserve Board.
• C) Federal Deposit Insurance Corporation.
• D) Secretary of Commerce.
• E) None of the above.

A call currency option:

• A) Obligates the holder to purchase currency or currency futures contracts at a fixed price any time before the option expires.
• B) Gives the holder the right to purchase currency or currency futures contracts at a fixed price any time before the option expires.
• C) Obligates the holder to sell currency or currency futures contracts at a fixed price any Rose/Hudgins, Bank Management and Financial Services 150 time before the option expires.
• D) Gives the holder the right to sell currency or currency futures contracts at a fixed price any time before the option expires.
• E) None of the above.