First National Bank Is a Member of a Multibank Holding

question 134

Multiple Choice

First National Bank is a member of a multibank holding company. The bank makes ARM loans and occasionally purchases ARM loans from its affiliate national and state banks as well as from nonaffiliated banks. Which of the following practices is NOT acceptable under the OCC ARM regulation?

• A) The bank purchases loans from its state affiliate banks where the index on the loan is tied to First National's prime rate.
• B) The bank makes loans to purchase single-family dwellings with interest rates that may be adjusted from time to time.
• C) The bank links the interest rate indices on its own ARM loans to them national prime rate as published in The Wall Street Journal.
• D) The bank requires its national bank affiliates to use the national prime rate as published in The Wall Street Journal as the index for any of the ARM loans it purchases.

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Definitions:

Absorption Costing

A strategy in accounting that involves incorporating costs related to manufacturing, including direct materials, direct labor, and variable and fixed overheads, into the price point of a product.

Production Cost

The total expense incurred in manufacturing a product, including materials, labor, and overhead.

Absorption Costing

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead in the cost of a product.

Variable Costing

Variable costing is an accounting method that only considers variable costs, which change with production levels, in the cost of goods sold and excludes fixed manufacturing overhead.