The Reason Why the Banking Act of 1933 Prohibited Commercial

question 96

Multiple Choice

The reason why the Banking Act of 1933 prohibited commercial banks from buying and selling corporate stocks and bonds was that

• A)there was concern that banks would be able to "take over" and monopolize these companies
• B)they would earn so much profit that they would stop lending to home buyers and small borrowers
• C)the instability inherent in the asset value of such a corporation would destabilize the banking system
• D)this would give large banks an unfair advantage over smaller banks
• E)the statement is incorrect; banks have always been allowed to purchase these stocks and bonds

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Definitions:

Departmentalization

The organizational process of dividing a company into distinct departments, each managed separately to perform specific tasks or achieve objectives.

Organizational Size

A measurement that reflects the scale and scope of an organization, usually assessed by the number of employees, revenue, or physical size.

Technology

Refers to the application of scientific knowledge for practical purposes, especially in industry.

Organizational Design

The process of structuring an organization's strategy, roles, responsibilities, and processes to achieve its goals and objectives effectively.