SIE Knowledge of Capital Markets Question 17: Answer and Explanation

Question: 17

Which of the following statements is true regarding the Federal Reserve?

• A. The system is overseen by a board that is called both the Federal Reserve Board and the Board of Governors.
• B. The system has ten branch banks, each with its own board and president.
• C. The system has twenty-four regional banks, each with its own board and president.
• D. The member banks receive dividends from stock they hold in Reserve banks and can trade that stock.

Correct Answer: A

Explanation:

A: Choice A is correct. The Board of Governors and the Federal Reserve Board are both names for the same board, which supervises the system. Choices B and C are incorrect because the system has twelve regional banks and twenty-four branch banks. Choice D is incorrect because, though they do receive dividends from stock they hold in Reserve banks, they may not sell or trade that stock.