can u please answer these MCQs. Thanks and Regards

FIN 369 Keeton Spring 2016 Assignment 5 Due at the end of Sunday, April 10 1. The most important difference between the original Diners Club card and the charge cards that large department stores had been issuing to their customers was that ____. (ES, pp. 53-54 and Mann, pp. 81-82) A. the Diners Club card was for use at restaurants rather than retail stores B. the Diners Club card was an example of a universal payment network C. payments with the Diners Club card were processed electronically D. the Diners Club card could be used at multiple businesses whereas most charge cards could be used only at the store issuing the card 2. By 1957, Diners Club was earning most of its revenue from the ____. (ES, pp. 54-55) A. annual fee paid by cardholders B. annual fee paid by merchants C. percentage fee paid by merchants on each transaction D. interest paid by cardholders on the balance due 3. Merchants were willing to accept the Diners Club card when it was introduced mainly because ___. (Mann, pp. 82-83) A. non-par banking had resulted in merchants receiving less than 100 cents on the dollar when paid by check B. check payments by business travelers were subject to long delays and risk of non-payment due to insufficient funds C. the card holder paid most of the fees for processing the payment D. Diners Club had used mass mailings to persuade a substantial majority of U.S. consumers to acquire a Diners Club card 4. American Express introduced a charge card in 1956 in response to the increased competition for its travel and entertainment business from ____. The company suffered losses at first because it had less experience in ____. (ES, pp. 58-59) A. Visa; extending credit B. Visa; processing payments C. Diners Club; extending credit D. Diners Club; processing payments 5. In the mid-1960s, BankAmerica began expanding the geographic reach of its California-based credit card program by ____. (BL, p. 62; Kindle, 1275; ES, p. 62) A. offering the card in other California cities beside Los Angeles and California B. offering the card through banks that it acquired in other states 2 C. licensing the card to banks in other states through a franchise system D. inviting consumers in other states to open accounts in the California bank 6. Today's Visa card network grew out of the_____, while today's MasterCard network evolved from the ____. (BL, pp. 61-62; Kindle, 1275-1283; ES, pp. 63-65). A. Interbank Card Association; BankAmericacard program B. BankAmericacard program; Interbank Card Association C. Diners' Club card program, American Express card program D. American Express card program; Diners Cub card program 7. According to BL, banks joined the Visa and MasterCard networks in the early days mainly as a way to increase their ____. (BL, p. 63; Kindle) A. income from interchange fees B. deposit business C. consumer lending D. business lending 8. When Evans and Schmalensee say that the major card networks are characterized by \"coopetition,\" they mean that banks compete with ____ but cooperate with _____. (ES, p. 63) A. each other for cardholders; merchants in setting interchange fees B. merchants in setting interchange fees; merchants on rules to allocate fraud losses C. the card networks in setting interchange fees; the networks in signing up cardholders D. each other for merchants and cardholders; each other in processing payments and setting operational standards 9. According to Mann, which of the following factors help explain why credit cards gained more traction in the U.S. than most other developed countries? (Mann, pp. 83-85) 1. The large geographic size of the U.S., which encouraged remote business travel. 2. The greater use of check guarantee cards in the U.S. than other countries. 3. The fragmented U.S. banking market, which prevented checks from being accepted for payment in distant locations. A. 1 only B. 2 only C. 1 and 3 D. 2 and 3 10. Visa and MasterCard were initially owned by ____ and are currently owned by _____. (BL, p. 65, Kindle, 1366-1374) A. acquiring banks; issuing banks B. issuing banks; acquiring banks 3 C. issuing and acquiring banks; investors D. investors; issuing and acquiring banks 11. In principle, public ownership could change the incentives of the major card networks in which of the following ways? (BL, p.67; Kindle, 1401-1408) 1. Make them less interested than issuing banks in setting high interchange fees. 2. Make them indifferent between credit card transactions and debit card transactions. 3. Make them less interested in earning profits. A. 1 and 2 B. 1 and 3 C. 2 and 3 D. 1, 2, and 3 12. When a credit card holder borrows from her bank by not paying off her balance in full at the end of the billing cycle, the loan can be viewed as which of the following? (BL, p. 67; Kindle, pp. 1409-1417) 1. Unsecured loan. 2. Secured loan. 3. Installment loan. 4. Revolving credit. A. 1 and 3 B. 1 and 4 C. 2 and 3 D. 2 and 4 13. Banks that specialize in issuing and servicing credit cards rather than providing general banking services are called ____. Mann believes that these banks have ____.innovation and competitive pricing in the U.S. credit card industry (Mann, p. 22) A. acquirers; held back B. acquirers; encouraged C. monolines; held back D. monolines; encouraged 14. In an open-loop credit card network such as Visa, the issuing bank can be viewed as serving the ____ and the acquiring bank as serving the ____. (BL, pp 69-70; Kindle, 1455-1460) A. merchant; card holder B. card holder; merchant C. card network; merchant D. card holder; card network 4 15. An important difference between a closed-loop and open-loop card network is that in an open-loop card network ____. (BL, pp 69-70; Kindle, 1455-1460; Mann, p. 20) A. only consumers above a certain income level can join B. only banks above a certain size can join C. a single entity performs the issuing, acquiring, and network functions D. the issuing, acquiring, and network functions are performed by separate entities 16. ______ are examples (is an example) of closed-loop card networks, while ____ are examples (is an example) of open-loop card networks. (BL, p. 7; Kindle, 180) A. MasterCard; Visa B. the original American Express; the original Discover C. Visa and MasterCard; the original American Express and Discover D. the original American Express and Discover; Visa and MasterCard 17. When a merchant contracts with a processor such as First Data for acquiring services, the contractual responsibility for the merchant side of the transaction rests with ____. (BL, pp. 71, 99, and 100; Kindle, 1475-1481, 2064-2073) A. an acquiring bank B. the card network C. the merchant D. the processor 18. The card verification value or code (CVV/CVC) was added to the magnetic strip of credit cards in the 1990s to prevent fraudsters from using ____. Later, the fraud control data element (CVV2/CVC2) began to be printed on the back of the card to prevent fraudsters from using ____. (BL, pp. 72; Kindle, 1494-1510) A. a stolen card number to make a purchase over the Internet or telephone; information on a printed card receipt to produce a counterfeit card B. information on a printed card receipt to produce a counterfeit card; a stolen card number to make a purchase over the Internet or telephone C. a stolen card to make a purchase at a store; a stolen card to make a purchase over the Internet or telephone D. a stolen card to make a purchase over the Internet or telephone; a stolen card to make a purchase at a store 19. Chip credit cards with signature verification are less vulnerable to fraud than traditional mag stripe cards because the chip cards ___. (BL, p. 73; Kindle, 1510-1518; King, pp. 1-4) A. can only be used to make card-not-present transactions by disclosing the CVV2 code on the back of the card B. are very difficult to copy, even with a magnetic stripe reader C. cannot be used to make a purchase at a store if stolen 5 D. use biometric identification of the card holder 20. Chip cards are more secure with PIN verification than signature verification because the PIN ____, preventing a thief from using a stolen card for a POS purchase. (BL, p. 73; Kindle, 1518) A. must be entered by the cardholder at the point of sale B. is easier for store clerks to read than a signature C. must be entered by the merchant at the point of sale D. changes with each transaction 21 Beginning in October 2015, merchants had an extra incentive to install terminals that can accept EMV cards, because Visa and MasterCard announced they would ____.; Kindle, 1518; King, p. 4) A. subsidize the purchase of EMV terminals B. charge an extra fee for card payments from non-EMV terminals C. refuse to process card payments with EMV cards from non-EMV terminals D. shift liability to the merchant for counterfeit-card fraud that could have been prevented with an EMV terminal 22. According to Heun, Chip cards with EMV technology would not have prevented the Target data breach because _____. As a result, the fraudsters could still have been used the stolen data to ____. (Heun) A. the card data would still have been unprotected on Target's computers; manufacture counterfeit cards B. the card data would still have been unprotected on Target's computers; make fraudulent cardnot-present payments C. dynamic authentication is easily blocked; manufacture counterfeit cards D. dynamic authentication is easily blocked; make fraudulent card-not-present payments 23. In credit card transactions, authorization occurs____ while clearing and settlement occurs ____. (BL, pp. 74-75; Kindle, 1540) A. with a delay of several hours; with a delay of one day B. with a delay; in real time C. in real time; with a delay and in batches D. in real time; with a delay and singly 24. In a Visa or MasterCard credit card transaction, the interchange fee is paid by the ____ to the ____. (BL, pp. 79-80; Kindle, 1645-1680; Mann, p. 26) A. acquiring bank; card network B. acquiring bank; issuing bank C. merchant; issuing bank D. merchant; acquiring bank 6 25. In a Visa or MasterCard credit card transaction, the merchant discount fee is paid by the ____ to the ____. (BL, pp. 80-81; Kindle, 1676-1683; Mann, p. 26) A. merchant; issuing bank B. merchant; acquiring bank C. acquiring bank; card network D. acquiring bank; issuing bank 26. In the debate over interchange fees, proponents argue that they are needed to ____ while opponents argue that they ____. (BL, p. 82; Kindle, 1710-1719) A. keep banks profitable; are too complicated for anyone to understand B. keep banks profitable; constitute price fixing and are unfair to merchants C. manage a two-side market; are too complicated for anyone to understand D. manage a two-sided market; constitute price fixing and are unfair to merchants 27. BL suggest that one way of resolving the interchange controversy that is gaining acceptance is to let _____. (BL, p. 82; Kindle, 1710-1719) A. the Federal Reserve set interchange fees B. merchants set up their own payment system C. merchants charge consumers an extra fee when they pay with a high-interchange-fee card D. consumers pay with cash 28. The bank that issues a consumer's credit card is___ a bank in which the consumer has a checking account. (BL. p. 83; Kindle, 1736) A. always B. never C. sometimes 29. When the card networks require a merchant's acquiring bank to return a credit card payment due to a disputed or fraudulent transaction, the process is called a ____. (BL, p. 85; Kindle, 1775; Mann, p. 27) A. refund B. chargeback C. stop payment order D. surcharge 30. The main difference between a credit card and a charge card is that ____. (BL, p. 86; Kindle, 1789-1799) A. credit cards involve the extension of credit to the consumer but charge cards do not B. credit cards were introduced before charge cards 7 C. the balance on a charge card must be paid in full at the end of the monthly billing cycle D. charge cards are offered only by retailers 31. In normal times, the share of interest income in banks' revenues from credit card issuance is ____ the share of interchange fees. (BL, p. 87; Kindle, 1829; Mann, p. 23) A. about the same as B. substantially less than C. substantially greater than 32. As a source of revenue to card issuers, annual card fees have ___ in importance for traditional credit cards due to ____competition among issuers for cardholders. (BL, p. 88; Kindle, 1838) A. decreased; higher B. decreased; lower C. increased; higher D. increased; lower 33. Independent sales organizations (ISOs) act as brokers between acquiring banks and ____ and tend to focus on ____. (BL, p. 99; Kindle, 2034-2041) A. card issuers; smaller banks B. processors; larger acquirers C. merchants; smaller merchants D. merchants; larger merchants 34. Most payments experts view the market for credit card acquisitions as highly ___, causing the merchant discount fee to exceed the interchange fee by a relatively ____ margin. (Mann, p. 26 and ES, p. 155) A. concentrated; large B. concentrated; small C. competitive; large D. competitive; small 35. In credit card transactions, acquirers generally face ___ fraud risk because the ____. (BL, p. 101; Kindle, 2099-2109) A. some; the card network covers part of the losses from fraud but not all B. some; acquirer might be unable to collect from a fraudulent merchant if the merchant failed to deliver the promised goods and the payment was charged back by the consumer C. no; the card issuer is responsible for all fraud losses D. no; the acquirer could always collect from the merchant if the merchant accepted a fraudulent payment that was charged back 8 36. In recent years, a growing number of smaller merchants have been able to accept credit cards because Visa and MasterCard have allowed third parties such as PayPal and Square to serve as a \"master merchant (also known as \"merchant of record\"). This means that the third party ____. (BL, p. 101; Kindle, 2118-2121) A. helps arrange contracts between the smaller merchants and acquiring banks B. owns a bank that serves as card acquirer for each of the smaller merchants C. enters into a contract with an acquiring bank instead of the smaller merchants having to do it D. negotiates with the card networks to reduce interchange fees for smaller merchants. 37. A key factor helping credit card issuers manage credit risk has been the development of ____, which provide issuers with a comprehensive picture of card applicants' credit exposures and repayment histories. (BL, pp. 102-103; Kindle, 2129-2137) A. information-sharing arrangements among card issuers B. government-operated credit registries C. private-sector credit bureaus 38. In card-not-present transactions, such as those conducted over the Internet, the losses from fraudulent credit card use have usually been borne by the ____. (BL, pp. 68-69 and 104; Kindle, 1434-1442 and 2147-2155) A. card network B. cardholder C. card-issuing bank D. merchant 39. In card-present transactions, such as those at a bricks-and-mortar store, the losses from fraudulent credit card use have usually been borne by the ____. (BL, pp. 68-69 and 104; Kindle, 1434-1442 and 2147-2155) A. card network B. cardholder C. card-issuing bank D. merchant 40. Under federal law, a unique protection available to consumers making purchases with their credit cards is ___. (Mann, p. 29) A. the right to postpone payment of a credit card bill in the event of a medical emergency B. the right to withhold payment for a good that is not delivered or is defective C. protection from loss when unauthorized use is reported to the issuer in a timely manner D. the right to receive monthly statements 9 41. From Diners Club to the present, a common complaint of retailers about credit cards has been that they ___. Evans and Schmalensee point out that merchant acceptance of credit cards has ____. (ES, pp. 115-116) A. take a haircut every time a consumer uses one; grown nevertheless B. take a haircut every time a consumer uses one; stalled as a result C. can't convince consumers to use them; grown nevertheless D. can't convince consumers to use them; stalled as a result 42. In the early days of credit cards, large retailers were ____ about taking Visa and MasterCard credit cards because the cards ____than their own store cards. (ES, p. 116) A. enthusiastic; were easier to process B. enthusiastic; yielded higher profits per transaction C. unenthusiastic; were harder to process D. unenthusiastic; yielded lower profits per transaction 43. Until fairly recently, the major credit card systems like Visa imposed a restriction on participating merchants called the ____ rule, which prohibited a merchant from ____. (ES, p. 119) A. honor-all-cards; taking the cards of one card system but not the cards of another system B. honor-all cards; taking some cards of a system but not other cards of the same system C. no-surcharge; giving customers a discount for paying by cash or check D. no-surcharge; charging one customer a higher price than another customer 44. Suppose a merchant has been accepting only cash and checks for payment. Which of the following would represent potential benefits to the merchant of accepting credit cards? (ES, pp. 120-124) 1. Can be sure of getting paid if he follows proper card authorization procedures, whereas a check could bounce. 2. Can sell more, because consumers who stop by his store and do not carry checks will now be able to pay with a credit card. 3. Can sell more, because some consumers are only willing to buy on credit. 4. Can sell more, because consumers who preferred to shop at competing stores because they accepted credit cards will now be willing to shop with him. A. 1 and 3 B. 2 and 4 C. 1, 2, and 4 D. 1, 2, 3, and 4 45. Although they question its practical importance, Evans and Schmalensee note that one of the potential benefits in Question 44 is a private rather than social benefit and could thus lead to 10 over-acceptance of credit cards by merchants. Which benefit do they have in mind? (ES, pp. 123-124) A. 1 B. 2 C. 3 D. 4