Banking Practice Exam 2025 - Free Banking Practice Questions and Study Guide

The correct answer is that a financial holding company can own both commercial banks and non-bank businesses. This type of holding company is specifically designed to engage in a broader range of financial activities than traditional bank holding companies.

Financial holding companies benefit from the Gramm-Leach-Bliley Act of 1999, which eliminated the separation between banking, insurance, and securities industries. As a result, they can diversify their business operations to include various financial services beyond traditional banking, such as investment banking, wealth management, and insurance. This flexibility allows them to create synergies among their various businesses and provide more comprehensive financial solutions to their customers.

In contrast, options like one-bank and multibank holding companies are primarily focused on owning and managing banks. A one-bank holding company controls only a single bank, while a multibank holding company owns multiple banks but is generally limited to traditional banking operations. A mixed-use holding company, while not a standard term in regulatory frameworks, generally refers to entities that engage in a variety of activities but does not necessarily denote the same comprehensive financial capabilities as a financial holding company.

Thus, the unique structure and regulatory permissions given to financial holding companies empower them to operate across both bank and non-bank sectors, making them the correct choice