Pension funds have fewer liquidity problem than depositories

Assignment Help Financial Management

Reference no: EM13953820

1. Pension funds have fewer liquidity problems than depositories because

a. pension funds have more sources of funds.

b. pension fund outflows are more predictable

c. pension funds hold a greater proportion of short-term marketable securities

d. pension fund inflows are less predictable.

2. An active management strategy in which money managers try to make timely movements among stocks, bonds, and cash based on complex quantitative models is called

a. tactical liability management

b. tactical arbitrage manipulation.

c. tactical nuclear deterrent

d. tactical asset allocation

3. Financial holding companies (FHCs)

a. may begin as finance firms for large nonfinancial firms

b. may begin with the merger of several finance, insurance, and investment companies over time and offer diversified financial services

c. face difficulties in melding cultures and managing a diverse group of firms

d. all of the above

4. Captive sales finance companies arose to meet

a. consumers' need for funds to make large household purchases

b. businesses' need for funds to buy inventories necessary for sales

c. businesses' need for funds to purchase equipment and other fixed assets.

d. none of the above

5. The most successful diversified financial services institutions have followed the strategy of

a. offering all financial services to all types of customers

b. keeping the operations of different financial services separate

c. offering a variety of services to selected markets and encouraging cooperation among employees

d. none of the above

6. Lenders can reduce the risk of loan default by

a. increasing the frequency of payments.

b. requiring assets to be pledged as collateral.

c. requiring borrowers to maintain a certain level of deposits in their accounts until the loan matures

d. all the above

7. Insurance operations include

a. new product design and development, production, distribution, and advertisement.

b. services, administration, and finance and investment.

c. underwriting, product management, and claims adjustment and settlement.

d. all of the above

8. For property/casualty insurers, expenses

a. are often larger than revenues from premiums during periods of catastrophic losses

b. are primarily benefit payments and additions to policy reserves

c. are primarily loss expenses, unlike life insurers with expenses dominated by benefit payments and additions to policy reserves

d. a. and c

9. Mortgage-backed securities (MBSs)

a. are loans to the government using residential and business mortgages as collateral

b. can be a source of liquidity to the originator of the underlying asset

c. purchasers include insurers, pension funds, banks, thrifts, credit unions, and mutual funds

d. b. and c.

10. Reserve requirements were first enforced to promote confidence in the banking system. Since the 1950s reserve requirements have also been viewed as a means

a. to control the money supply

b. to provide liquidity for the Fed funds market

c. to supply funds to regulators to aid failing institutions

d. to supply funds to the Federal Reserve to support discount window loans

11. The largest holders of mortgage debt, in descending order, are

a. securitization pools, commercial banks, and savings institutions

b. commercial banks, finance companies, and credit unions

c. federal and related agencies, commercial banks, and savings and loans

d. securitization pools, federal and related agencies, and commercial banks

12. Loans sold with no recourse

a. have a lower probability of default

b. are more attractive to potential investors because of a guaranteed rate of return

c. allow the originator to remove the loans from its balance sheet.

d. all of the above

13. Financial institutions are required to maintain liquid assets for the purpose(s) of

a. meeting repayment obligations to customers holding maturing liabilities

b. meeting regulatory requirements for reserves.

c. meeting the dividend payment requirements of outstanding common stock

d. a. and b.

14. What is the best description of the term "peer to peer" lending?

a. One financial institution lending to another financial institution through Internet applications.

b. A website which structures a loan where one business lends money to another business.

c. An Internet site which pools multiple investors money for the purpose of making a loan to someone else

d. A mobile banking application which allows someone to transfer funds to someone else

15. Financial institutions.......

a. are organizations that can have multiple lines of business which relate to the financial industry

b. have a bank charter which only allows them to make loans

c. are privately held companies which solely offer sub-prime loans

d. are not able to make business loans

Reference no: EM13953820

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