FIN 420 EXAM 1 RISK AND RETURN
PORTFOLIO THEORY ASSESSMENT STUDY
GUIDE
●● Shadow banking is defined as:
any type of lending provided by financial institutions that are not
commercial banks
any type of lending performed by the financial reserve
a nonbank depository institution
non of the above
Answer: any type of lending provided by financial institutions that are
not commercial banks
●● A financial holding company cannot own which of the following?
A bank.
A bank holding company.
A thrift.
A thrift holding company.
A financial holding company may own all of the above.
Answer: A financial holding company may own all of the above.
●● Bank regulations:
,can prevent bank failures.
can eliminate economic risk for banks.
serve as guidelines for sound operating policies.
guarantee bankers will make sound management decisions.
guarantee bankers act in an ethical manner.
Answer: serve as guidelines for sound operating policies
●● ______________ refers to the process of pooling a group of assets
with similar features and issuing securities that are collateralized by the
assets.
Originate-to-Resell
Securitization
Mortgage Collateralization
Deposit Origination
Loan-to-Distribute
Answer: Securitization
●● Which of the following is not a fundamental function of the Federal
Reserve?
Conduct the nation s monetary policy.
Provide an effective payments system.
Regulate banking operations.
Ensure bank profitability.
, All of the above are fundamental functions of the Federal Reserve.
Answer: All of the above are fundamental functions of the Federal
Reserve.
●● What is the job of the Consumer Financial Protection Bureau?
prevent predatory lending practices
make it easier for consumers to understand the terms of a mortgage
before agreeing to them
deters mortgage brokers from earning higher commissions for closing
loans with higher fees or higher interest rates
requires that mortgage originators not steer potential borrowers to a loan
that will result in the highest payment for the originator
all of the above are jobs of the CFPB
Answer: all of the above are jobs of the CFPB
●● In 2008, the U.S. Treasury financial supported financial institutions
by:
purchasing troubled assets.
buying preferred stock in some financial institutions.
issuing guarantees on money market funds.
increasing the deposit insurance limit.
all of the above.
Answer: all the above
PORTFOLIO THEORY ASSESSMENT STUDY
GUIDE
●● Shadow banking is defined as:
any type of lending provided by financial institutions that are not
commercial banks
any type of lending performed by the financial reserve
a nonbank depository institution
non of the above
Answer: any type of lending provided by financial institutions that are
not commercial banks
●● A financial holding company cannot own which of the following?
A bank.
A bank holding company.
A thrift.
A thrift holding company.
A financial holding company may own all of the above.
Answer: A financial holding company may own all of the above.
●● Bank regulations:
,can prevent bank failures.
can eliminate economic risk for banks.
serve as guidelines for sound operating policies.
guarantee bankers will make sound management decisions.
guarantee bankers act in an ethical manner.
Answer: serve as guidelines for sound operating policies
●● ______________ refers to the process of pooling a group of assets
with similar features and issuing securities that are collateralized by the
assets.
Originate-to-Resell
Securitization
Mortgage Collateralization
Deposit Origination
Loan-to-Distribute
Answer: Securitization
●● Which of the following is not a fundamental function of the Federal
Reserve?
Conduct the nation s monetary policy.
Provide an effective payments system.
Regulate banking operations.
Ensure bank profitability.
, All of the above are fundamental functions of the Federal Reserve.
Answer: All of the above are fundamental functions of the Federal
Reserve.
●● What is the job of the Consumer Financial Protection Bureau?
prevent predatory lending practices
make it easier for consumers to understand the terms of a mortgage
before agreeing to them
deters mortgage brokers from earning higher commissions for closing
loans with higher fees or higher interest rates
requires that mortgage originators not steer potential borrowers to a loan
that will result in the highest payment for the originator
all of the above are jobs of the CFPB
Answer: all of the above are jobs of the CFPB
●● In 2008, the U.S. Treasury financial supported financial institutions
by:
purchasing troubled assets.
buying preferred stock in some financial institutions.
issuing guarantees on money market funds.
increasing the deposit insurance limit.
all of the above.
Answer: all the above
