FIN 420 CORRECT EXAMS ANSWERS AND
QUESTIONS SET A+
✔✔Critical Issues with Bankruptcy - ✔✔- Is it a temporary problem
- IS company worth more if liquidated
- Who'll be in charge and what type of bankruptcy is most appropriate
✔✔Sarbanes-Oxley Act (SOX) - ✔✔Makes the CFO of publicly traded companies listed
on US stock exchanges personally responsible for the accuracy and completeness of
financial statements, and for the development and implementation of adequate internal
financial controls
✔✔Secure and Unsecured Creditors - ✔✔-if secured you have legal security interest,
but if not you can't claim any remaining assets after secured assets are removed
✔✔Unanimous Consent - ✔✔all classes of creditors and equity holders must consent to
the reorganization plan, with a two-thirds vote of all members in each class required for
consent
✔✔What do Banks do for Firms - ✔✔help firms obtain capital, invest funds, and manage
treasury operations via various products and services.
✔✔Differences in banking structures and financial regulations may - ✔✔impact the way
in which global FIs offer services in certain countries.
✔✔Commercial Banks offer - ✔✔Two types of depository accounts
✔✔Demand Deposit Account - ✔✔These receive deposits, make payments and
facilitate intercompany transfers
✔✔Time Deposit Accounts (TDA) - ✔✔Early withdrawal is only allowed with prior
notification. This may result in a penalty. Examples include: Certificate of Deposit and
MMDA's
, ✔✔Money Market Deposit Accounts (MMDAs) - ✔✔covered by deposit insurance and
limits account holders to a defined number of pre-authorized withdrawals
✔✔SWIFT uses - ✔✔8 or 11 characterers when transferring money between banks
✔✔RTN - ✔✔This code routes checks and electronic transactions to the right FI
✔✔IBAN - ✔✔way to identify bank accounts across national borders and can have up to
34 alphanumeric characters that is mostly made up of information that is country-
specific
✔✔Service offered by Banks: Credit Services - ✔✔Banks lend funds deposited by
savers to entities needing capital
✔✔Services offered By Banks: - ✔✔- Credit Services
- Transaction Processing
- Info Reporting
Trade Services
- FX Traded
- Risk Management
✔✔Transaction Processing - ✔✔Banks in most countries control access to the various
payment processing systems
✔✔Info Reporting - ✔✔This is critical for efficient management of a firm's treasury
operations
✔✔Trade Services - ✔✔•Commercial LC: Banks substitute their credit on behalf of the
customer
•Stand by Letter of Credit: Ensures certain terms and conditions are met by the bank's
customers
✔✔Investment Banks - ✔✔Offer much more investment services than a commercial
bank like security underwriting, M&A divestitures, and acting as a financial advisor to
institutional clients
✔✔Underwriting - ✔✔-own entire issue
-Issuer receives its funds
-investment bank assumes price and marketability risk
Full and Best Effort
✔✔Distribution - ✔✔Sell and Buy side of an investment bank and should be
independent from each other by internal controls and procedures.
QUESTIONS SET A+
✔✔Critical Issues with Bankruptcy - ✔✔- Is it a temporary problem
- IS company worth more if liquidated
- Who'll be in charge and what type of bankruptcy is most appropriate
✔✔Sarbanes-Oxley Act (SOX) - ✔✔Makes the CFO of publicly traded companies listed
on US stock exchanges personally responsible for the accuracy and completeness of
financial statements, and for the development and implementation of adequate internal
financial controls
✔✔Secure and Unsecured Creditors - ✔✔-if secured you have legal security interest,
but if not you can't claim any remaining assets after secured assets are removed
✔✔Unanimous Consent - ✔✔all classes of creditors and equity holders must consent to
the reorganization plan, with a two-thirds vote of all members in each class required for
consent
✔✔What do Banks do for Firms - ✔✔help firms obtain capital, invest funds, and manage
treasury operations via various products and services.
✔✔Differences in banking structures and financial regulations may - ✔✔impact the way
in which global FIs offer services in certain countries.
✔✔Commercial Banks offer - ✔✔Two types of depository accounts
✔✔Demand Deposit Account - ✔✔These receive deposits, make payments and
facilitate intercompany transfers
✔✔Time Deposit Accounts (TDA) - ✔✔Early withdrawal is only allowed with prior
notification. This may result in a penalty. Examples include: Certificate of Deposit and
MMDA's
, ✔✔Money Market Deposit Accounts (MMDAs) - ✔✔covered by deposit insurance and
limits account holders to a defined number of pre-authorized withdrawals
✔✔SWIFT uses - ✔✔8 or 11 characterers when transferring money between banks
✔✔RTN - ✔✔This code routes checks and electronic transactions to the right FI
✔✔IBAN - ✔✔way to identify bank accounts across national borders and can have up to
34 alphanumeric characters that is mostly made up of information that is country-
specific
✔✔Service offered by Banks: Credit Services - ✔✔Banks lend funds deposited by
savers to entities needing capital
✔✔Services offered By Banks: - ✔✔- Credit Services
- Transaction Processing
- Info Reporting
Trade Services
- FX Traded
- Risk Management
✔✔Transaction Processing - ✔✔Banks in most countries control access to the various
payment processing systems
✔✔Info Reporting - ✔✔This is critical for efficient management of a firm's treasury
operations
✔✔Trade Services - ✔✔•Commercial LC: Banks substitute their credit on behalf of the
customer
•Stand by Letter of Credit: Ensures certain terms and conditions are met by the bank's
customers
✔✔Investment Banks - ✔✔Offer much more investment services than a commercial
bank like security underwriting, M&A divestitures, and acting as a financial advisor to
institutional clients
✔✔Underwriting - ✔✔-own entire issue
-Issuer receives its funds
-investment bank assumes price and marketability risk
Full and Best Effort
✔✔Distribution - ✔✔Sell and Buy side of an investment bank and should be
independent from each other by internal controls and procedures.
