MSF EXAM /MSF BASIC RIDER COURSE NEWEST 2025 ACTUA
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L EXAM COMPLETE 250 QUESTIONS AND CORRECTDETAIL
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ED ANSWERS (VERIFIED ANSWERS) |ALREADY GRADED A+
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Economic collapse during the 1930s, the banking system in the U.S. perfor
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med directly or indirectly all financial services. Those functionsincluded al
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l of the following EXCEPT
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A. commercial banking. z
B. money market funds. z z
C. investment banking. z
D. stock investing. z
E. insurance services. - ANSWER B Money Market Funds z z z z z z z
Depository financial institutions include all of the following EXCEPT
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A. commercial banks. z
B. savings banks. z
C. investment banks. z
D. credit unions. z
E. all of the options are depository institutions. -
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ANSWER C.investment banks.
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Nondepository financial institutions are represented by all of thefollowing z z z z z z z z z z
EXCEPT
A. insurance companies. z
B. mutual funds. z
C. finance companies. z
D. credit unions. z
E. securities firms. - ANSWER D. credit unions. z z z z z z
Which of the following statements is FALSE?
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A. A financial intermediary specializes in the production of information.
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,B. A financial intermediary reduces its risk exposure by pooling itsas
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sets.
C. A financial intermediary benefits society by providing a mechanismfo
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r payments.
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D. A financial intermediary may act as a broker to bring together fundsdef
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icit and funds surplus units.
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E. A financial intermediary acts as a lender of last resort. -
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zANSWER E.A financial intermediary acts as a lender of last resort.
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5. Which function of an FI reduces transaction and information costs betwe
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en a corporation and individual which may encourage a higher rateof savin
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gs?
A. Brokerage services. z
B. Asset transformation services. z z
C. Information production services. z z
D. Money supply management. z z
E. Administration of the payments mechanism. - z z z z z
ANSWER A.Brokerage services.
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In its role as a delegated monitor, an FI
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A. keeps track of required interest and principal payments on loans itori
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ginates.
B. works with financially distressed borrowers in danger of defaultingo
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n their loans.
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C. holds portfolios of loans that they continue to service.
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D. maintains contact with borrowers to ensure that loan proceeds areuti
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lized for intended purposes.
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E. All of the options. - ANSWER E. All of the options.
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Which of the following is NOT a major function of financialintermediaries
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?
A. Brokerage services. z
B. Asset transformation services. z z
C. Information production. z
D. Management of the nation's money supply. z z z z z
,E. Administration of the payments mechanism. - z z z z z
ANSWER D.Management of the nation's money supply.
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Advantages of depositing funds into a typical bank account instead ofdirect
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ly buying corporate securities include all of the following EXCEPT
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A. monitoring done by the bank on your behalf. z z z z z z z
B. increased liquidity if funds are needed quickly.
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C. increased transactions costs. z z
D. less price risk when funds are needed.
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E. better diversification of deposited funds. -
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zANSWER C. increasedtransactions costs.
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Many households place funds with financial institutions because manyFI
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accounts provide
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A. lower denominations than other securities.
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B. flexible maturities verses other interest-earning securities.
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C. better liquidity than directly negotiated debt contracts.
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D. less price risk if interest rates change.
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E. All of the options. - ANSWER E. All of the options.
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The reason FIs can offer highly liquid, low price-
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risk contracts to saverswhile investing in relatively illiquid and higher risk
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assets is z
A. because diversification allows an FI to predict more accurately theex
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pected returns on its asset portfolio.
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B. significant amounts of portfolio risk are diversified away by investingin
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assets that have correlations between returns that are less than perfectly pos
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itive.
C. because individual savers cannot benefit from risk diversification.
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D. because FIs have a cost advantage in monitoring their portfolios.
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E. All of the options. - ANSWER E. All of the options.
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The federal government has traditionally extended safety nets to DIsconsis
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ting of z
, A. deposit insurance, discount window borrowing, and reserver
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equirements.
B. deposit insurance and discount window borrowing.
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C. deposit insurance, unemployment insurance, and discount windowb
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orrowing.
D. deposit insurance, open market operations, and discount windowb
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orrowing. - z
ANSWER B. deposit insurance and discount window borrowing.
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The asset transformation function of FIs typically involves
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A. receipt of securities through electronic payments systems.
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B. altering the liquidity and maturity features of funds sources used tofin
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ance the FI's asset portfolio.
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C. granting loans to transform funds deficit units into funds surplusun
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its.
D. investing short-term funds in off-balance sheet activities. z z z z z z
E. transferring of funds from one generation to another. - z z z z z z z z
zANSWER B.altering the liquidity and maturity features of funds sources
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used to finance the FI's asset portfolio.
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Which of the following refers to the possibility that a firm's owners ormana
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gers will take actions contrary to the promises contained in the covenants o
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f the securities the firm issues to raise funds?
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A. Liquidity risk. z
B. Price risk. z
C. Credit risk. z
D. Intermediation.
E. Agency costs. - ANSWER E. Agency costs. z z z z z z
14. Which of the following refers to the term "maturity intermediation"?
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A. Creation of a secondary market mature enough to withstandv
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olatility.
B. Overcoming constraints to buying assets imposed by large minimumde z z z z z z z z z
nomination size. z
C. Mismatching the maturities of assets and liabilities. z z z z z z
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L EXAM COMPLETE 250 QUESTIONS AND CORRECTDETAIL
z z z z z z z
ED ANSWERS (VERIFIED ANSWERS) |ALREADY GRADED A+
z z z z z z
Economic collapse during the 1930s, the banking system in the U.S. perfor
z z z z z z z z z z z
med directly or indirectly all financial services. Those functionsincluded al
z z z z z z z z z z
l of the following EXCEPT
z z z z
A. commercial banking. z
B. money market funds. z z
C. investment banking. z
D. stock investing. z
E. insurance services. - ANSWER B Money Market Funds z z z z z z z
Depository financial institutions include all of the following EXCEPT
z z z z z z z z
A. commercial banks. z
B. savings banks. z
C. investment banks. z
D. credit unions. z
E. all of the options are depository institutions. -
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ANSWER C.investment banks.
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Nondepository financial institutions are represented by all of thefollowing z z z z z z z z z z
EXCEPT
A. insurance companies. z
B. mutual funds. z
C. finance companies. z
D. credit unions. z
E. securities firms. - ANSWER D. credit unions. z z z z z z
Which of the following statements is FALSE?
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A. A financial intermediary specializes in the production of information.
z z z z z z z z
,B. A financial intermediary reduces its risk exposure by pooling itsas
z z z z z z z z z z
sets.
C. A financial intermediary benefits society by providing a mechanismfo
z z z z z z z z z
r payments.
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D. A financial intermediary may act as a broker to bring together fundsdef
z z z z z z z z z z z z
icit and funds surplus units.
z z z z
E. A financial intermediary acts as a lender of last resort. -
z z z z z z z z z z
zANSWER E.A financial intermediary acts as a lender of last resort.
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5. Which function of an FI reduces transaction and information costs betwe
z z z z z z z z z z
en a corporation and individual which may encourage a higher rateof savin
z z z z z z z z z z z z
gs?
A. Brokerage services. z
B. Asset transformation services. z z
C. Information production services. z z
D. Money supply management. z z
E. Administration of the payments mechanism. - z z z z z
ANSWER A.Brokerage services.
z z z z
In its role as a delegated monitor, an FI
z z z z z z z z
A. keeps track of required interest and principal payments on loans itori
z z z z z z z z z z z
ginates.
B. works with financially distressed borrowers in danger of defaultingo
z z z z z z z z z
n their loans.
z z
C. holds portfolios of loans that they continue to service.
z z z z z z z z
D. maintains contact with borrowers to ensure that loan proceeds areuti
z z z z z z z z z z
lized for intended purposes.
z z z
E. All of the options. - ANSWER E. All of the options.
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Which of the following is NOT a major function of financialintermediaries
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?
A. Brokerage services. z
B. Asset transformation services. z z
C. Information production. z
D. Management of the nation's money supply. z z z z z
,E. Administration of the payments mechanism. - z z z z z
ANSWER D.Management of the nation's money supply.
z z z z z z z z
Advantages of depositing funds into a typical bank account instead ofdirect
z z z z z z z z z z z
ly buying corporate securities include all of the following EXCEPT
z z z z z z z z z
A. monitoring done by the bank on your behalf. z z z z z z z
B. increased liquidity if funds are needed quickly.
z z z z z z
C. increased transactions costs. z z
D. less price risk when funds are needed.
z z z z z z
E. better diversification of deposited funds. -
z z z z z
zANSWER C. increasedtransactions costs.
z z z z
Many households place funds with financial institutions because manyFI
z z z z z z z z z
accounts provide
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A. lower denominations than other securities.
z z z z
B. flexible maturities verses other interest-earning securities.
z z z z z
C. better liquidity than directly negotiated debt contracts.
z z z z z z
D. less price risk if interest rates change.
z z z z z z
E. All of the options. - ANSWER E. All of the options.
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The reason FIs can offer highly liquid, low price-
z z z z z z z z
risk contracts to saverswhile investing in relatively illiquid and higher risk
z z z z z z z z z z z z
assets is z
A. because diversification allows an FI to predict more accurately theex
z z z z z z z z z z
pected returns on its asset portfolio.
z z z z z
B. significant amounts of portfolio risk are diversified away by investingin
z z z z z z z z z z z
assets that have correlations between returns that are less than perfectly pos
z z z z z z z z z z z
itive.
C. because individual savers cannot benefit from risk diversification.
z z z z z z z
D. because FIs have a cost advantage in monitoring their portfolios.
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E. All of the options. - ANSWER E. All of the options.
z z z z z z z z z z
The federal government has traditionally extended safety nets to DIsconsis
z z z z z z z z z z
ting of z
, A. deposit insurance, discount window borrowing, and reserver
z z z z z z z
equirements.
B. deposit insurance and discount window borrowing.
z z z z z
C. deposit insurance, unemployment insurance, and discount windowb
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orrowing.
D. deposit insurance, open market operations, and discount windowb
z z z z z z z z
orrowing. - z
ANSWER B. deposit insurance and discount window borrowing.
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The asset transformation function of FIs typically involves
z z z z z z z
A. receipt of securities through electronic payments systems.
z z z z z z
B. altering the liquidity and maturity features of funds sources used tofin
z z z z z z z z z z z
ance the FI's asset portfolio.
z z z z
C. granting loans to transform funds deficit units into funds surplusun
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its.
D. investing short-term funds in off-balance sheet activities. z z z z z z
E. transferring of funds from one generation to another. - z z z z z z z z
zANSWER B.altering the liquidity and maturity features of funds sources
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used to finance the FI's asset portfolio.
z z z z z z
Which of the following refers to the possibility that a firm's owners ormana
z z z z z z z z z z z z z
gers will take actions contrary to the promises contained in the covenants o
z z z z z z z z z z z z
f the securities the firm issues to raise funds?
z z z z z z z z
A. Liquidity risk. z
B. Price risk. z
C. Credit risk. z
D. Intermediation.
E. Agency costs. - ANSWER E. Agency costs. z z z z z z
14. Which of the following refers to the term "maturity intermediation"?
z z z z z z z z z z
A. Creation of a secondary market mature enough to withstandv
z z z z z z z z z
olatility.
B. Overcoming constraints to buying assets imposed by large minimumde z z z z z z z z z
nomination size. z
C. Mismatching the maturities of assets and liabilities. z z z z z z
