Chapter 10 The Investment Function in Banking and Financial-Services Management Exam
4. A(n) _________________________ is a security where the interest stripped security
portion of the security is sold separately from the
principal portion of the security.
5. _________________________ are the way the federal, state and Answer: Pledging requirements
local governments guarantee the safety of their
deposits with banks.
6. The most aggressive investment maturity strategy Answer: rate expectation strategy
calls for the bank to continually shift the maturities of its
securities in responses to changes in interest rates and
is called the __________________.
7. _________________________ is the risk that the bank will have to Answer: Liquidity risk
sell part of its investment portfolio before their maturity
for a capital loss.
8. _________________________ is the risk that the economy of the Answer: Business risk
market area they service may take a down turn in the
future.
9. __________________ is the risk that the company whose Call risk
bonds the financial institution owns may retire the entire
issue of corporate bonds in advance of their maturity
leaving the bank with the risk of earnings losses
resulting from reinvesting the cash at lower interest
rates.
A security issued by the federal government with 1 to 10 Treasury Note
years to maturity when it is issued is called a(n)
_________________________ .
11. A short term debt security issued by major Commercial Paper
corporations is known as __________________.
12. The investment maturity strategy which calls for the Answer: front-end-loaded policy
bank to have all of their investment assets in very short
term maturities is called the _________________________.
13. A money market security which represents a bank's Answer: bankers' acceptance
commitment to pay a stipulated amount of money on a
specific future date under specific conditions and which
is often used in international trade is known as a(n)
_________________________.
, Chapter 10 The Investment Function in Banking and Financial-Services Management Exam
14. A(n) _________________________ is an interest-bearing receipt certificate of deposit
for the deposit of funds in a bank for a stipulated time
period. Ones that are oriented towards business
customers or institutions are known as jumbos.
15. _________________________ are any securities which reach Money market securities
maturity in under one year.
16. _________________________ are any securities whose original Capital Market Securities
maturity exceeds one year
17. Securities sold by Fannie Mae, Freddie Mac and federal agency securities
others are known as
18. Claims against the expected income and principal securitized assets
generated by a pool of similar-type loans are known as
_________________________.
19. The long term debt obligations of major corporate bonds
corporations are known as ________________________.
The investment maturity strategy which calls for the back-end loaded policy
bank to have all of their investment assets in very long
term maturities is known as the _________________________.
21. Financial Institutions may invest in municipal bonds bank qualified
issued by smaller local governments. These bonds are
known as ____________ bonds.
22. Marketable notes and bonds sold by agencies Government Agency Securities
owned by the government or sponsored by the
government are known as .
23. A security issued by the federal government with Treasury Bonds
greater than 10 years to maturity when it is issued is
called a(n) .
24. are time deposits of fixed maturity issued by the Eurocurrency deposits
world's larges banks headquartered in financial centers
around the globe. The heart of this market is centered
in London.
25. are a type of municipal bond that are backed by the General Obligatins bonds
full faith and credit of the issuing government.
4. A(n) _________________________ is a security where the interest stripped security
portion of the security is sold separately from the
principal portion of the security.
5. _________________________ are the way the federal, state and Answer: Pledging requirements
local governments guarantee the safety of their
deposits with banks.
6. The most aggressive investment maturity strategy Answer: rate expectation strategy
calls for the bank to continually shift the maturities of its
securities in responses to changes in interest rates and
is called the __________________.
7. _________________________ is the risk that the bank will have to Answer: Liquidity risk
sell part of its investment portfolio before their maturity
for a capital loss.
8. _________________________ is the risk that the economy of the Answer: Business risk
market area they service may take a down turn in the
future.
9. __________________ is the risk that the company whose Call risk
bonds the financial institution owns may retire the entire
issue of corporate bonds in advance of their maturity
leaving the bank with the risk of earnings losses
resulting from reinvesting the cash at lower interest
rates.
A security issued by the federal government with 1 to 10 Treasury Note
years to maturity when it is issued is called a(n)
_________________________ .
11. A short term debt security issued by major Commercial Paper
corporations is known as __________________.
12. The investment maturity strategy which calls for the Answer: front-end-loaded policy
bank to have all of their investment assets in very short
term maturities is called the _________________________.
13. A money market security which represents a bank's Answer: bankers' acceptance
commitment to pay a stipulated amount of money on a
specific future date under specific conditions and which
is often used in international trade is known as a(n)
_________________________.
, Chapter 10 The Investment Function in Banking and Financial-Services Management Exam
14. A(n) _________________________ is an interest-bearing receipt certificate of deposit
for the deposit of funds in a bank for a stipulated time
period. Ones that are oriented towards business
customers or institutions are known as jumbos.
15. _________________________ are any securities which reach Money market securities
maturity in under one year.
16. _________________________ are any securities whose original Capital Market Securities
maturity exceeds one year
17. Securities sold by Fannie Mae, Freddie Mac and federal agency securities
others are known as
18. Claims against the expected income and principal securitized assets
generated by a pool of similar-type loans are known as
_________________________.
19. The long term debt obligations of major corporate bonds
corporations are known as ________________________.
The investment maturity strategy which calls for the back-end loaded policy
bank to have all of their investment assets in very long
term maturities is known as the _________________________.
21. Financial Institutions may invest in municipal bonds bank qualified
issued by smaller local governments. These bonds are
known as ____________ bonds.
22. Marketable notes and bonds sold by agencies Government Agency Securities
owned by the government or sponsored by the
government are known as .
23. A security issued by the federal government with Treasury Bonds
greater than 10 years to maturity when it is issued is
called a(n) .
24. are time deposits of fixed maturity issued by the Eurocurrency deposits
world's larges banks headquartered in financial centers
around the globe. The heart of this market is centered
in London.
25. are a type of municipal bond that are backed by the General Obligatins bonds
full faith and credit of the issuing government.
