FI 412 FINAL Questions with 100%
Correct Answers
In a __________ plan, the employee usually makes some investment decisions for
funding the pension, often choosing from a collection of mutual funds, rather
than having a full range of options. Correct Answer: defined contribution
In a defined contribution plan, the employee is usually offered a collection of
mutual funds from which to choose.
Social Security is a Correct Answer: "pay-as-you-go" system
If Jules is interested in investing in a mutual fund and wants to know how the
funds will be invested and how the fund has performed in the past, he should
read Correct Answer: the fund's prospectus
The prospectus discloses how the funds will be invested and the past
performance of the fund.
The __________ Act requires hedge funds with more than $100 million to register
with the SEC. Correct Answer: Dodd-Frank
The Dodd-Frank Act of 2010 requires hedge funds that manage more than $100
million to register with the SEC as investment advisors.
Which of the following is NOT a common characteristic of hedge funds? Correct
Answer: Seek to be market-neutral
Require investors to commit funds for several years
Are limited to high net worth individuals
****Track an index, like the S&P 500
, ETFs, not hedge funds, are linked to indexes, like the S&P 500.
Under the Basel plan, Correct Answer: both:
assets and off-balance sheet activities are assigned to various categories to
reflect the degree of credit risk.
a bank's total capital must equal or exceed 8 percent of total risk-weighted
assets
The __________ attempt to set international standards for bank capital. Correct
Answer: Basel Accords
Since the incentive structure for bank executives may very well lead to
undercapitalized banks, the international community has tried to set
international standards for bank capital through the Basel Accords.
ABC Bank's biggest customers do a lot of business in Country X. This exposes ABC
Bank to a high level of risk of what type? Correct Answer: Country risk
ABC Bank will have a high degree of country risk as it is so heavily involved in
another country. If there is significant governmental failure in this country, ABC
Bank is greatly at risk.
Mutual savings banks are concentrated in the ________ United States. Correct
Answer: northeastern
Which of these is an accurate description of a captive sales finance company?
Correct Answer: A finance company owned by a parent company to help
finance the goods sold by the parent company
Correct Answers
In a __________ plan, the employee usually makes some investment decisions for
funding the pension, often choosing from a collection of mutual funds, rather
than having a full range of options. Correct Answer: defined contribution
In a defined contribution plan, the employee is usually offered a collection of
mutual funds from which to choose.
Social Security is a Correct Answer: "pay-as-you-go" system
If Jules is interested in investing in a mutual fund and wants to know how the
funds will be invested and how the fund has performed in the past, he should
read Correct Answer: the fund's prospectus
The prospectus discloses how the funds will be invested and the past
performance of the fund.
The __________ Act requires hedge funds with more than $100 million to register
with the SEC. Correct Answer: Dodd-Frank
The Dodd-Frank Act of 2010 requires hedge funds that manage more than $100
million to register with the SEC as investment advisors.
Which of the following is NOT a common characteristic of hedge funds? Correct
Answer: Seek to be market-neutral
Require investors to commit funds for several years
Are limited to high net worth individuals
****Track an index, like the S&P 500
, ETFs, not hedge funds, are linked to indexes, like the S&P 500.
Under the Basel plan, Correct Answer: both:
assets and off-balance sheet activities are assigned to various categories to
reflect the degree of credit risk.
a bank's total capital must equal or exceed 8 percent of total risk-weighted
assets
The __________ attempt to set international standards for bank capital. Correct
Answer: Basel Accords
Since the incentive structure for bank executives may very well lead to
undercapitalized banks, the international community has tried to set
international standards for bank capital through the Basel Accords.
ABC Bank's biggest customers do a lot of business in Country X. This exposes ABC
Bank to a high level of risk of what type? Correct Answer: Country risk
ABC Bank will have a high degree of country risk as it is so heavily involved in
another country. If there is significant governmental failure in this country, ABC
Bank is greatly at risk.
Mutual savings banks are concentrated in the ________ United States. Correct
Answer: northeastern
Which of these is an accurate description of a captive sales finance company?
Correct Answer: A finance company owned by a parent company to help
finance the goods sold by the parent company
