FINA 3317 Final Exam Questions With
Correct Answers
Of the items below, the main assets for insurers are: - ANSWER Bonds
Which of the following firms depends the most on lending? - ANSWER DATCU
Payday lenders are most likely to be regulated by: - ANSWER The CFPB
In the USA, insurers are mainly regulated by: - ANSWER state regulators
The quotes below are most likely for what type of security? - ANSWER Options
Using the rates from the WSJ page below, which rate gives the best estimate of
what a US commercial bank could expect to earn on their long term assets? -
ANSWER 3.64%
Which of the following financial institutions most likely has bonds as the primary
asset on its balance sheet and policy reserves as its primary liability?: -
ANSWER Insurers
Which combination of risks do insurers most prefer? - ANSWER High-frequency,
short-tail, with high product inflation but low social inflation
Using the rates below,
what is the yield paid by mutual funds that invest primarily in T-Bills and
commercial paper? - ANSWER 0.25%
Which of the following financial institutions has loans as the primary asset on its
balance sheet and deposits as its primary liability?: - ANSWER Credit Union
Which of the following usually has the highest proportion of subprime
borrowers? - ANSWER Finance Companies
The Fed regulates which of the following?: - ANSWER Systemically important
investment banks / BHCs
Finance companies face a vulnerability that commercial banks do not because: -
ANSWER Finance companies depend more on issuing commercial paper than
banks
, A firm commitment underwriting contract is when: - ANSWER The underwriter
purchases the entire new issue of a security and then tries to resell it at a higher
price.
Loans are one of the main assets, and deposits are generally the main liability,
for: - ANSWER Commercial banks
The issue of new securities to a small group of institutional investors is called
(a/an): - ANSWER Private placement
Separate accounts would be seen most commonly at: - ANSWER Insurers
The internal and unreported transfer of large blocks of stock between a bank's
clients is/are called: - ANSWER Dark pools
Which of the following is true about insurers' risk of loss? - ANSWER The losses
associated with high product inflation are easier to predict than the losses
associated with high social inflation.
Which of the following is a difference(s) between Finance Companies and
Commerical Banks? - ANSWER Finance Companies do not take deposits. /
Finance Companies are regulated by the CFPB and banks are regulated by the
FDIC.
Small specialized investment banks are called: - ANSWER Boutiques
A large increase in the money supply through the purchase of bonds by the Fed
is called: - ANSWER Quantitative easing
The FDIC regulates which of the following?: - ANSWER Commercial banks
Which central bank is likely to have the most local-currency assets? - ANSWER
The US federal reserve
The "fed funds rate" is: - ANSWER The rate charged by banks when lending
excess reserves to each other.
Which of the following is NOT true about usury? - ANSWER Usury refers to the
charging of excessively low interest rates.
"Quantitative easing" refers to: - ANSWER An unusually large purchase of
government bonds by the Fed.
Correct Answers
Of the items below, the main assets for insurers are: - ANSWER Bonds
Which of the following firms depends the most on lending? - ANSWER DATCU
Payday lenders are most likely to be regulated by: - ANSWER The CFPB
In the USA, insurers are mainly regulated by: - ANSWER state regulators
The quotes below are most likely for what type of security? - ANSWER Options
Using the rates from the WSJ page below, which rate gives the best estimate of
what a US commercial bank could expect to earn on their long term assets? -
ANSWER 3.64%
Which of the following financial institutions most likely has bonds as the primary
asset on its balance sheet and policy reserves as its primary liability?: -
ANSWER Insurers
Which combination of risks do insurers most prefer? - ANSWER High-frequency,
short-tail, with high product inflation but low social inflation
Using the rates below,
what is the yield paid by mutual funds that invest primarily in T-Bills and
commercial paper? - ANSWER 0.25%
Which of the following financial institutions has loans as the primary asset on its
balance sheet and deposits as its primary liability?: - ANSWER Credit Union
Which of the following usually has the highest proportion of subprime
borrowers? - ANSWER Finance Companies
The Fed regulates which of the following?: - ANSWER Systemically important
investment banks / BHCs
Finance companies face a vulnerability that commercial banks do not because: -
ANSWER Finance companies depend more on issuing commercial paper than
banks
, A firm commitment underwriting contract is when: - ANSWER The underwriter
purchases the entire new issue of a security and then tries to resell it at a higher
price.
Loans are one of the main assets, and deposits are generally the main liability,
for: - ANSWER Commercial banks
The issue of new securities to a small group of institutional investors is called
(a/an): - ANSWER Private placement
Separate accounts would be seen most commonly at: - ANSWER Insurers
The internal and unreported transfer of large blocks of stock between a bank's
clients is/are called: - ANSWER Dark pools
Which of the following is true about insurers' risk of loss? - ANSWER The losses
associated with high product inflation are easier to predict than the losses
associated with high social inflation.
Which of the following is a difference(s) between Finance Companies and
Commerical Banks? - ANSWER Finance Companies do not take deposits. /
Finance Companies are regulated by the CFPB and banks are regulated by the
FDIC.
Small specialized investment banks are called: - ANSWER Boutiques
A large increase in the money supply through the purchase of bonds by the Fed
is called: - ANSWER Quantitative easing
The FDIC regulates which of the following?: - ANSWER Commercial banks
Which central bank is likely to have the most local-currency assets? - ANSWER
The US federal reserve
The "fed funds rate" is: - ANSWER The rate charged by banks when lending
excess reserves to each other.
Which of the following is NOT true about usury? - ANSWER Usury refers to the
charging of excessively low interest rates.
"Quantitative easing" refers to: - ANSWER An unusually large purchase of
government bonds by the Fed.
