Question 1

Explain why a large equipment provider that sells to many of its commercial customers on account may use a finance company.

Accepted Answer

A large equipment provider may use a fin

Question 2

The Social Security System in the U.S. is best described as a:

Accepted Answer

A)  defined benefits plan. 
B)  defined contribution plan. 
C)  employer funded plan. 
D)  pay-as-you-go system. 
A)  defined benefits plan. 
B)  defined contribution plan. 
C)  employer funded plan. 
D)  pay-as-you-go system.

Question 3

One result of the Riegle-Neal Interstate Banking and Branching Efficiency Act was that:

Accepted Answer

A)  banking system efficiency decreased. 
B)  banks became less geographically diversified. 
C)  banking system efficiency increased. 
D)  banks became less geographically diversified and banking system efficiency decreased. 
A)  banking system efficiency decreased. 
B)  banks became less geographically diversified. 
C)  banking system efficiency increased. 
D)  banks became less geographically diversified and banking system efficiency decreased.

Question 4

A typical automobile insurance policy is an example of:

Accepted Answer

A)  liability insurance only. 
B)  property and casualty insurance. 
C)  property insurance only. 
D)  casualty insurance only. 
A)  liability insurance only. 
B)  property and casualty insurance. 
C)  property insurance only. 
D)  casualty insurance only.

Question 5

Pension funds resemble life insurance companies in the sense that:

Accepted Answer

A)  the payoff occurs only occurs when a person dies. 
B)  they accept deposits. 
C)  they offer the ability to make premium payments today in return for a promised payment under specified future circumstances. 
D)  they both are better investments the longer you live. 
A)  the payoff occurs only occurs when a person dies. 
B)  they accept deposits. 
C)  they offer the ability to make premium payments today in return for a promised payment under specified future circumstances. 
D)  they both are better investments the longer you live.

Question 6

The number of banks in the U.S. today is approximately:

Accepted Answer

A)  5,400. 
B)  800. 
C)  200. 
D)  15,300. 
A)  5,400. 
B)  800. 
C)  200. 
D)  15,300.

Question 7

The category of financial intermediaries called securities firms includes each of the following, except:

Accepted Answer

A)  mutual funds. 
B)  brokerages. 
C)  investment banks. 
D)  credit unions. 
A)  mutual funds. 
B)  brokerages. 
C)  investment banks. 
D)  credit unions.

Question 8

Pension funds resemble insurance companies by:

Accepted Answer

A)  pooling the savings of only large investors. 
B)  accepting deposits. 
C)  spreading risk. 
D)  becoming better investments the longer you live. 
A)  pooling the savings of only large investors. 
B)  accepting deposits. 
C)  spreading risk. 
D)  becoming better investments the longer you live.

Question 9

Insurance company assets will include:

Accepted Answer

A)  stocks and bonds. 
B)  only bonds. 
C)  only stocks. 
D)  only U.S. Treasury securities. 
A)  stocks and bonds. 
B)  only bonds. 
C)  only stocks. 
D)  only U.S. Treasury securities.

Question 10

Whole life insurance has decreased in popularity due to:

Accepted Answer

A)  many whole life insurance companies becoming bankrupt. 
B)  cheaper savings alternatives that have developed, making whole life policies expensive savings vehicles. 
C)  mergers with property and casualty companies, raising the cost of all insurance. 
D)  lower interest rates on alternative savings vehicles. 
A)  many whole life insurance companies becoming bankrupt. 
B)  cheaper savings alternatives that have developed, making whole life policies expensive savings vehicles. 
C)  mergers with property and casualty companies, raising the cost of all insurance. 
D)  lower interest rates on alternative savings vehicles.

Question 11

There are two current trends in the financial industry which run in opposite directions. What are they?

Accepted Answer

The first is that large firms are workin

Question 12

The Riegle-Neal Interstate Banking and Branching Efficiency Act has allowed banks to diversify themselves geographically. Has this geographical expansion resulted in the harm to consumers that early supporters of anti-branching laws feared? Explain.

Accepted Answer

As the text points out, the results have

Question 13

Why does the United States have more banks than most other highly industrialized countries?

Accepted Answer

The United States, for many ye

Question 14

Why did it take almost 100 years before the United States had its own national currency?

Accepted Answer

The writers of the U.S. Constitution fea

Question 15

Explain why a domestic bank in the U.S. might create a subsidiary bank in a foreign location like the Cayman Islands.

Accepted Answer

A U.S. domestic bank may find it profita

Question 16

One of the results of the limit on bank branching was:

Accepted Answer

A)  increased diversification in the loan portfolio of small banks. 
B)  curtailment of credit availability for borrowers in small towns. 
C)  lower profits for banks. 
D)  increased efficiency in the operations of banks. 
A)  increased diversification in the loan portfolio of small banks. 
B)  curtailment of credit availability for borrowers in small towns. 
C)  lower profits for banks. 
D)  increased efficiency in the operations of banks.

Question 17

If someone wants to start a bank today they would have to:

Accepted Answer

A)  obtain a charter from the federal government. 
B)  simply have $5 million is startup capital, a charter is no longer needed. 
C)  obtain a charter either from the federal or state government. 
D)  obtain a state charter, the federal government stopped issuing charters in 1970. 
A)  obtain a charter from the federal government. 
B)  simply have $5 million is startup capital, a charter is no longer needed. 
C)  obtain a charter either from the federal or state government. 
D)  obtain a state charter, the federal government stopped issuing charters in 1970.

Question 18

Hedge funds:

Accepted Answer

A)  are strictly for millionaires. 
B)  are heavily regulated. 
C)  issue commercial paper and bonds. 
D)  always employ diversification techniques called "hedging." 
A)  are strictly for millionaires. 
B)  are heavily regulated. 
C)  issue commercial paper and bonds. 
D)  always employ diversification techniques called "hedging."

Question 19

What is the basic difference(s) between term and whole life insurance?

Accepted Answer

Term life insurance is just life insuran

Question 20

A young father needing to provide his family with financial security would be better off purchasing:

Accepted Answer

A)  a whole life insurance policy. 
B)  a term life insurance policy. 
C)  as much life insurance as they can afford. 
D)  no life insurance; instead he should focus on saving. 
A)  a whole life insurance policy. 
B)  a term life insurance policy. 
C)  as much life insurance as they can afford. 
D)  no life insurance; instead he should focus on saving.

Exam 13:Financial Industry Structure

Explain why a large equipment provider that sells to many of its commercial customers on account may use a finance company.

The Social Security System in the U.S. is best described as a:

One result of the Riegle-Neal Interstate Banking and Branching Efficiency Act was that:

A typical automobile insurance policy is an example of:

Pension funds resemble life insurance companies in the sense that:

The number of banks in the U.S. today is approximately:

The category of financial intermediaries called securities firms includes each of the following, except:

Pension funds resemble insurance companies by:

Insurance company assets will include:

Whole life insurance has decreased in popularity due to:

There are two current trends in the financial industry which run in opposite directions. What are they?

The Riegle-Neal Interstate Banking and Branching Efficiency Act has allowed banks to diversify themselves geographically. Has this geographical expansion resulted in the harm to consumers that early supporters of anti-branching laws feared? Explain.

Why does the United States have more banks than most other highly industrialized countries?

Why did it take almost 100 years before the United States had its own national currency?

Explain why a domestic bank in the U.S. might create a subsidiary bank in a foreign location like the Cayman Islands.

One of the results of the limit on bank branching was:

If someone wants to start a bank today they would have to:

Hedge funds:

What is the basic difference(s) between term and whole life insurance?

A young father needing to provide his family with financial security would be better off purchasing:

An Introduction to Money and the Financial System

Money and the Payments System

Financial Instruments, Financial Markets, and Financial Institutions

Future Value, Present Value and Interest Rates

Understanding Risk

Bonds, Bond Prices, and the Determination of Interest Rates

The Risk and Term Structure of Interest Rates

Stocks, Stock Markets and Market Efficiency

Derivatives: Futures, Options, and Swaps

Foreign Exchange

The Economics of Financial Intermediation

Depository Institutions: Banks and Bank Management

Regulating the Financial System

Central Banks in the World Today

The Structure of Central Banks: The Federal Reserve and the European Central Bank

The Central Bank Balance Sheet and the Money Supply Process

Monetary Policy: Stabilizing the Domestic Economy

Exchange Rate Policy and the Central Bank

Money Growth, Money Demand and Modern Monetary Policy

Output, Inflation, and Monetary Policy

Understanding Business Cycle Fluctuations

Modern Monetary Policy and the Challenges Facing Central Bankers

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