Question 1

What regulatory change did Congress approve in 2010 to reduce counterparty risk in the shadow banking system?

Accepted Answer

A)  push more trading of derivatives onto exchanges 
B)  required investment banks to follow the same rules on leverage as commercial banks 
C)  required increased collateral for those trading derivatives 
D)  banned trading of mortgage-backed securities 
A)  push more trading of derivatives onto exchanges 
B)  required investment banks to follow the same rules on leverage as commercial banks 
C)  required increased collateral for those trading derivatives 
D)  banned trading of mortgage-backed securities

Question 2

What makes advising on mergers and acquisitions particularly profitable for investment banks relative to other services that they provide?

Accepted Answer

Unlike other activities,an inv

Question 3

Sales finance companies

Accepted Answer

A)  purchase accounts receivable of small firms at a discount. 
B)  sell commercial paper and buy long-term corporate bonds. 
C)  take in deposits from savers and buy corporate commercial paper. 
D)  are affiliated with companies which manufacture or sell goods. 
A)  purchase accounts receivable of small firms at a discount. 
B)  sell commercial paper and buy long-term corporate bonds. 
C)  take in deposits from savers and buy corporate commercial paper. 
D)  are affiliated with companies which manufacture or sell goods.

Question 4

A specified amount of a claim that the insurance company does NOT need to pay is called

Accepted Answer

A)  coinsurance. 
B)  a deductible. 
C)  a copayment. 
D)  a premium. 
A)  coinsurance. 
B)  a deductible. 
C)  a copayment. 
D)  a premium.

Question 5

What is the name of the pension plan under which employees can make tax-deductible contributions through regular payroll deductions?

Accepted Answer

A)  401(k) plan 
B)  Social Security plan 
C)  early retirement plan 
D)  486(b) plan 
A)  401(k) plan 
B)  Social Security plan 
C)  early retirement plan 
D)  486(b) plan

Question 6

Shadow banks ________ borrow short-term funds that are not federally insured and use them for long-term investment,and therefore ________ to runs similar to those that occurred during the financial crisis.

Accepted Answer

A)  continue to; are vulnerable 
B)  continue to; are no longer vulnerable 
C)  no longer; are vulnerable 
D)  no longer; are no longer vulnerable 
A)  continue to; are vulnerable 
B)  continue to; are no longer vulnerable 
C)  no longer; are vulnerable 
D)  no longer; are no longer vulnerable

Question 7

All of the following are potential benefits of defined contribution plans EXCEPT

Accepted Answer

A)  clear ownership rights to the balances of their 401Ks. 
B)  lower risk for employees. 
C)  if the employee's investments are profitable, the employee can have high income during retirement. 
D)  contributions to traditional 401Ks are tax deductible. 
A)  clear ownership rights to the balances of their 401Ks. 
B)  lower risk for employees. 
C)  if the employee's investments are profitable, the employee can have high income during retirement. 
D)  contributions to traditional 401Ks are tax deductible.

Question 8

When an insurance company makes a direct loan to a firm,the loan is known as

Accepted Answer

A)  a private placement. 
B)  a commercial paper. 
C)  an account receivable. 
D)  an account payable. 
A)  a private placement. 
B)  a commercial paper. 
C)  an account receivable. 
D)  an account payable.

Question 9

What do many economists see finance companies as having an advantage in?

Accepted Answer

A)  purchasing commercial paper 
B)  selling long-term securities 
C)  monitoring the value of collateral 
D)  charging consumers particularly low interest rates 
A)  purchasing commercial paper 
B)  selling long-term securities 
C)  monitoring the value of collateral 
D)  charging consumers particularly low interest rates

Question 10

An important service provided by underwriters is

Accepted Answer

A)  lowering of information costs. 
B)  dealing with problems of moral hazard. 
C)  insuring firms against loss from fire. 
D)  insuring firms against loss from employee theft. 
A)  lowering of information costs. 
B)  dealing with problems of moral hazard. 
C)  insuring firms against loss from fire. 
D)  insuring firms against loss from employee theft.

Question 11

In which of the following have pension funds invested the most?

Accepted Answer

A)  corporate equities and mutual fund shares 
B)  government securities 
C)  corporate bonds 
D)  mortgages 
A)  corporate equities and mutual fund shares 
B)  government securities 
C)  corporate bonds 
D)  mortgages

Question 12

All of the following are types of finance companies EXCEPT

Accepted Answer

A)  government finance. 
B)  consumer finance. 
C)  sales finance. 
D)  business finance. 
A)  government finance. 
B)  consumer finance. 
C)  sales finance. 
D)  business finance.

Question 13

Mutual funds

Accepted Answer

A)  take in deposits from savers and make loans to borrowers. 
B)  sell shares to savers and purchase assets with the funds. 
C)  take in deposits from savers and purchase assets with the funds. 
D)  bring together small savers and small borrowers. 
A)  take in deposits from savers and make loans to borrowers. 
B)  sell shares to savers and purchase assets with the funds. 
C)  take in deposits from savers and purchase assets with the funds. 
D)  bring together small savers and small borrowers.

Question 14

Which of the following is a contractual saving institution?

Accepted Answer

A)  The New York Stock Exchange 
B)  Greater Illinois Savings and Loan 
C)  Prudential Insurance Company 
D)  Fidelity Magellan Mutual Fund 
A)  The New York Stock Exchange 
B)  Greater Illinois Savings and Loan 
C)  Prudential Insurance Company 
D)  Fidelity Magellan Mutual Fund

Question 15

Which agency did Congress create in the 1930s to reduce information costs in financial markets?

Accepted Answer

A)  FDIC 
B)  SEC 
C)  Federal Reserve 
D)  Consumer Financial Protection Agency 
A)  FDIC 
B)  SEC 
C)  Federal Reserve 
D)  Consumer Financial Protection Agency

Question 16

What type of economic research do analysts at investment banks conduct?

Accepted Answer

Analysts engage in economic research,wri

Question 17

Which of the following activities is NOT a primary concern of investment banks?

Accepted Answer

A)  taking in deposits and making loans 
B)  providing advice and financing for mergers and acquisitions 
C)  underwriting new security issues 
D)  providing advice on new security issues 
A)  taking in deposits and making loans 
B)  providing advice and financing for mergers and acquisitions 
C)  underwriting new security issues 
D)  providing advice on new security issues

Question 18

What does it mean for an investment bank to conduct a "road show"?

Accepted Answer

A)  It involves an investment bank marketing its services to firms considering new issues. 
B)  It is when an investment bank goes to the SEC to seek approval for a new issue. 
C)  It is when firms seeking an underwriter consider alternative investment banks. 
D)  It involves visits to institutional investors who might want to buy the security issue. 
A)  It involves an investment bank marketing its services to firms considering new issues. 
B)  It is when an investment bank goes to the SEC to seek approval for a new issue. 
C)  It is when firms seeking an underwriter consider alternative investment banks. 
D)  It involves visits to institutional investors who might want to buy the security issue.

Question 19

The law of large numbers allows insurance companies to

Accepted Answer

A)  hold capital market instruments as assets without fearing overly large numbers of defaults. 
B)  hold money market instruments as assets without fearing overly large numbers of defaults. 
C)  predict the average number of occurrences of insurable events in a large population of policyholders. 
D)  charge higher premiums than necessary, knowing that large numbers of individuals will pay them. 
A)  hold capital market instruments as assets without fearing overly large numbers of defaults. 
B)  hold money market instruments as assets without fearing overly large numbers of defaults. 
C)  predict the average number of occurrences of insurable events in a large population of policyholders. 
D)  charge higher premiums than necessary, knowing that large numbers of individuals will pay them.

Question 20

Money market mutual funds

Accepted Answer

A)  hold portfolios of stocks. 
B)  hold portfolios of short-term assets. 
C)  are always load funds. 
D)  hold only U.S. Treasury securities. 
A)  hold portfolios of stocks. 
B)  hold portfolios of short-term assets. 
C)  are always load funds. 
D)  hold only U.S. Treasury securities.

What regulatory change did Congress approve in 2010 to reduce counterparty risk in the shadow banking system?

What makes advising on mergers and acquisitions particularly profitable for investment banks relative to other services that they provide?

Sales finance companies

A specified amount of a claim that the insurance company does NOT need to pay is called

What is the name of the pension plan under which employees can make tax-deductible contributions through regular payroll deductions?

Shadow banks borrow short-term funds that are not federally insured and use them for long-term investment,and therefore to runs similar to those that occurred during the financial crisis.

All of the following are potential benefits of defined contribution plans EXCEPT

When an insurance company makes a direct loan to a firm,the loan is known as

What do many economists see finance companies as having an advantage in?

An important service provided by underwriters is

In which of the following have pension funds invested the most?

All of the following are types of finance companies EXCEPT

Mutual funds

Which of the following is a contractual saving institution?

Which agency did Congress create in the 1930s to reduce information costs in financial markets?

What type of economic research do analysts at investment banks conduct?

Which of the following activities is NOT a primary concern of investment banks?

What does it mean for an investment bank to conduct a "road show"?

The law of large numbers allows insurance companies to

Money market mutual funds

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I- the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters

Exam 11: Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

What regulatory change did Congress approve in 2010 to reduce counterparty risk in the shadow banking system?

What makes advising on mergers and acquisitions particularly profitable for investment banks relative to other services that they provide?

Sales finance companies

A specified amount of a claim that the insurance company does NOT need to pay is called

What is the name of the pension plan under which employees can make tax-deductible contributions through regular payroll deductions?

Shadow banks ________ borrow short-term funds that are not federally insured and use them for long-term investment,and therefore ________ to runs similar to those that occurred during the financial crisis.

All of the following are potential benefits of defined contribution plans EXCEPT

When an insurance company makes a direct loan to a firm,the loan is known as

What do many economists see finance companies as having an advantage in?

An important service provided by underwriters is

In which of the following have pension funds invested the most?

All of the following are types of finance companies EXCEPT

Mutual funds

Which of the following is a contractual saving institution?

Which agency did Congress create in the 1930s to reduce information costs in financial markets?

What type of economic research do analysts at investment banks conduct?

Which of the following activities is NOT a primary concern of investment banks?

What does it mean for an investment bank to conduct a "road show"?

The law of large numbers allows insurance companies to

Money market mutual funds

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I- the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters

Shadow banks borrow short-term funds that are not federally insured and use them for long-term investment,and therefore to runs similar to those that occurred during the financial crisis.