Question 1

State and local government pension plans tend to be

Accepted Answer

A)  Defined benefit plans 
B)  Defined contribution plans 
C)  Pay-as-you-go plans 
D)  Redistributive plans 
A)  Defined benefit plans 
B)  Defined contribution plans 
C)  Pay-as-you-go plans 
D)  Redistributive plans A

Question 2

Large concentrations of equity in DB portfolios

Accepted Answer

A)  Adds to variability in DB funding positions 
B)  Reduces variability in DB funding positions 
C)  Is immaterial to DB funding positions 
D)  None of the above 
A)  Adds to variability in DB funding positions 
B)  Reduces variability in DB funding positions 
C)  Is immaterial to DB funding positions 
D)  None of the above A

Question 3

The trend in retirement plans has been

Accepted Answer

A)  Toward defined benefit plans 
B)  Toward defined contribution plans 
C)  Toward more reliance on Social Security 
D)  There have been no discernable trends over recent decades 
A)  Toward defined benefit plans 
B)  Toward defined contribution plans 
C)  Toward more reliance on Social Security 
D)  There have been no discernable trends over recent decades B

Question 4

Separate accounts offered by LICOs

Accepted Answer

A)  Add to their risk profiles 
B)  Reduce their risk profiles 
C)  Do not affect their risk profiles 
D)  Increase concentration risk 
A)  Add to their risk profiles 
B)  Reduce their risk profiles 
C)  Do not affect their risk profiles 
D)  Increase concentration risk

Question 5

The reinsurance market

Accepted Answer

A)  Enables double coverage for policy holders 
B)  Fosters risk reduction by reducing concentration risk 
C)  Raises concentration risk 
D)  Is prohibited by regulatory authorities 
A)  Enables double coverage for policy holders 
B)  Fosters risk reduction by reducing concentration risk 
C)  Raises concentration risk 
D)  Is prohibited by regulatory authorities

Question 6

The returns that participants in DB plans receive on their contributions to the plan

Accepted Answer

A)  Are front loaded-they are highest for short-term participants 
B)  Are back loaded-they are highest for long-term participants 
C)  Are neither front nor back loaded 
D)  Are constant across participants 
A)  Are front loaded-they are highest for short-term participants 
B)  Are back loaded-they are highest for long-term participants 
C)  Are neither front nor back loaded 
D)  Are constant across participants

Question 7

The Social Security program in the United States originally was intended to be

Accepted Answer

A)  A defined benefit plan 
B)  A defined contribution plan 
C)  A pay-as-you-go plan 
D)  A redistributive plan 
A)  A defined benefit plan 
B)  A defined contribution plan 
C)  A pay-as-you-go plan 
D)  A redistributive plan

Question 8

Employer sponsors of defined benefit (DB) plans bear what type of risk

Accepted Answer

A)  Investment risk 
B)  Longevity risk 
C)  Managerial risk 
D)  Both a and b above 
A)  Investment risk 
B)  Longevity risk 
C)  Managerial risk 
D)  Both a and b above

Question 9

Annuities offered by life insurance companies (LICOs)

Accepted Answer

A)  Add to longevity risk profiles 
B)  Reduce longevity risk profiles 
C)  Do not affect longevity risk profiles 
D)  Increase concentration risk 
A)  Add to longevity risk profiles 
B)  Reduce longevity risk profiles 
C)  Do not affect longevity risk profiles 
D)  Increase concentration risk

Question 10

In contrast to LICOs, property and casualty insurance companies

Accepted Answer

A)  Are major investors in stocks 
B)  Are major investors in corporate bonds 
C)  The nature of their business does not result in their investing large amounts of funds in relation to the amount of insurance that they underwrite 
D)  Are much the same as large institutional investors 
A)  Are major investors in stocks 
B)  Are major investors in corporate bonds 
C)  The nature of their business does not result in their investing large amounts of funds in relation to the amount of insurance that they underwrite 
D)  Are much the same as large institutional investors

Question 11

At times, the following outsourcing is done by pension plans

Accepted Answer

A)  Defined benefit plans outsource to annuity providers 
B)  Defined contribution plans outsource to open-end mutual funds 
C)  Pension laws prohibit outsourcing 
D)  Both a and b 
A)  Defined benefit plans outsource to annuity providers 
B)  Defined contribution plans outsource to open-end mutual funds 
C)  Pension laws prohibit outsourcing 
D)  Both a and b

State and local government pension plans tend to be

Large concentrations of equity in DB portfolios

The trend in retirement plans has been

Separate accounts offered by LICOs

The reinsurance market

The returns that participants in DB plans receive on their contributions to the plan

The Social Security program in the United States originally was intended to be

Employer sponsors of defined benefit (DB) plans bear what type of risk

Annuities offered by life insurance companies (LICOs)

In contrast to LICOs, property and casualty insurance companies

At times, the following outsourcing is done by pension plans

Introduction

Overview of the Financial System

The Special Role of Commercial Banks

Factors Affecting Yields

Principles of Portfolio Selection and Efficient Markets

The Money Market

The Bond Market

Securitization

The Mortgage Market

The Equity Market

Central Banking and the Federal Reserve

Monetary Policy: The Basics

Monetary Policy: Challenges Faced by Policymakers

Financial Crises

The Foreign Exchange Market and Exchange Rate Regimes

Depository Institutions

The Pricing of Financial Assets

Mutual Funds

Hedge, Venture Capital, and Private Equity Funds

Filters

Exam 20: Large Institutional Investors

State and local government pension plans tend to be

Large concentrations of equity in DB portfolios

The trend in retirement plans has been

Separate accounts offered by LICOs

The reinsurance market

The returns that participants in DB plans receive on their contributions to the plan

The Social Security program in the United States originally was intended to be

Employer sponsors of defined benefit (DB) plans bear what type of risk

Annuities offered by life insurance companies (LICOs)

In contrast to LICOs, property and casualty insurance companies

At times, the following outsourcing is done by pension plans

Introduction

Overview of the Financial System

The Special Role of Commercial Banks

Factors Affecting Yields

Principles of Portfolio Selection and Efficient Markets

The Money Market

The Bond Market

Securitization

The Mortgage Market

The Equity Market

Central Banking and the Federal Reserve

Monetary Policy: The Basics

Monetary Policy: Challenges Faced by Policymakers

Financial Crises

The Foreign Exchange Market and Exchange Rate Regimes

Depository Institutions

The Pricing of Financial Assets

Mutual Funds

Hedge, Venture Capital, and Private Equity Funds

Filters