Exam 25: Exploring the Complexities of Financial Services and Regulation

Can we really reduce risk exposure or simply shift exposure to risk? Why?

Financial-service reliability has become as important as price to many customers today.

Public confidence is of high priority to financial institutions.

What are the possible disadvantages of consolidation and convergence among financial-service institutions?

Governments have taken major steps over the years to ensure the safety of banks and other financial institutions in order to protect the public's funds.

Personal communication between financial institutions and their customers will likely to continue to be important in the delivery of some financial services, especially to older customers and smaller businesses.

Managers of successful financial institutions today must be intimately familiar with risk-management tools such as: duration analysis, interest rate swaps, currency swaps, financial futures and option contracts.

Regulated institutions typically posses a comparative advantage over non-regulated institutions because the public trusts them more.

Under the terms of the Gramm-Leach-Bliley (Financial Services Modernization) Act, customers were granted the authority to stop a financial institution from sharing their private information with nonaffiliated firms if those customers did so in writing.

One of the most recent and important changes sweeping through the financial system is financial innovation-the development of new financial services and instruments.

One problem with government insurance that must be faced is how to avoid distorting risk-taking decisions by the managers of privately owned financial institutions. This kind of problem is an incidence of the more general type of the ______ problems encountered in the economics literature.

Debit cards are one of the fastest growing methods of payment.

Many members of the public regard financial institutions as less secure today than in the past, especially in the wake of great credit crisis of 2007-2009.

When any financial institution develops serious problems that reach public notice, the public's confidence in other financial institutions may be damaged as well.

The Internet in conjunction with computers will allow the transfer of information in microseconds.

What is the privacy protection issue all about? Why is it important to customers of financial institutions? To financial-service institutions themselves?

How can we avoid a breakdown of the payments system? What damage would a full-scale payments breakdown do?

In the financial holding company model, the earnings or losses of other affiliated companies do not affect the overall company.

Only the government can offer effective remedies in ensuring the continued viability of existing financial institutions and the public's confidence in them.

The cost and productivity advantages of the financial institutions with extensive service delivery systems already in place are likely to lead to still more mergers and consolidations.