Exam 16: Exploring Various Aspects of Pension Funds, Finance Companies, and Insurance Industry

An asset held by life insurers that tends to follow the business cycle and represents a volatile claim on the industry's resources is:

Recently, a highly controversial form of pension plan, the cash balance plan, has appeared in an effort to reduce sponsoring employer's costs and provide added flexibility.

Which of the following is not a new form of consumer-oriented finance company that has emerged recently?

Because markets are efficient, those mutual funds that are professionally managed will always outperform index mutual funds.

Finance companies' share of the consumer loan market has fallen in recent years, while commercial banks and credit unions have enlarged their share of that market.

The single largest group of investors in the United States in the stock market is:

Property-casualty insurers have diversified into many different lines in order to reduce risk.

The bulk of life insurance companies' funds is invested in short-term, high-yield securities.

A major trend affecting all financial institutions today is:

Which recent ruling listed below requires businesses to report the unfunded portion of pension benefits as a liability?

Since the life insurance industry is "vested with the public interest," there is no need for regulation of this industry.

Because of their high yields life insurance companies invest most of their funds in corporate stock.

Life insurance companies are a relatively recent addition to the financial system of the United States; the first American life insurance firm began operations during the Civil War period.

During the 1990s and early into the new century hedge funds became prominent and by 2006 held well over $1 trillion in industry assets.

According to the text several insurance companies have run into deep trouble and some have failed due to:

Recently, one of the most rapidly growing investment companies (which is also gradually replacing traditional pension plans) is:

What are the principal assets acquired by pension funds? What factors guide their selection of securities?

Using each of the phrases or sentences below, identify the key term or concept used in Chapter 16. a. Sells as many ownership shares as the public demands. b. Financial-service firms offering and managing retirement plans. c. Financial-service companies selling their customers protection against loss related to death, disability and old age. d. Protects customers against losses or damage to persons and/or property.

The primary problem with mutual fund rating firms such as Morning star is that they can only rate mutual funds based on future performance.

Investment companies buy mostly state and local government securities rather than federal government securities for their investment portfolios.