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

Insurance companies invest in long-term securities due to their high predictability of cash inflows and outflows.

Life and property-casualty insurers make most of their net earnings or profits from:

Federal reform legislation in 2005 required employers to fully fund their pension plans within seven years.

The prime beneficiary of the cash balance pension plan is the employee.

Because of their high liquidity needs and safety requirements, most pension funds invest heavily in money market mutual funds.

For pension funds, defined benefit plans promise a specific monthly or annual payment to workers when they retire based upon how much they contribute each year to the fund.

The property-casualty insurance business is ____ than the life insurance business.

A financial institution reports the following figures in its latest annual report: Drawing upon the discussion in this chapter on measuring and evaluating the performance of a financial institution, please calculate as many measures of this firm's performance as you can. Do you notice any performance measures that the management of this institution might wish to investigate for possible problems?

Mutual funds investing in shares of mutual funds are known as super-mutuals.

Assets selected by the pension funds depend heavily upon what one factor, according to the textbook?

Because property-casualty insurance companies are taxed virtually the same as other corporations, tax-exempt bonds are very attractive to them.

What measures of a financial institution's performance are the most widely used?

The approximate number of property-casualty insurance companies headquartered in the United States is:

The Financial Accounting Standards Board requires businesses to make projections of their future pension obligations.

Recent trends in the aggressive management of some hedge funds have led to calls for more extensive regulation of the industry, especially as these funds have begun to pursue smaller, more vulnerable and busters.

One of the most prominent changes in mutual funds is greater use of derivatives, including financial futures, options and both credit and interest rate swap contracts.

Hedge funds often ask for minimal investments of at least:

In order to increase their yield and, therefore, their income most life insurance companies turn over their portfolios frequently.

The assets of an investment company are managed by its board of directors.

What is a REIT? A mortgage bank? A leasing company? Why do you think these specialized financial institutions came into being? Have they faced any serious problems of late?