Question 1

If finance companies have liabilities that are more rate sensitive than their assets and want to reduce interest rate risk, they could

Accepted Answer

A)  shorten their average asset life. 
B)  lengthen their average asset life. 
C)  shorten the maturity of debt that they issue. 
D)  make greater use of fixed-rate loans. 
A)  shorten their average asset life. 
B)  lengthen their average asset life. 
C)  shorten the maturity of debt that they issue. 
D)  make greater use of fixed-rate loans.

Question 2

Finance companies commonly act as ____ for accounts receivable; that is, they purchase a firm's receivables at a discount and are responsible for processing and collecting the balances of theseaccounts.

Accepted Answer

A)  brokers 
B)  dealers 
C)  market makers 
D)  factors 
E)  none of the above 
A)  brokers 
B)  dealers 
C)  market makers 
D)  factors 
E)  none of the above

Question 3

Although commercial paper is available only for short-term financing, finance companies can continually roll over their issues to create a permanent source of funds.

Accepted Answer

A) True 
 B)False

Question 4

Consumer finance companies sometimes provide mortgage loans to individuals.

Accepted Answer

A) True 
 B)False

Question 5

Finance companies can accumulate capital by doing all of the following except

Accepted Answer

A)  retaining earnings. 
B)  issuing stock. 
C)  issuing commercial paper. 
D)  Finance companies can build their capital base by doing all of the above. 
A)  retaining earnings. 
B)  issuing stock. 
C)  issuing commercial paper. 
D)  Finance companies can build their capital base by doing all of the above.

Question 6

The main competition for finance companies in the consumer loan market comes from pension funds and insurance companies.

Accepted Answer

A) True 
 B)False

Question 7

Finance companies are regulated by the states and are not subject to regulation by any agency of the federal government.

Accepted Answer

A) True 
 B)False

Question 8

____ finance companies concentrate on purchasing credit contracts from retailers and dealers.

Accepted Answer

A)  Consumer 
B)  Sales 
C)  Commercial 
D)  None of the above 
A)  Consumer 
B)  Sales 
C)  Commercial 
D)  None of the above

Question 9

Finance companies are exempt from state regulations.

Accepted Answer

A) True 
 B)False

If finance companies have liabilities that are more rate sensitive than their assets and want to reduce interest rate risk, they could

Finance companies commonly act as ____ for accounts receivable; that is, they purchase a firm's receivables at a discount and are responsible for processing and collecting the balances of theseaccounts.

Although commercial paper is available only for short-term financing, finance companies can continually roll over their issues to create a permanent source of funds.

Consumer finance companies sometimes provide mortgage loans to individuals.

Finance companies can accumulate capital by doing all of the following except

The main competition for finance companies in the consumer loan market comes from pension funds and insurance companies.

Finance companies are regulated by the states and are not subject to regulation by any agency of the federal government.

____ finance companies concentrate on purchasing credit contracts from retailers and dealers.

Finance companies are exempt from state regulations.

Role of Financial Markets and Institutions

Determination of Interest Rates

Structure of Interest Rates

Functions of the Fed

Monetary Policy

Money Markets

Bond Markets

Bond Valuation and Risk

Mortgage Markets

Stock Offerings and Investor Monitoring

Stock Valuation and Risk

Market Microstructure and Strategies

Financial Futures Markets

Options Markets

Swap Markets

Foreign Exchange Derivative Markets

Commercial Bank Operations

Bank Regulation

Bank Management

Bank Performance

Thrift Operations

Mutual Fund Operations

Securities Operations

Insurance Operations

Pension Fund Operations

Filters

Exam 22: Finance Company Operations

If finance companies have liabilities that are more rate sensitive than their assets and want to reduce interest rate risk, they could

Finance companies commonly act as ____ for accounts receivable; that is, they purchase a firm's receivables at a discount and are responsible for processing and collecting the balances of theseaccounts.

Although commercial paper is available only for short-term financing, finance companies can continually roll over their issues to create a permanent source of funds.

Consumer finance companies sometimes provide mortgage loans to individuals.

Finance companies can accumulate capital by doing all of the following except

The main competition for finance companies in the consumer loan market comes from pension funds and insurance companies.

Finance companies are regulated by the states and are not subject to regulation by any agency of the federal government.

____ finance companies concentrate on purchasing credit contracts from retailers and dealers.

Finance companies are exempt from state regulations.

Role of Financial Markets and Institutions

Determination of Interest Rates

Structure of Interest Rates

Functions of the Fed

Monetary Policy

Money Markets

Bond Markets

Bond Valuation and Risk

Mortgage Markets

Stock Offerings and Investor Monitoring

Stock Valuation and Risk

Market Microstructure and Strategies

Financial Futures Markets

Options Markets

Swap Markets

Foreign Exchange Derivative Markets

Commercial Bank Operations

Bank Regulation

Bank Management

Bank Performance

Thrift Operations

Mutual Fund Operations

Securities Operations

Insurance Operations

Pension Fund Operations

Filters