Exam 14: Investment Banking, insurance, and Other Sources of Fee Income

A trust department's activities often center around establishing:

A bank is considering adding life insurance underwriting to the services it offers.It has estimated that the expected return and standard deviation of its traditional services are 12 percent and 6 percent respectively.It has also estimated that the expected return and standard deviation of its new underwriting services are 18 percent and 10 percent respectively.The correlation between these services has been estimated to be +0.10 and the bank estimates that 90 percent of its business will be from traditional services and 10 percent from the new underwriting services.What is the expected return of the new combination of services?

_______________________ emerge when financial organization grows in size and is able to reduce its cost of production per unit of output.

Which of the following trust agreements allows the bank trust officer to act on behalf of a living customer?

An annuity is a product that offers shares in a pool of securities (stocks,bonds,etc. )and flows through any earnings generated to the shareholding customer.

A savings instrument where the customer makes a lump sum payment to the investment manager who invests the payment in earning assets and later receives a stream of income from the assets is called:

A bank is considering adding security brokerage services to the services it offers.It has estimated that the expected return and standard deviation of its traditional service are 6% and 14% respectively.It has estimated that the expected return and standard deviation of its new securities brokerage services are 14% and 24% respectively.The correlation between these services has been estimated to be -0.4 and the bank estimates that 60% of its business will be from traditional services and 40% from the new services.What is the expected return of the new combined firm?

When bank purchases stocks,bonds,mutual funds,and annuities on behalf of their customers,these products are referred to as _______________________.

A company that offers shares in a pool of securities and the returns to the shareholders flow through any earnings generated is called:

A(n)_________________________ is a contract that promises to make a cash payment to the beneficiary in the event of the death of the policy holder.

A customer's pro rata value of a share in a mutual fund,if the assets of the fund were liquidated and liabilities paid off,is called:

Which of the following is an example of a nondeposit investment product of the bank?

Trust department activities include all of the following except:

As a consequence of recent legislation,banks cannot offer insurance products or services.

Customers purchasing nondeposit investment accounts sold by a bank operating in the United States must be told in writing that:

Investment bankers are financial advisors to individuals and act as brokers and dealers for those individuals.

The trusts that arise under a probated will and are often used to save on estate taxes are called:

A proprietary mutual fund is where the bank sells a mutual fund through one of their affiliated companies and where the bank can act as an investment advisor.

______________ are private investment pools which primarily offer to wealthy investors and major institutions higher investment returns by taking on relatively risky assets.

A 'Chinese wall' is supposed to prevent the transfer of insider information about clients between the investment banker's security underwriting division and the internal unit where proprietary trading of stocks and bonds takes place.