Question 1

As of March 2015,the payday loan industry was regulated at the federal level.

Accepted Answer

A) True 
 B)False

Question 2

Finance companies have no significant downturns in economic performance over the last two decades.

Accepted Answer

A) True 
 B)False

Question 3

In 2008,GE Capital Corporation accounted for approximately 50 percent of General Electric's sales and profits.

Accepted Answer

A) True 
 B)False

Question 4

It is impossible for an individual to be approved for a finance company loan with a bankruptcy on their record.

Accepted Answer

A) True 
 B)False

Question 5

Wholesale and retail motor vehicle loans and leases constitute the largest subcategory of business loans.

Accepted Answer

A) True 
 B)False

Question 6

Sales finance companies do not directly compete with depository institutions for consumer loans.

Accepted Answer

A) True 
 B)False

Question 7

Personal credit institutions may be willing to approve collateral that depository institutions do not find acceptable.

Accepted Answer

A) True 
 B)False

Question 8

Finance companies have relied primarily on short-term commercial paper and other debt sources to finance asset growth.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is a major source of debt capital for a captive finance company?

Accepted Answer

A) Premiums. 
B) Deposits. 
C) Equity. 
D) Bank loans. 
E) Parent company. 
A) Premiums. 
B) Deposits. 
C) Equity. 
D) Bank loans. 
E) Parent company.

Question 10

Because finance companies do not accept deposits,they do not have bank regulators providing oversight of their activities.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is NOT an advantage of a finance company over a commercial bank in providing services to small business customers?

Accepted Answer

A) Finance companies are less willing to accept risky customers than are banks. 
B) Finance companies are not subject to regulations that restrict the type of products and services they can offer. 
C) Finance companies often have substantial industry and product expertise. 
D) Finance companies generally have lower overhead than banks. 
A) Finance companies are less willing to accept risky customers than are banks. 
B) Finance companies are not subject to regulations that restrict the type of products and services they can offer. 
C) Finance companies often have substantial industry and product expertise. 
D) Finance companies generally have lower overhead than banks.

Question 12

As a percent of assets,finance companies currently rely more heavily on commercial paper as a source of financing than in 1977.

Accepted Answer

A) True 
 B)False

Question 13

As of 2015,real estate loans dominated the assets of finance companies.

Accepted Answer

A) True 
 B)False

Question 14

In financing their asset growth,finance companies

Accepted Answer

A) have relied more on bank loans over time. 
B) rely heavily on short-term commercial paper. 
C) use less equity capital than commercial banks. 
D) do not issue demand deposits,but can issue time deposits. 
A) have relied more on bank loans over time. 
B) rely heavily on short-term commercial paper. 
C) use less equity capital than commercial banks. 
D) do not issue demand deposits,but can issue time deposits.

Question 15

A person with a history of bad credit and an inconsistent record of payments on other debt is most likely to find a short-term loan through a

Accepted Answer

A) commercial bank. 
B) personal credit institution. 
C) savings bank. 
D) sales finance institution. 
E) payday lender. 
A) commercial bank. 
B) personal credit institution. 
C) savings bank. 
D) sales finance institution. 
E) payday lender.

Question 16

Personal finance companies will make loans to people that are unable to borrow from a depository institution.

Accepted Answer

A) True 
 B)False

Question 17

General Electric Capital Corporation (GECC)provides services to more than 15 million businesses and consumer is Asia alone.

Accepted Answer

A) True 
 B)False

Question 18

Sales finance institutions provide financing to customers of specific retailers.

Accepted Answer

A) True 
 B)False

Question 19

Finance companies that prey on desperate higher-risk customers charging unfairly exorbitant interest rates are referred to as

Accepted Answer

A) refinancing companies. 
B) captive companies. 
C) business credit companies. 
D) loan shark companies. 
A) refinancing companies. 
B) captive companies. 
C) business credit companies. 
D) loan shark companies.

Question 20

Ally Financial [formerly General Motors Acceptance Corporation (GMAC)]

Accepted Answer

A) is a wholly owned subsidiary of General Motors. 
B) only provides financing to purchasers of automobiles built by General Motors. 
C) was classified as a commercial bank holding company in 2008. 
D) did not participate in federal bailout funds during the financial crisis because of their financial strength. 
A) is a wholly owned subsidiary of General Motors. 
B) only provides financing to purchasers of automobiles built by General Motors. 
C) was classified as a commercial bank holding company in 2008. 
D) did not participate in federal bailout funds during the financial crisis because of their financial strength.

Exam 3: Financial Services: Finance Companies

As of March 2015,the payday loan industry was regulated at the federal level.

Finance companies have no significant downturns in economic performance over the last two decades.

In 2008,GE Capital Corporation accounted for approximately 50 percent of General Electric's sales and profits.

It is impossible for an individual to be approved for a finance company loan with a bankruptcy on their record.

Wholesale and retail motor vehicle loans and leases constitute the largest subcategory of business loans.

Sales finance companies do not directly compete with depository institutions for consumer loans.

Personal credit institutions may be willing to approve collateral that depository institutions do not find acceptable.

Finance companies have relied primarily on short-term commercial paper and other debt sources to finance asset growth.

Which of the following is a major source of debt capital for a captive finance company?

Because finance companies do not accept deposits,they do not have bank regulators providing oversight of their activities.

Which of the following is NOT an advantage of a finance company over a commercial bank in providing services to small business customers?

As a percent of assets,finance companies currently rely more heavily on commercial paper as a source of financing than in 1977.

As of 2015,real estate loans dominated the assets of finance companies.

In financing their asset growth,finance companies

A person with a history of bad credit and an inconsistent record of payments on other debt is most likely to find a short-term loan through a

Personal finance companies will make loans to people that are unable to borrow from a depository institution.

General Electric Capital Corporation (GECC)provides services to more than 15 million businesses and consumer is Asia alone.

Sales finance institutions provide financing to customers of specific retailers.

Finance companies that prey on desperate higher-risk customers charging unfairly exorbitant interest rates are referred to as

Ally Financial [formerly General Motors Acceptance Corporation (GMAC)]

Why Are Financial Institutions Special

Financial Services: Depository Institutions

Financial Services: Securities Firms and Investment Banks

Financial Services: Mutual Fund and Hedge Fund Companies

Financial Services: Insurance Companies

Risks of Financial Institutions

Interest Rate Risk I

Interest Rate Risk II

Credit Risk: Individual Loan Risk

Credit Risk: Loan Portfolio and Concentration Risk

Liquidity Risk

Foreign Exchange Risk

Sovereign Risk

Market Risk

Off-Balance-Sheet Risk

Technology and Other Operational Risks

Liability and Liquidity Management

Deposit Insurance and Other Liability Guarantees

Capital Adequacy

Product and Geographic Expansion

Futures and Forwards

Options, Caps, Floors, and Collars

Swaps

Loan Sales

Securitization

Filters