Question 1

What are home equity loans? Why do finance companies prefer home equity loans to unsecured debt?

Accepted Answer

Home equity loans are loans that pledge

Question 2

Of all the depository institutions,as a percentage of assets,credit unions rely the most on deposit sources of funds.

Accepted Answer

A) True 
 B)False

Question 3

Generally,consumer finance companies make loans to borrowers who have been refused loans at banks due to low income or poor credit.

Accepted Answer

A) True 
 B)False

Question 4

Which one of the following utilizes the least amount of deposits as a source of funds?

Accepted Answer

A) Banks 
B) Credit unions 
C) Finance companies 
D) Savings associations 
E) Savings banks 
A) Banks 
B) Credit unions 
C) Finance companies 
D) Savings associations 
E) Savings banks

Question 5

There are more credit unions than other types of thrifts,but credit unions are generally smaller than other types of thrifts.

Accepted Answer

A) True 
 B)False

Question 6

Rank the following from greatest to smallest in terms of industry asset size in 2016.
I. Banks
II. Savings institutions
III. Credit unions
IV. Finance companies

Accepted Answer

A) IV,I,II,III 
B) I,IV,III,II 
C) I,II,IV,III 
D) I,II,III,IV 
E) II,IV,III,I 
A) IV,I,II,III 
B) I,IV,III,II 
C) I,II,IV,III 
D) I,II,III,IV 
E) II,IV,III,I

Question 7

For the finance company industry as a whole,the largest single loan type is

Accepted Answer

A) business loans. 
B) consumer loans. 
C) real estate loans. 
D) high-risk consumer loans. 
E) credit card loans. 
A) business loans. 
B) consumer loans. 
C) real estate loans. 
D) high-risk consumer loans. 
E) credit card loans.

Question 8

As a percentage of total assets,credit unions invest ________ in securities than savings institutions and ________ in consumer loans than commercial banks.

Accepted Answer

A) more; more 
B) less; less 
C) more; less 
D) less; more 
E) less; about the same 
A) more; more 
B) less; less 
C) more; less 
D) less; more 
E) less; about the same

Question 9

A captive finance company is one that

Accepted Answer

A) is owned by a retailer or manufacturer. 
B) is owned by a bank holding company. 
C) is owned by its depositors. 
D) lends only to high-risk individuals that cannot obtain loans elsewhere (i.e.,captives). 
E) is regulated at the federal level. 
A) is owned by a retailer or manufacturer. 
B) is owned by a bank holding company. 
C) is owned by its depositors. 
D) lends only to high-risk individuals that cannot obtain loans elsewhere (i.e.,captives). 
E) is regulated at the federal level.

Question 10

Explain why low interest rates and strong mortgage markets help keep profitability high at savings institutions.

Accepted Answer

Low interest rates have helped savings i

Question 11

The policy employed in the 1980s of not closing economically insolvent savings institutions was called regulatory forbearance.

Accepted Answer

A) True 
 B)False

Question 12

Traditionally,most credit union members had a common employer,but increasingly the required commonality is a common location of either residence or workplace.

Accepted Answer

A) True 
 B)False

Question 13

What are the major advantages that credit unions enjoy over banks?

Accepted Answer

Advantages of credit unions are as follo

Question 14

On average,finance companies have higher capital-to-total-asset ratio than that of commercial.

Accepted Answer

A) True 
 B)False

Question 15

Because of the differences in the makeup of their major loan types,finance companies typically have shorter-term loans than banks.

Accepted Answer

A) True 
 B)False

Question 16

The predominant liabilities for savings institutions are

Accepted Answer

A) commercial deposits and FHLB borrowings. 
B) wholesale money market notes and reserves at the Fed. 
C) transaction accounts,small time and savings deposits. 
D) checking accounts and money market mutual funds. 
A) commercial deposits and FHLB borrowings. 
B) wholesale money market notes and reserves at the Fed. 
C) transaction accounts,small time and savings deposits. 
D) checking accounts and money market mutual funds.

Question 17

What are the major disadvantages that credit unions face versus banks?

Accepted Answer

Disadvantages of credit unions are as fo

Question 18

What are the advantages finance companies (FCs)have over banks in the area of business lending? What disadvantages do they have?

Accepted Answer

Finance company advantages include the f

Question 19

Savings institutions must have at least 65 percent of their assets in mortgage-related areas in order to maintain their thrift charter.

Accepted Answer

A) True 
 B)False

Question 20

In 2016,credit union's biggest type of loans was ________.

Accepted Answer

A) mortgages 
B) business loans 
C) consumer loans 
D) home equity loans 
E) government loans 
A) mortgages 
B) business loans 
C) consumer loans 
D) home equity loans 
E) government loans

Exam 14: Other Lending Institutions: Savings Institutions, credit Unions, and Finance Companies

What are home equity loans? Why do finance companies prefer home equity loans to unsecured debt?

Of all the depository institutions,as a percentage of assets,credit unions rely the most on deposit sources of funds.

Generally,consumer finance companies make loans to borrowers who have been refused loans at banks due to low income or poor credit.

Which one of the following utilizes the least amount of deposits as a source of funds?

There are more credit unions than other types of thrifts,but credit unions are generally smaller than other types of thrifts.

Rank the following from greatest to smallest in terms of industry asset size in 2016. I. Banks II. Savings institutions III. Credit unions IV. Finance companies

For the finance company industry as a whole,the largest single loan type is

As a percentage of total assets,credit unions invest ________ in securities than savings institutions and ________ in consumer loans than commercial banks.

A captive finance company is one that

Explain why low interest rates and strong mortgage markets help keep profitability high at savings institutions.

The policy employed in the 1980s of not closing economically insolvent savings institutions was called regulatory forbearance.

Traditionally,most credit union members had a common employer,but increasingly the required commonality is a common location of either residence or workplace.

What are the major advantages that credit unions enjoy over banks?

On average,finance companies have higher capital-to-total-asset ratio than that of commercial.

Because of the differences in the makeup of their major loan types,finance companies typically have shorter-term loans than banks.

The predominant liabilities for savings institutions are

What are the major disadvantages that credit unions face versus banks?

What are the advantages finance companies (FCs)have over banks in the area of business lending? What disadvantages do they have?

Savings institutions must have at least 65 percent of their assets in mortgage-related areas in order to maintain their thrift charter.

In 2016,credit union's biggest type of loans was ________.

Introduction

Determinants of Interest Rates

Interest Rates and Security Valuation

The Federal Reserve System, monetary Policy, and Interest Rates

Money Markets

Bond Markets

Mortgage Markets

Stock Markets

Foreign Exchange Markets

Derivative Securities Markets

Commercial Banks: Industry Overview

Commercial Banks Financial Statements and Analysis

Regulation of Commercial Banks

Insurance Companies

Securities Firms and Investment Banks

Investment Companies

Pension Funds

Types of Risks Incurred by Financial Institutions

Managing Credit Risk on the Balance Sheet

Managing Liquidity Risk on the Balance Sheet

Managing Interest Rate Risk and Insolvency Risk on the Balance Sheet

Managing Risk Off the Balance Sheet With Derivative Securities

Managing Risk Off the Balance Sheet With Loan Sales and Securitization

Filters

As a percentage of total assets,credit unions invest in securities than savings institutions and in consumer loans than commercial banks.