Question 1

Finance companies obtain a significant portion of their short-term financing from

Accepted Answer

A) time and savings deposits. 
B) transaction accounts. 
C) long-term bonds. 
D) issuing commercial paper. 
E) equity. 
A) time and savings deposits. 
B) transaction accounts. 
C) long-term bonds. 
D) issuing commercial paper. 
E) equity.

Question 2

Factoring is

Accepted Answer

A) equipment leasing. 
B) servicing mortgage factors. 
C) purchasing corporate accounts receivables at a discount. 
D) financing automobile purchases. 
E) making installment loans to customers. 
A) equipment leasing. 
B) servicing mortgage factors. 
C) purchasing corporate accounts receivables at a discount. 
D) financing automobile purchases. 
E) making installment loans to customers.

Question 3

Finance companies are regulated at the federal and state levels similar to commercial banks.

Accepted Answer

A) True 
 B)False

Question 4

Sales finance institutions specialize in loan sales to banks and thrifts.

Accepted Answer

A) True 
 B)False

Question 5

The U.S. Central Credit Union and the corporate credit union

Accepted Answer

A) are the primary regulators of the credit union industry. 
B) provide investment and liquidity services to corporate credit unions. 
C) serve as the trade organization for the industry. 
D) charter credit unions. 
E) provide deposit insurance for credit unions. 
A) are the primary regulators of the credit union industry. 
B) provide investment and liquidity services to corporate credit unions. 
C) serve as the trade organization for the industry. 
D) charter credit unions. 
E) provide deposit insurance for credit unions.

Question 6

How do the primary risks of credit unions differ from banks? from savings institutions (SIs)? from finance companies?

Accepted Answer

Credit unions face credit risk on consum

Question 7

Generally,a captive finance company is wholly owned by major manufacturing companies with the purpose of providing financing to customers purchasing the parent company's product.

Accepted Answer

A) True 
 B)False

Question 8

In 2016,the largest U.S. savings institution was

Accepted Answer

A) USAA Federal Savings Bank. 
B) Synchrony Bank. 
C) Navy Federal. 
D) Hudson City Bancorp. 
E) Charles Schwab Bank. 
A) USAA Federal Savings Bank. 
B) Synchrony Bank. 
C) Navy Federal. 
D) Hudson City Bancorp. 
E) Charles Schwab Bank.

Question 9

Deposits at savings banks are backed by the ________ and deposits at savings institutions are backed by the ________.

Accepted Answer

A) BIF; BIF 
B) BIF; SAIF 
C) SAIF; BIF 
D) SAIF; SAIF 
E) DIF; DIF 
A) BIF; BIF 
B) BIF; SAIF 
C) SAIF; BIF 
D) SAIF; SAIF 
E) DIF; DIF

Question 10

SI profitability declined in the mid-2000s due to
I. the yield curve becoming more positively sloped.
II. decreases in the NIM ratio.
III. increases in the NIM ratio.
IV. the yield curve becoming flatter and even inverted.

Accepted Answer

A) I and II only 
B) II and III only 
C) II and IV only 
D) III and IV only 
E) I and III only 
A) I and II only 
B) II and III only 
C) II and IV only 
D) III and IV only 
E) I and III only

Question 11

In 2016,credit union's largest portion of investment securities was ________.

Accepted Answer

A) treasury debt 
B) corporate bonds 
C) federal agency securities 
D) mortgage-backed securities 
E) asset-backed securities 
A) treasury debt 
B) corporate bonds 
C) federal agency securities 
D) mortgage-backed securities 
E) asset-backed securities

Question 12

Factoring is the term used when a finance company purchases accounts receivable from corporate customers at premium.

Accepted Answer

A) True 
 B)False

Question 13

In a mutual organization,the depositors are owners of the institution.

Accepted Answer

A) True 
 B)False

Question 14

A savings institution (SI)has funded $12 million of 30-year fixed-rate mortgages with an average interest rate of 5.75 percent. These assets are funded with time deposits with an average maturity of six months. The deposits are currently paying 3.5 percent. In six months time,however,the Fed has raised interest rates twice and the depositors now must be paid 4.25 percent. What will happen to the SI's ROA and NIM? How would your answer change if the SI normally sells the mortgages every six months and originates additional new mortgage loans?

Accepted Answer

The original gross profit margin was 5.7

Question 15

The largest U.S. banks are larger than the entire credit union industry.

Accepted Answer

A) True 
 B)False

Question 16

________ are the most diversified of depository institutions and ________ are on average the largest depository institutions.

Accepted Answer

A) Banks; savings institutions 
B) Credit unions; commercial banks 
C) Credit unions; credit unions 
D) Commercial banks; commercial banks 
E) Savings institutions; commercial banks 
A) Banks; savings institutions 
B) Credit unions; commercial banks 
C) Credit unions; credit unions 
D) Commercial banks; commercial banks 
E) Savings institutions; commercial banks

Question 17

The National Credit Union Administration is the primary regulator of federally chartered credit unions.

Accepted Answer

A) True 
 B)False

Question 18

Credit unions are not taxed and,as a result,well-run credit unions are often able to charge lower loan rates and pay slightly higher deposit rates than banks.

Accepted Answer

A) True 
 B)False

Question 19

After deposits,the second largest source of funds at savings institutions is FHLB loans.

Accepted Answer

A) True 
 B)False

Question 20

Floor plan loan is a type of short-term loan to finance high priced inventory in which the purchased inventory is placed as collateral for the loan.

Accepted Answer

A) True 
 B)False

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

Finance companies obtain a significant portion of their short-term financing from

Factoring is

Finance companies are regulated at the federal and state levels similar to commercial banks.

Sales finance institutions specialize in loan sales to banks and thrifts.

The U.S. Central Credit Union and the corporate credit union

How do the primary risks of credit unions differ from banks? from savings institutions (SIs)? from finance companies?

Generally,a captive finance company is wholly owned by major manufacturing companies with the purpose of providing financing to customers purchasing the parent company's product.

In 2016,the largest U.S. savings institution was

Deposits at savings banks are backed by the ________ and deposits at savings institutions are backed by the ________.

SI profitability declined in the mid-2000s due to I. the yield curve becoming more positively sloped. II. decreases in the NIM ratio. III. increases in the NIM ratio. IV. the yield curve becoming flatter and even inverted.

In 2016,credit union's largest portion of investment securities was ________.

Factoring is the term used when a finance company purchases accounts receivable from corporate customers at premium.

In a mutual organization,the depositors are owners of the institution.

The largest U.S. banks are larger than the entire credit union industry.

________ are the most diversified of depository institutions and ________ are on average the largest depository institutions.

The National Credit Union Administration is the primary regulator of federally chartered credit unions.

Credit unions are not taxed and,as a result,well-run credit unions are often able to charge lower loan rates and pay slightly higher deposit rates than banks.

After deposits,the second largest source of funds at savings institutions is FHLB loans.

Floor plan loan is a type of short-term loan to finance high priced inventory in which the purchased inventory is placed as collateral for the loan.

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

Deposits at savings banks are backed by the and deposits at savings institutions are backed by the .

are the most diversified of depository institutions and are on average the largest depository institutions.