Question 1

Interest rates are expected to rise substantially in the money market over the next several weeks or months and Stronghold's management is concerned that its relatively low current yield (a seven-day average of 4.05 percent, one of the lowest yields among existing money funds) may result in the loss of many of its more interest-sensitive share accounts. The fund's average maturity is currently at 34 days, also substantially less than the industry's current average maturity of about 45 days.
What steps would you recommend to help Stronghold Money Fund prepare for an apparent impending change in the money fund's condition?

Accepted Answer

In short, the expected interest rate hike will cause the Fund's financial asset value to shrink. Shortening the average maturity even further will allow the Fund to adjust the current yield on a roll-over basis or on the new shares more swiftly.
Stronghold Money Fund Assets is a relatively new money market fund with about $400 million in total financial assets and shares outstanding (each maintained at a value of $1.00 per share). Most of the fund's accounts represent the savings of high-income, interest-sensitive financial market investors. Stronghold's current distribution of financial assets currently is as follows:

Question 2

What advantages do credit unions have over banks? What disadvantages do they face?

Accepted Answer

Credit unions pay dividends to their members, but they are considered nonprofit associations, doing business only with their owners and, therefore, are classified as tax-exempt mutual organizations. Their long-run survival stems mainly from their being able to offer low loan rates and high deposit interest rates and from their relatively low operating costs.
The credit union sector remains small compared to other major financial institutions. U.S. credit unions are also under intense pressure to develop new services and penetrate new markets due to increasing competition from other financial institutions. In particular, credit unions face a decline in the demand for their historically most important credit service-automobile loans-where they face fierce competition from banks and finance companies (such as GMAC and Ford Motor Credit).

Question 3

From 1995 to 2000, what happened to the following three statistics? Total number of credit unions in the United States
Total number of credit union members in the United States U.S. Credit Union Assets

Accepted Answer

A)   1 has decreased; 2 and 3 have increased
B)   All three have increased
C)   1 has increased; 2 and 3 have decreased
D)   All three have decreased
E)   None of the above A

Question 4

If you are a small saver what advantages do money market funds appear to offer you relative to banks and credit unions? What disadvantages?

Accepted Answer

The answer of If you are a small saver what...

Question 5

What exactly are "mutuals?"
How do these institutions differ from stockholder-owned depository institutions?

Accepted Answer

The answer of What exactly are "mutuals?"
How do these institutions...

Question 6

How did savings and loans get started? How does the history of savings and loans compare with the history of savings banks? Which is the older financial institution?

Accepted Answer

The answer of How did savings and loans get started?...

Question 7

If only 80 percent of the total of new funds raised will actually be available for making new auto loans, what is the minimum rate of return Axtell must earn in order to at least break even on these new loans?

Accepted Answer

The answer of If only 80 percent of the total...

Question 8

Credit unions are one of the fastest growing financial intermediaries in the United States and in many other parts of the world as well. What factors have contributed to this rapid growth?

Accepted Answer

The answer of Credit unions are one of the fastest...

Question 9

Exactly how are money market funds different from banks and credit unions in their behavior and the assets they hold?

Accepted Answer

The answer of Exactly how are money market funds different...

Question 10

How and why did money market funds begin to appear during the 1970s? What factors have contributed to their recent growth?

Accepted Answer

The answer of How and why did money market funds...

Question 11

There are around 9500 credit unions in the United States as of 2005.

Accepted Answer

A) True 
 B)False

Question 12

The total financial assets for savings and loans plus savings banks was over $2 .8 trillion in 2006.

Accepted Answer

A) True 
 B)False

Question 13

As of 2005, global membership in credit union is just over 157 million people of which almost 85 million reside in the United States.

Accepted Answer

A) True 
 B)False

Question 14

From 1996 to 2000, what happened to the following three statistics? Total financial assets reported at year-end
Total deposits reported at year-end
Net income after taxes of U.S. Savings and Loans and Savings banks

Accepted Answer

A)   1 and 2 have increased; 3 has decreased
B)   All three have increased
C)   1 has increased; 2 and 3 have decreased
D)   All three have decreased
E)   None of the above

Question 15

Most recently, which of the following thrift institution financial holding companies has the greatest total assets?

Accepted Answer

A)   Washington Mutual, Seattle
B)   Golden State Bancorp, San Francisco
C)   Golden West Financial Corp., Oakland
D)   Sovereign Bancorp, Philadelphia
E)   Astoria Financial Corp., Lake Success

Exam 15: Nonbank Thrift Institutions: Savings and Loans, Savings Banks, Credit Unions, and Money Market Funds

What advantages do credit unions have over banks? What disadvantages do they face?

From 1995 to 2000, what happened to the following three statistics? Total number of credit unions in the United States Total number of credit union members in the United States U.S. Credit Union Assets

If you are a small saver what advantages do money market funds appear to offer you relative to banks and credit unions? What disadvantages?

What exactly are "mutuals?" How do these institutions differ from stockholder-owned depository institutions?

How did savings and loans get started? How does the history of savings and loans compare with the history of savings banks? Which is the older financial institution?

If only 80 percent of the total of new funds raised will actually be available for making new auto loans, what is the minimum rate of return Axtell must earn in order to at least break even on these new loans?

Credit unions are one of the fastest growing financial intermediaries in the United States and in many other parts of the world as well. What factors have contributed to this rapid growth?

Exactly how are money market funds different from banks and credit unions in their behavior and the assets they hold?

How and why did money market funds begin to appear during the 1970s? What factors have contributed to their recent growth?

There are around 9500 credit unions in the United States as of 2005.

The total financial assets for savings and loans plus savings banks was over $2 .8 trillion in 2006.

As of 2005, global membership in credit union is just over 157 million people of which almost 85 million reside in the United States.

From 1996 to 2000, what happened to the following three statistics? Total financial assets reported at year-end Total deposits reported at year-end Net income after taxes of U.S. Savings and Loans and Savings banks

Most recently, which of the following thrift institution financial holding companies has the greatest total assets?