Liberty BUSI 321 Test 4 Answers Complete Solutions

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Question 1 For a given level of return on assets, a bank with a higher level of capital will have a lower

Question 2 Fees charged by a bank on various services allow the bank to generate:

Question 3 Bank T generally obtains a high percentage of its funds from wholesale CDs. Bank V which obtains most of its funds from retail CDs. Bank Z obtains its funds from checking accounts. The bank that will incur the highest interest expenses is ____.

Question 4 A(n) ____ in interest rates could reduce a commercial bank’s expected cash flows because the interest paid on deposits may ____ than the interest earned on loans and investments.

Question 5 Banks A and B have the same net income. Bank A has a higher capital ratio and more assets than B. Bank A’s return on assets is ____ than Bank B’s. Bank A’s return on equity is ____ than Bank B’s.

Question 17 If finance companies with a greater rate­sensitivity of liabilities than assets wanted to reduce interest­rate risk, they could

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Question 18 Consumer finance companies primarily focus on for

Question 19 Finance companies can accumulate capital by doing all of the following except

Question 20 ____ finance companies concentrate on purchasing credit contracts from retailers and dealers.

Question 21 When a finance company’s assets are ____ interest rate sensitive than its liabilities and when interest rates are expected to ____, bonds can provide long­term financing at a rate that is completely insulated from rising market rates.

Question 22 Finance companies commonly act as ____ for accounts receivable; that is, they purchase a firm’s receivables at a discount and are responsible for processing and collecting the balances of these accounts.

Question 23 Finance companies are subject to

Question 24 Compared to other lending financial institutions, finance companies have a ____ loan delinquency rate, and the average rate charged on loans is ____ on average.

Question 25 The most common investment by closed­end funds is in

Question 26 To cover managerial expenses, mutual funds typically charge

Question 27 Money market funds are normally perceived to have ____ interest rate risk, and ____ default risk.

Question 39 Competitive bidding by securities firms for underwriting the issue of new bonds is primarily used for

Question 40 The ____ offers insurance on cash and securities deposited at brokerage firms.

Question 41 The ____ is not involved in the regulation of the securities industry.

Question 42 Pension portfolios managed by trusts are expected to offer ____ returns than those managed by insurance companies and have a(n) ____ degree of risk.

Question 43 The most common use of funds for property and casualty insurance companies is

Question 44 Which of the following is a difference in characteristics between life insurance companies and property and casualty insurance companies?

Question 49 The ratio of an insurance company’s net profit to policyholders’ surplus is called

Question 50 Pension funds managed by life insurance companies are normally referred to as