This pack of ECO 316 Week 2 Chapter 12 What Financial Institutions Do shows the solutions to the following problems:<\/b><\/p>\n
12.1 Multiple Choice Questions<\/p>\n
1) Which of the following is NOT one of the three largest financial institutions in the world?<\/p>\n
2) Which of the following is a securities market institution?<\/p>\n
3) Which of the following is an investment institution?<\/p>\n
4) Which of the following is a contractual saving institution?<\/p>\n
5) Which of the following is a depository institution?<\/p>\n
6) Securities market institutions<\/p>\n
7) Which of the following had the largest percentage of total assets of financial intermediaries in the United States?<\/p>\n
8) Which of the following increased its share of the percentage of total assets of financial intermediaries by the most between 1960 and 2006?<\/p>\n
9) Which of the following decreased its share of the percentage of total assets of financial intermediaries between 1960 and 2006?<\/p>\n
10) Why are securities market institutions not considered to be financial intermediaries?<\/p>\n
11) Investment banks<\/p>\n
12) Underwriting involves<\/p>\n
13) In investment banking the “spread” is the difference between<\/p>\n
14) If an investment bank underwrites an issue on an “all-or-none” basis,<\/p>\n
15) If an investment bank underwrites an issue on a “best efforts” basis,<\/p>\n
16) A syndicate is<\/p>\n
17) Which of the following is not a leading underwriting firm?<\/p>\n
18) The most important service provided by underwriters is<\/p>\n
19) Why was the Securities and Exchange Commission established?<\/p>\n
20) Why did the risks associated with underwriting bond issues rise during the 1980s?<\/p>\n
21) SEC Rule 415<\/p>\n
22) SEC Rule 415<\/p>\n
23) All of the following statements about junk bonds are true EXCEPT<\/p>\n
24) Merchant banking refers to<\/p>\n
25) Deleveraging<\/p>\n
26) A “tombstone” is a<\/p>\n
27) Unlike brokers, dealers<\/p>\n
28) Securities dealers make most of their income from<\/p>\n
29) The largest firms in securities markets<\/p>\n
30) By 2006, the primary growth area for investment banking was<\/p>\n
31) Many issuers of stocks and bonds use underwriters for all of the following reasons EXCEPT<\/p>\n
32) Buying and selling securities on the basis of insider information is against the law<\/p>\n
33) What was the “big bang”?<\/p>\n
34) All of the following are part of Euronext (an integrated European stock exchange) EXCEPT<\/p>\n
35) Which of the following is NOT true of exchanges?<\/p>\n
36) Which of the following is true of the York Stock Exchange?<\/p>\n
37) A specialist is<\/p>\n
38) In an over-the-counter market trading takes place<\/p>\n
39) A firm with both auction market and over-the-counter capabilities was formed late in 1998 when<\/p>\n
40) What is the most liquid market in the world?<\/p>\n
41) The relative illiquidity of corporate bonds is reflected in their having<\/p>\n
42) Why did seats on the major exchanges decline in value in the late 1990s?<\/p>\n
43) Electronic communications networks (ECNs) are<\/p>\n
44) Many analysts think Electronic communications networks (ECNs) will become important executors of exchange-traded stocks because<\/p>\n
45) Mutual funds<\/p>\n
46) The portfolios that mutual funds offer to savers are<\/p>\n
47) In what year did the mutual fund industry in the United States begin?<\/p>\n
48) Closed-end mutual funds<\/p>\n
49) A load fund<\/p>\n
50) Money market mutual funds<\/p>\n
51) What percentage of the mutual fund market is held by money market mutual funds?<\/p>\n
52) The largest category of mutual funds is<\/p>\n
53) Under a current SEC proposal,<\/p>\n
54) The growth in self-directed retirement accounts (such as IRAs and 401(k) plans)<\/p>\n
55) Finance companies<\/p>\n
56) Finance companies<\/p>\n
57) Which of the following statements is NOT true of consumer finance companies?<\/p>\n
58) Business finance companies<\/p>\n
59) All of the following are types of finance companies EXCEPT<\/p>\n
60) Factoring<\/p>\n
61) Sales finance companies<\/p>\n
62) What do many analysts see finance companies as having an advantage in?<\/p>\n
63) An insurance premium is a<\/p>\n
64) When an insurance company makes a direct loan to a firm, the loan is known as<\/p>\n
65) Insurance companies<\/p>\n
66) The law of large numbers allows insurance companies to<\/p>\n
67) Blood tests administered to applicants for medical insurance are an example of an attempt by insurance companies to deal with the problem of<\/p>\n
68) Charging drivers with good records lower premiums than drivers with bad records is an<\/p>\n
example of an attempt by insurance companies to deal with the problem of<\/p>\n
69) The use of deductibles and coinsurance are examples of attempts by insurance companies to deal with the problem of<\/p>\n
70) Which of the following is true of mutual insurance companies?<\/p>\n
71) Term life insurance<\/p>\n
72) Property and casualty insurers hold<\/p>\n
73) Property and casualty insurance companies hold more liquid assets than do life insurance companies because<\/p>\n
74) The largest institutional participants in capital markets are<\/p>\n
75) In which of the following have pension funds invested the most?<\/p>\n
76) Vesting refers to<\/p>\n
77) In a defined contribution pension plan,<\/p>\n
78) A defined benefits plan<\/p>\n
79) To deal with difficulties in administering pension funds, Congress in 1974 passed the<\/p>\n
80) What is the name of the pension plan under which employees can make tax-deductible contributions through regular payroll deductions?<\/p>\n
81) Savings institutions originated as<\/p>\n
82) Credit unions have invested primarily in<\/p>\n
83) The oldest U.S. government intervention in financial intermediation is government lending to<\/p>\n
84) Which of the following is NOT a government financial institution?<\/p>\n
85) The largest category of U.S. government lending activities is government lending to<\/p>\n
86) Which of the following is NOT a financial intermediary?<\/p>\n
87) “Sallie Mae” was established to encourage lending to<\/p>\n
88) The greatest difficulty with federal loan guarantees is that<\/p>\n
12.2 Essay Questions<\/p>\n
1) What are venture capital funds? Why have they been successful? Is it likely that venture capital firms will become as large mutual funds, insurance companies, or pension funds?<\/p>\n
2) Discuss changes in the level of competition in security underwriting during the last few decades.<\/p>\n
3) Why did the share that money market mutual funds among total assets held by intermediaries nearly triple between 1980 and 2006?<\/p>\n
4) What services are finance companies able to offer consumers and businesses that banks do not offer?<\/p>\n","protected":false},"excerpt":{"rendered":"
This pack of ECO 316 Week 2 Chapter 12 What Financial Institutions Do shows the solutions to the following problems: 12.1 Multiple Choice Questions 1) Which of the following is NOT one of the three largest financial institutions in the Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-71006","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/71006","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=71006"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/71006\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=71006"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=71006"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=71006"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}