Question

1. Excluding Schwab and E-Trade (which are now savings institutions), the largest asset category for most Savings Insitutions is:

   	A.	Cash
   	B.	Loans
   	C.	Securities
   	D.	Time Deposits
   	E.	Trading Account Assets

4 points   

QUESTION 8

1. Finance Companies are subject to:

   	A.	A maximum length on loan matruities
   	B.	Regulations on Interstate Banking
   	C.	A maximum limit on loan size
   	D.	A ceiling (maximum) interest rate charged on loans that they offer

4 points   

QUESTION 9

1. The primary regulation for Insurance Companies is:

   	A.	State Agencies
   	B.	The Federal Reserve
   	C.	The National Regulatory Information System
   	D.	The Federal Deposit Insurance Company (FDIC)

4 points   

QUESTION 10

1. The _______________ problem is when customers who are most likely to have a claim against an insurance company are those quickest to apply for an insurance contract.

   	A.	Adverse selection
   	B.	Liquidity
   	C.	Default risk
   	D.	Capital adequacy
   	E.	Mismatched maturity

4 points   

QUESTION 11

1. Northeastern Investments (NEI) is selling some XYZ bonds from its own holdings. It bought these bonds 14 months ago, anticipating to profit from an increase in the XYZ bond price. Here, NEI is clearly involved in a(n):

   	A.	Agency transaction
   	B.	Private placement
   	C.	Principal transaction
   	D.	Program trade

4 points   

QUESTION 12

1. An open-end mutual fund that invests in stocks will usually promise ________

   	A.	To redeem investors' shares upon demand at the current NAV (Net Asset Value)
   	B.	To earn the rate of return promised in the Prospectus
   	C.	To have a minimum NAV for investors
   	D.	To have a minimum rate of return for investors

4 points   

QUESTION 13

1. Key Federal legislation passed in 1974 concerning the administration of pension plans is the :

   	A.	PBGC Act
   	B.	Keogh Act
   	C.	Financial Services Modernization Act
   	D.	ERISA (Employee Retirement Income Security Act)
   	E.	Roth Act

4 points   

QUESTION 14

1. A ________________ is an employer-offered supplemental retirement plan, in which contributions are from after-tax income in that year, therefore not taxed when withdrawn at retirement.

   
   

   	A.	Social Security Plan
   	B.	Roth 401 (k) plan
   	C.	Defined contribution plan
   	D.	Defined benefit plan

4 points   

QUESTION 15

1. Smalltown Bank’s equipment that they use to sort and clear checks that have been deposited has a breakdown. Smalltown is exposed to ____________.

   	A.	Operational Risk
   	B.	Market Risk
   	C.	Credit Risk
   	D.	Insolvency Risk
   	E.	Liquidity Risk

4 points   

QUESTION 16

1. The term ___________ applies when pervasive, economy-wide factors cause widespread credit risk.

   	A.	Firm specific risk
   	B.	Country Risk
   	C.	Off-balance sheet risk
   	D.	Systematic risk

Answer 1

Q7) Savings institutions, sometimes called thrift institutions, are banks that serve a local community. Loans are the biggest assets for banks. Option B is correct

Q8) A maximum limit on the loan size. Loan to any particular entity or sector cannot exceed a certain % of the total asset size. Option c is correct

Q9) NAIC model acts and regulations provide some degree of uniformity between states, but these models do not have the force of law and have no effect unless they are adopted by a state. ... In many states, insurance is regulated through a cabinet-level "department" because of its economic importance. Option A is correct

Q10) Option A is correct. In the insurance industry, adverse selection refers to situations in which an insurance company extends insurance coverage to an applicant whose actual risk is substantially higher than the risk known by the insurance company

Q11) Option B is correct. Principal Transaction means a transaction where the registered securities or commodities broker or dealer acts as a principal or underwriter for the broker or dealer's own account, rather than as an agent for the customer.

Q12) Option A is correct