Insurance and Risk Management
271. Using the symbols of Chapter 11, a reduction in the riskiness of a company's earnings, other things being equal, will be reflected in:
- A reduction in the market risk premium (Km- Krf)
- A rise in D
- A rise in the beta-coefficient
- A reduction in the beta-coefficient
- A reduction in g
Correct answer: (A)
A reduction in the market risk premium (Km- Krf)
272. Which of the following are bank assets?
- Customer deposits and advances to the general public
- Reserves and advances to the general public
- Investments and capital
- Reserves and customer deposits
- Notes and coin and customer deposits
Correct answer: (B)
Reserves and advances to the general public
273. Which of the following are characteristics of the US financial system?
- It has been dominated by large New York banks
- Modern firm's raise funds largely through the stock market
- It has had a history of bank collapses
- All banks are licensed by the Federal Reserve Board
Correct answer: (C)
It has had a history of bank collapses
274. Which of the following are depository institutions?
- Insurance companies
- Credit unions
- Money market mutual funds
- Savings and loan associations
- Investment banks
- Commercial banks
Correct answer: (B)
Credit unions
275. Which of the following are generally characteristics of bonds:
- Zero default risk and fixed coupon payments
- Fixed coupon payments and no fixed period to maturity
- No fixed period to maturity and variable coupon payments
- Zero capital risk and bi-annual coupons
- Prior claim on the assets of issuers and a fixed period to maturity
Correct answer: (E)
Prior claim on the assets of issuers and a fixed period to maturity
276. Which of the following institutions are classified as thrifts?
- Savings and loan associations
- State chartered banks
- Savings bank
- Credit unions
- Small commercial banks
Correct answer: (, C
)
Savings and loan associations
Savings bank
, C
277. Which of the following is an 'AFB' bank:
- BNP-Paribas
- MONEP
- Crédit Mutuel
- Crédit Municipal
Correct answer: (A)
BNP-Paribas
278. Which of the following is likely to have the lowest degree of income risk for an investor investing for five years?
- Ordinary company shares
- A bank sight deposit
- Government bonds with ten years to maturity
- A succession of one year bank time deposits
- A succession of 3-month treasury bills
Correct answer: (C)
Government bonds with ten years to maturity
279. Which of the following is not a member of the European Monetary Union?
- Finland
- Denmark
- Norway
- Sweden
Correct answer: (C)
Norway
280. Which of the following makes US monetary policy?
- The Federal Reserve System
- The Federal Reserve Bank
- The Board of Governors of the Federal Reserve System
- None of the above
Correct answer: (D)
None of the above