SNT Final PDF

10/4/2020 Blank Quiz
Blank Quiz
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When the redemptions of money market mutual fund shares exceeds sales 1 point
of shares, the fund accommodates the amount of excessive redemptions

by *
issuing bonds
borrowing from banks
selling some of the assets contained in the portfolio
issuing stock.
Other:
When interest rates decline, investors who want to earn a high return may 1 point
tend to ________ in stock mutual funds, and _________deposits in
depository institutions. *
reduce; increase
increase; reduce
reduce; reduce.
increase; increase.
Other:
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Which of the following statements is incorrect? * 1 point
Unlike other portfolio managers, the managers of mutual funds do not analyze
economic and industry trends
Some mutual funds offer check-writing privileges
Mutual funds serve as a key financial intermediary.
Because of their diversification, management expertise, and liquidity, mutual funds

have grown at a rapid pace.
Other:
Exchange-traded funds are like open-end funds in the sense that * 1 point
none of the above
their shares are traded on an exchange, and their share price changes throughout the
day.
they are not actively managed.
they have a fixed number of shares
Other:
Which of the following is not disclosed in the prospectus? * 1 point
the fees incurred by the mutual fund
the investment objective of the funds
the return on the fund over the past 15 years
the minimum amount of investment required
Other:
If a bank that relies heavily on short-term deposits expects interest rates to 1 point
consistently decrease over time, it would allocate most of its loans with
______ rates if it desires to maximize its expected returns. It could reduce
its exposure to inter¬est rate risk by setting ______ rates on its loans. *
fixed; fixed
variable; variable
fixed; variable
variable; fixed
Other:
Petri Bank had interest revenues of $70 million last year and $30 million in 1 point
interest expenses. About $300 million of Petri’s $800 million in assets are
rate-sensitive, while $600 million of its liabilities are rate-sensitive. Petri
Bank’s net interest margin is ________ percent. *
6.7
3.6
Other:
Petri Bank had interest revenues of $70 million last year and $30 million in 1 point
interest expenses. About $300 million of Petri’s $800 million in assets are
rate-sensitive, while $600 million of its liabilities are rate-sensitive. Petri
Bank’s gap is $_________. *
-300 million
300 million
500 million
-500 million
Other:
Petri Bank’s gap ratio is _________ percent * 1 point
37.5
50
40
100
Other:
Which of the following statements is incorrect? * 1 point
Insurance provides a payment to the insured under conditions specified by the

insurance policy contract.
Individuals who are less exposed to specific conditions that cause financial damage
are more likely to purchase insurance against those conditions.
Insurance can cause the insured to take more risks because they are protected.
Insurance companies employ underwriters to calculate the risk of specific insurance

policies.
Other:
______ insurance provides insurance for a policyholder only over a 1 point
specified period. *
universal
whole life
A&C
Term
Other:
Because life insurance companies carry a large amount of ______ 1 point
securities, the market value of their asset port¬folio can be ______ to

interest rate fluctuations. *
long term; insensitive
short term; very sensitive
short term; insensitive
long term; very sensitive
Other:
Which type of life insurance policy specifies a limited period of time over 1 point
which the policy will exist, and builds a cash value for policyholders over
time? *
universal life
whole life
decreasing term
term
Other:
Which of the following is not a major function of the securities industry? * 1 point
underwriting
development of exchanges for gold and silver
brokerage
raising new capital
Other:
In a ______, a firm places its entire issue of new secur¬ities without the 1 point
underwriting services of an investment banking firm. *
shelf registration agreement
market placement
private placement
public placement
Other:
Requests by customers to purchase or sell securities at the price existing 1 point

when the order reaches the exchange floor are called *
limit orders
short selling.
market orders.
stop loss orders.
Other:
Asset-stripping refers to * 1 point
acquiring a firm and selling off individual divisions of the firm separately
investing in the shares of a firm that is anticipated to experience a leveraged buyout

(LBO).
financing provided by investment banking firms to help support an acquisition
acquiring shares in a firm, causing the firm to repurchase the shares at a premium to
prevent a takeover
Other:
If a bank attempts to reduce exposure to interest rate risk by replacing long 1 point
term marketable securities with more floating rate commercial loans, it is
likely that the bank’s *
B and C
liquidity risk would decrease
default risk would decrease
liquidity risk would increase
default risk would increase
Other:
A bank has the following asset and liability portfolios. What is the gap? 3 points
Rate sensitive Assets Rate sensitive Liabilities (in millions) ( in millions)

Floating rate loans $4,000 NOW accounts $1,750 Floating rate mortgages
$1,000 MMDAs $4,500 Short term Treasury securities $1,500 Short term
CDs $ 1,000 $6,500 $7,250 *
Your answer
A investment adviser recommends that you invest in four different mutual 3 points
funds that are focused on different countries in Europe. The adviser says
that you will be completely insulated from U.S. economic conditions, and
that your portfolio will therefore have low risk. Do you agree? Explain. *
Your answer
Describe a defined-contribution plan, and explain why it differs from a 3 points
defined-benefit plan. *
Your answer
Describe the flotation costs incurred by a corporation that issues stock. 3 points
Compare flotation costs of issuing bonds versus stock. Which are higher?
*
Your answer
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10/4/2020 Blank Quiz

of shares, the fund accommodates the amount of excessive redemptions

borrowing from banks

selling some of the assets contained in the portfolio

Which of the following statements is incorrect? * 1 point

Some mutual funds offer check-writing privileges

Mutual funds serve as a key financial intermediary.

Because of their diversification, management expertise, and liquidity, mutual funds

none of the above

they are not actively managed.

they have a fixed number of shares

Which of the following is not disclosed in the prospectus? * 1 point

the fees incurred by the mutual fund

the investment objective of the funds

the return on the fund over the past 15 years

the minimum amount of investment required

Petri Bank’s gap ratio is _________ percent * 1 point

Which of the following statements is incorrect? * 1 point

Insurance provides a payment to the insured under conditions specified by the

Insurance companies employ underwriters to calculate the risk of specific insurance

______ insurance provides insurance for a policyholder only over a 1 point

Because life insurance companies carry a large amount of ______ 1 point

securities, the market value of their asset port¬folio can be ______ to

long term; insensitive

short term; very sensitive

short term; insensitive

long term; very sensitive

development of exchanges for gold and silver

raising new capital

shelf registration agreement

Requests by customers to purchase or sell securities at the price existing 1 point

stop loss orders.

Asset-stripping refers to * 1 point

investing in the shares of a firm that is anticipated to experience a leveraged buyout

financing provided by investment banking firms to help support an acquisition

liquidity risk would decrease

default risk would decrease

liquidity risk would increase

default risk would increase

Rate sensitive Assets Rate sensitive Liabilities (in millions) ( in millions)

Describe a defined-contribution plan, and explain why it differs from a 3 points

Send me a copy of my responses.

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