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Question
From the perspective of an FI, which of the following is an advantage of a floating-rate loan?
A. Stable interest payments will be received throughout the loan period.
B. The pre-specified interest rate remains in force over the loan contract period no matter what happens to market interest rates.
C. The bank can request repayment of a loan at any time in the contract period.
D. The default risk is completely eliminated.
E. The interest rate risk is transferred to the borrower.
Answer
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Related questions
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The Insurance Regulatory Information System (IRIS) is a standardized examination system used to measure the profitability of insurance companies.
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In the case of an insurance company failure, policyholders immediately receive a payout of the cash surrender value of their policies.
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The two policy categories offered by property-casualty insurers that are most likely to be subject to rate regulation are
A. auto insurance and worker's compensation.
B. homeowner multiple peril and commercial multiple peril.
C. earthquake and flood.
D. surety bonds and financial guaranty.
E. product liability and farm owner multiple peril.
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The McCarran-Ferguson Act of 1945
A. separated commercial banking from insurance activities.
B. mandated federal insurance company charters.
C. stipulated that insurance companies are to be regulated at the state level.
D. initiated a national insurance guaranty fund.
E. limited insurance company assets to low risk government securities.
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The surrender value of an insurance policy is
A. the expected payment commitment on existing policy contracts.
B. a fund established and held separately from the company's other assets.
C. the cash value paid to the policyholder if the policy is terminated before it matures.
D. the same as the endowment payout.
E. the price at which the company may repurchase the policy.
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Annuities offered by life insurance companies are a financial contract that
A. is used to build up a fund.
B. pays only fixed returns to groups of employees.
C. is used to liquidate a fund.
D. pays only variable returns to individuals.
E. None of the above are correct.
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B. universal life.
C. whole life.
D. endowment life.
E. variable life.
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An insurance policy that protects an individual over an entire lifetime as long as the premiums are paid is called
A. term life.
B. universal life.
C. whole life.
D. endowment life.
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Which of the following is NOT considered a trading activity of securities firms?
A. Position trading.
B. Pure arbitrage.
C. Liquidity trading.
D. Risk arbitrage trading.
E. Program trading.
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A corporate venture capital firm
A. has publicly-traded common stock.
B. provides equity funds to companies that already have publicly traded common stock.
C. is a subsidiary of a nonfinancial corporation.
D. provides debt funding to only to established corporations.
E. is subject to more stringent disclosure requirements than other venture capital firms.
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Which of the following would be a key area of activity for an investment bank specializing in the commercial side of the business?
A. Purchase of existing securities.
B. Sale of securities in the secondary market.
C. Brokerage of existing securities.
D. Underwriting issues of new securities.
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Cash management accounts were an early attempt by commercial banks to provide investment banking services to individuals.
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