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Question
Which of the following is a weakness of the repricing model to measure interest rate risk?
A. Potential for overaggregation of assets and liabilities within each maturity bucket.
B. It ignores how changes in interest rates affect the market value of assets and liabilities.
C. It ignores the reinvestment of loan interest and principal payments that are reinvested at current market rates.
D. It fails to recognize off-balance-sheet activities that may be rate sensitive.
E. All of the above.
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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Property-casualty insurers tend to have a higher level of liquidity risk than life insurers.
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The largest property-casualty (PC) insurance companies have become less influential over the past decade.
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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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B. pays only fixed returns to groups of employees.
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E. None of the above are correct.
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B. universal life.
C. whole life.
D. endowment 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.
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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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