Final Exam - Financial Institution
Financial Insitutions Closed book, Closed Notes 1.
Final Examination
Fall 2011 Roger Staiger III
What is the difference between the spot market and the futures market In the spot market, trades are executed immediately, i.e. real time. In the futures markets, which is a derivatives market, trades are agreed upon today but settled lat later dates in the future.
2.
What is the main difference between the money markets and capital markets? Money markets are for short-term security exchanges, i.e. less than 270 days. The capital markets are for long-term security exchanges, i.e. greater than one year.
3.
What are four requirements to transfer capital within an efficient market? a. b. c. d. e. f. Stable Government Low Inflation Savings (personal, corporate, fiscal) Competition Disclosure (transparency) Fair market rules (legal system)
4.
Draw the difference between direct and indirect capital formation process.
Business
Securities Dollars
Savers
Business
5.
Financial Intermed.
Savers
Describe the purpose of an investment banking house. a. Design Sellable Securities b. Buy securities from corporations c. Resell to ‘savers’ (broker transactions)
6.
Name two sources of funds for Financial Intermediaries. a. Deposits (lenders, credit unions, pension funds) b. Premiums (life insurance) c. Share issuance (mutual funds) Name four main roles for depository institutions. a. Offer deposit accounts
7.
All problems equally weighted
Page 1 of 7
Financial Insitutions Closed book, Closed Notes b. c. d. e. 8.
Final Examination
Fall 2011 Roger Staiger III
Repackage (warehouse) deposit accounts Underwrite risk on loans “Expertise” in quantifying creditworthiness Provide diversification for placed loans
What are the unique characteristics for a credit union separating it from other depository institutions? a. b. c. d. Not for profit All business restricted to members All members share a common bond (geography,
Final Examination
Fall 2011 Roger Staiger III
What is the difference between the spot market and the futures market In the spot market, trades are executed immediately, i.e. real time. In the futures markets, which is a derivatives market, trades are agreed upon today but settled lat later dates in the future.
2.
What is the main difference between the money markets and capital markets? Money markets are for short-term security exchanges, i.e. less than 270 days. The capital markets are for long-term security exchanges, i.e. greater than one year.
3.
What are four requirements to transfer capital within an efficient market? a. b. c. d. e. f. Stable Government Low Inflation Savings (personal, corporate, fiscal) Competition Disclosure (transparency) Fair market rules (legal system)
4.
Draw the difference between direct and indirect capital formation process.
Business
Securities Dollars
Savers
Business
5.
Financial Intermed.
Savers
Describe the purpose of an investment banking house. a. Design Sellable Securities b. Buy securities from corporations c. Resell to ‘savers’ (broker transactions)
6.
Name two sources of funds for Financial Intermediaries. a. Deposits (lenders, credit unions, pension funds) b. Premiums (life insurance) c. Share issuance (mutual funds) Name four main roles for depository institutions. a. Offer deposit accounts
7.
All problems equally weighted
Page 1 of 7
Financial Insitutions Closed book, Closed Notes b. c. d. e. 8.
Final Examination
Fall 2011 Roger Staiger III
Repackage (warehouse) deposit accounts Underwrite risk on loans “Expertise” in quantifying creditworthiness Provide diversification for placed loans
What are the unique characteristics for a credit union separating it from other depository institutions? a. b. c. d. Not for profit All business restricted to members All members share a common bond (geography,