Question 1

In a defined contribution pension plan,

Accepted Answer

A)  The plan does not promise to pay the retiree a specific income stream after retirement. 
B)  The plan does promise to pay the retiree a specific income stream after retirement. 
C)  The employee's retirement income is not an obligation of the firm. 
D)  The company carries the risk of paying future pension benefits to retirees. 
E)  Choices a and c. 
A)  The plan does not promise to pay the retiree a specific income stream after retirement. 
B)  The plan does promise to pay the retiree a specific income stream after retirement. 
C)  The employee's retirement income is not an obligation of the firm. 
D)  The company carries the risk of paying future pension benefits to retirees. 
E)  Choices a and c. E

Question 2

Banks typically have short-term investment horizons because

Accepted Answer

A)  They have a strong need for liquidity. 
B)  They offer short-term deposit accounts. 
C)  They are required to by federal and state laws. 
D)  Choices a and b 
E)  All of the above 
A)  They have a strong need for liquidity. 
B)  They offer short-term deposit accounts. 
C)  They are required to by federal and state laws. 
D)  Choices a and b 
E)  All of the above D

Question 3

The retirement plan that promises to pay a specific benefit to its beneficiaries is

Accepted Answer

A)  A defined contribution plan. 
B)  A defined benefit pension plan. 
C)  A non-contribution pension plan. 
D)  An actuarial pension plan. 
E)  Choices a and c. 
A)  A defined contribution plan. 
B)  A defined benefit pension plan. 
C)  A non-contribution pension plan. 
D)  An actuarial pension plan. 
E)  Choices a and c. B

Question 4

Banks must compete for funds (savings deposits, CDs, etc.) in order to make loans and other types of investments.

Accepted Answer

A) True 
 B)False

Question 5

_________ are investment specialists that are responsible for managing the investments of others. There are often legal standards against which they must abide in the performance of their duties.

Accepted Answer

A)  Underwriters 
B)  Investments bankers 
C)  Fiduciaries 
D)  Account executives 
E)  Trust officers 
A)  Underwriters 
B)  Investments bankers 
C)  Fiduciaries 
D)  Account executives 
E)  Trust officers

Question 6

Which of the following is not true regarding defined contribution pension plans?

Accepted Answer

A)  Employees make regular contributions to the plan. 
B)  Employers make regular contributions to the plan. 
C)  The employer bears all of the investment risk. 
D)  Benefits are directly related to the earnings of the funds investments. 
E)  The number of defined contribution plans is increasing. 
A)  Employees make regular contributions to the plan. 
B)  Employers make regular contributions to the plan. 
C)  The employer bears all of the investment risk. 
D)  Benefits are directly related to the earnings of the funds investments. 
E)  The number of defined contribution plans is increasing.

Question 7

Banks have high liquidity needs and therefore, have a short time horizon.

Accepted Answer

A) True 
 B)False

Question 8

Many endowments are tax-exempt.

Accepted Answer

A) True 
 B)False

Question 9

Banks typically

Accepted Answer

A)  Have low liquidity needs. 
B)  Face very few federal and state regulatory constraints. 
C)  Don't have to compete for funds. 
D)  Have high liquidity needs and a short time horizons constraint. 
E)  Low investment risk. 
A)  Have low liquidity needs. 
B)  Face very few federal and state regulatory constraints. 
C)  Don't have to compete for funds. 
D)  Have high liquidity needs and a short time horizons constraint. 
E)  Low investment risk.

Question 10

Non-life insurance companies have somewhat unpredictable cash outflows and are therefore faced with different investment constraints than life insurance companies.

Accepted Answer

A) True 
 B)False

Question 11

Banks face regulatory constraints at both the state and federal level.

Accepted Answer

A) True 
 B)False

Question 12

Endowment funds

Accepted Answer

A)  Are formed from the contributions to charitable and educational institutions. 
B)  Are attractive investments for individuals with low liquidity needs. 
C)  Usually have very short investment horizons. 
D)  Provide retirement benefits for public employees. 
E)  Provide death benefits for its contributor's survivors. 
A)  Are formed from the contributions to charitable and educational institutions. 
B)  Are attractive investments for individuals with low liquidity needs. 
C)  Usually have very short investment horizons. 
D)  Provide retirement benefits for public employees. 
E)  Provide death benefits for its contributor's survivors.

Question 13

Cash flows for nonlife insurance companies, such as property and casualty, are similar to cash flows of life insurance companies.

Accepted Answer

A) True 
 B)False

In a defined contribution pension plan,

Banks typically have short-term investment horizons because

The retirement plan that promises to pay a specific benefit to its beneficiaries is

Banks must compete for funds (savings deposits, CDs, etc.) in order to make loans and other types of investments.

_________ are investment specialists that are responsible for managing the investments of others. There are often legal standards against which they must abide in the performance of their duties.

Which of the following is not true regarding defined contribution pension plans?

Banks have high liquidity needs and therefore, have a short time horizon.

Many endowments are tax-exempt.

Banks typically

Non-life insurance companies have somewhat unpredictable cash outflows and are therefore faced with different investment constraints than life insurance companies.

Banks face regulatory constraints at both the state and federal level.

Endowment funds

Cash flows for nonlife insurance companies, such as property and casualty, are similar to cash flows of life insurance companies.

The Investment Setting

The Asset Allocation Decision

Selecting Investments in a Global Market

Securities Markets and the Economy

Efficient Capital Markets

An Introduction to Portfolio Management

Asset Pricing Models: Capm and Apt

Economic and Industry Analysis

Company Analysis and Stock Valuation

Technical Analysis

Bond Fundamentals

The Analysis and Valuation of Bonds

An Introduction to Derivative Markets and Securities

Derivatives: Analysis and Valuation

Equity Portfolio Management Strategies

Bond Portfolio Management Strategies

Professional Money Management, Alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Analysis of Financial Statements

An Introduction to Security Valuation

Web Appendix: A Review of Statistics and the Security Market Line

Web Appendix: A Review of Statistics and the Security Market Line

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Exam 23: Appendix: Objectives and Constraints of Institutional Investors

In a defined contribution pension plan,

Banks typically have short-term investment horizons because

The retirement plan that promises to pay a specific benefit to its beneficiaries is

Banks must compete for funds (savings deposits, CDs, etc.) in order to make loans and other types of investments.

_________ are investment specialists that are responsible for managing the investments of others. There are often legal standards against which they must abide in the performance of their duties.

Which of the following is not true regarding defined contribution pension plans?

Banks have high liquidity needs and therefore, have a short time horizon.

Many endowments are tax-exempt.

Banks typically

Non-life insurance companies have somewhat unpredictable cash outflows and are therefore faced with different investment constraints than life insurance companies.

Banks face regulatory constraints at both the state and federal level.

Endowment funds

Cash flows for nonlife insurance companies, such as property and casualty, are similar to cash flows of life insurance companies.

The Investment Setting

The Asset Allocation Decision

Selecting Investments in a Global Market

Securities Markets and the Economy

Efficient Capital Markets

An Introduction to Portfolio Management

Asset Pricing Models: Capm and Apt

Economic and Industry Analysis

Company Analysis and Stock Valuation

Technical Analysis

Bond Fundamentals

The Analysis and Valuation of Bonds

An Introduction to Derivative Markets and Securities

Derivatives: Analysis and Valuation

Equity Portfolio Management Strategies

Bond Portfolio Management Strategies

Professional Money Management, Alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Analysis of Financial Statements

An Introduction to Security Valuation

Web Appendix: A Review of Statistics and the Security Market Line

Web Appendix: A Review of Statistics and the Security Market Line

Filters