Question

6.

Consumer loans, mortgage loans, government and municipal securities, and reserves will be found in the ____ of a typical depository institution.

Select one:

a. asset category in the balance sheet

b. income statement

c. capital category of the balance sheet

d. liability category of the balance sheet

7.

An investor will engage in a short sell when he/she expects the stock price to ____ in the future.

Select one:

a. increase

b. fall

c. remain the same

d. increase then fall

8.

The twin mandate in achieving the financial management goals are to

Select one:

a. maintain high profitability and low risk.

b. maintain high profitability and high risk.

c. maintain low profitability and high risk.

d. maintain low profitability and low risk.

9.

A major difference between finance companies and banks is that

Select one:

a. finance companies tend to lend to low risk borrowers compared to banks.

b. finance companies primarily lend to large businesses compared to banks that lend primarily to consumers.

c. All of the above

d. finance companies do not accept deposits but rather issue large denomination bonds and commercial paper.

10.

To reduce risk credit or default risk, a bank can

Select one:

a. All of the above

b. share the risk through loan participations.

c. diversify lending.

d. though selling loans to another bank or firm.

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Please answer ALL correctly!

I Will Thumb Up!

Thank you!

Answer 1

Q6;

Option A: these items are assets for a bank.

Q7:

Option B; when investor expects price to fall he do short selling

Q8:

Option A; Financial management always aims at increasing profitability and reduce risk

Q9:

Option B: finance companies primarily lend to large businesses compared to banks that lend primarily to consumers.

Some of the services of financial companies includes investment banking, underwriting etc

Q10:

Option A; all of the options are used to reduce default risk