Introduction to Careers in Finance D9126 : 1. FINANCE OVERVIEW AND FINANCIAL SERVICES
A family of four's share of the national debt would be about _____.
$225,000
For every $1 million of capital investment in the U.S., the amount from investors outside the U.S. is nearest to _____.
$50,000
A bank is audited and found to have insufficient reserves. It is probable that the SEC will move to shut the bank down.
False
Although the FDIC insures depositors' accounts up to $250,000, they don't pay out if the bank failure was due to some types of fraud or illegality.
False
For most Wall Street brokerage firms and the banks involved in the Enron scandal, the settlements they made put an end to their company.
False
In our current times, the United States' economy is mainly considered to be market-based.
False
The SEC was created before the Federal Reserve.
False
The U.S. and European countries do not need trade agreements because they have always freely traded without duties or quotas.
False
accounting
CPA exam
In 1994, NAFTA established a free trade agreement between _____. (Select all that apply.)
Canada Mexico United States
Global stock exchanges include _____. (Select all that apply.)
Chicago Mercantile Exchange NASDAQ
A corporation headquartered in London sells securities and is being investigated for questionable market behavior. The corporation would most likely be talking with officials from _____.
Financial Conduct Authority
The country with the lowest rate of inflation today is _____.
France
The Glass-Steagall Act was repealed by the _____.
Gramm-Leach Bliley Bill
The first insurance company in the United States was _____.
INA
An international bank needs economic advice and consultation. It is most likely they could receive this from _____.
International Monetary Fund
A company outside the United States is issuing shares of stock beginning at the end of the month. It is most likely there was the involvement of the _____.
International Organization of Stock Commissions
Legislation often referred to as the "Wall Street bailout" is _____.
TARP Act
The XYZ International Bank has higher margin requirements than the ABC International Bank. What does this mean?
Their deposits are higher.
Patient Protection and Affordable Care Act
This law mandates that every person in the U. S have health insurance.
Tarp Act
This law was basically a bailout program for Wall Street.
Federal Reserve Act
This law was created over 100 years ago as a direct result of the 1907 run on the banks.
A car salesman could work with a customer to sell her a car, and also could be involved with setting up the loan for the car. This is an example of layering of services.
True
Alex does not have a college degree. He may be able to get a job in a bank, although it will be limited by his lack of a degree.
True
Alex owns a bond with a high level of risk, and his partner owns one with much less risk. If both bonds reach maturity, Alex will end up with more money.
True
Although Deutsche Bank is headquartered in Germany, it is very likely it has some U.S. banking oversight.
True
Assuming that the money market, the foreign exchange market, and the secondary market for securities are functioning correctly, there will be economic growth.
True
Capital is the funds or resources available to fund investments and provide the necessary cash flow.
True
If the SEC had been in existence prior to 1929, it is less likely the stock market would have crashed.
True
Juan has some shares of risky stock from a start-up company, and other shares of stock from an established company with much less risk. It sounds as though Juan is diversifying his portfolio.
True
The Department of Labor has a voice in securities trading, since there is exposure through pension funds.
True
The International Monetary Fund provides advisement and also loans to countries.
True
The Patriot Act brought changes that were intended to decrease instances of computer hacking.
True
Workers' Compensation is considered a type of insurance.
True
An active primary market for the creation of new securities and the presence of plenty of buyers and sellers are all most indicative of _____.
a competitive marketplace
securtiy
a financial product, such as a stock or a bond, which is traded in a public stock market
Basel Committee
a group of international bankers who decide on global standards for foreign exchange
closed-end fund
a limited share investment fund not available to the general public
Jake is looking to sell his grandparents' marketable assets. Those with the most liquidity are _____. (Select all that apply.)
a municipal bond 100 shares of ABC Corporation common stock
Gramm-Leach-Bliley Act
allowing banks to enter all fields of financial services, including securities dealing. This ultimately led to the 2007 mortgage banking derivative meltdown
U.S. Council on Foreign Relations
an agency that researches trade and foreign relations issues and publishes reports about economic activity and policy making
commodity
an agricultural or natural resource product, like oil or corn, which is traded over a public securities market or commodities market such as the Chicago Board of Exchange
capitalism
an economic system where market factors such as demand and supply of goods and services influence prices and profits rather than controlled by a state or government
When the IPO for the successful Sweet Cookie Company came out, Bud bought 1,000 shares for $5.50 each. His friend eventually bought 500 shares at $8 each. It is most likely that Bud is _____. (Select all that apply.)
an investment banker a customer of an investment banker
mutual funds
an investment program trading in diversified holdings; professionally managed but owned by shareholders
Dale has bought 5,000 shares of ABC Corporation through a large firm, carrying out the purchase mainly online. Dale can be referred to as _____. (Select all that apply.)
an investor a customer a securities holder
U. S. Council on Foreign Relations
assesses and reports on foreign ownership of U. S. financial assets
North American Free Trade Agreement
began free trade between three geographically close countries
Libor is the price banks charge each other to _____.
borrow money
Which of the following careers in the financial industry requires a minimum of a four-year college Bachelor of Arts degree?
certified public accountant
An investment fund has 100 shares and is not available to investors in the general public. The fund is most likely a _____.
closed-end fund
Deregulation in the banking industry in 2007 was mainly intended to lead to _____. (Select all that apply.)
competitive pricing an efficient marketplace
As a result of concern over Latin American loans in 1975, the FDIC _____.
created the Interbank Payment System
The Securities and Exchange Commission will consider a monetary penalty to those financial institutions that do not abide by their mandates. This activity is an example of _____.
enforcement
The Securities and Exchange Commission is the primary regulatory authority for the banking industry.
fasle
McCarran Ferguson Act
federal law enacted in 1945 exempting most of the insurance business from federal regulation
Patient Protection and Affordable Care Act
federal law, created under President Barack Obama, requiring all people in the United States to have health insurance
Federal Reserve Act
federal legislation enacted in 1913, after the banking panic of 1907
By 2018, industries that are projected to represent 12 percent of the U.S. overall domestic product are _____. (Select all that apply.)
finance industry insurance industry
Since 2000, the U. S. national debt has quickly grown. This is mainly due to _____. (Select all that apply)
financing several wars increasing costs of federal programs the two-year economic downturn that began in 2007
Gramm-Leach-Bliley Bill
gives banks the authority to sell products and provide services previously thought of as nonbanking
International Monetary Fund
global agency that advises on monetary and trade policy
Fannie Mae and Freddie Mac are notable mainly because they _____. (Select all that apply.)
help first-time home buyers are run by the government
monetary system
includes a centralized banking system, securities mar-kets, and other financial instruments, to include insurance and real estate investment trusts
foreign exchange
international currencies that can be traded in the securities market and exchanged between nations in business transactions
Marco bought 1,000 euros on the foreign exchange market last week. If he buys 1,000 more this week, he will probably pay _____.
it cannot be determined from the information given
The United States financial system is attractive to international investors because _____. (Select all that apply.)
it is a stable system the FDIC insurance bank deposits the Federal Reserve oversees the system
In the event of a shock to the country's financial system, the best indication that it is well managed is _____.
it will automatically correct itself
Without the Gramm-Leach-Bliley Act, Bank of America would more than likely _____.
not be a mega-bank
International Monetary Fund
one component is loaning money to countries needing it
mutual fund
open-ended, trading securities that trade throughout their life
Characteristics of a functional financial market include being of sufficient size, liquidity, and _____. (Select all that apply.)
operational efficiency safety transparency
Gramm-Leach-Bliley Act of 2000
permitted banks to offer securities, insurance, and other financial products
Gina is buying 1,000 shares in an IPO of ABC Corporation. She is buying them through a _____.
primary market
The ABC Brokerage Firm has sold newly issued securities of the XYZ Corporation to a client. The client will hold onto these securities for a period of time. The securities are considered to be _____.
primary securities
Investment companies in the U.S. can be considered as one of four types: mutual funds, closed-end funds, unit investment funds, and (although not regulated by the SEC) _____.
private investment companies
Primary activities of the SEC include _____. (Select all that apply.)
processing all new stock issues penalizing individuals who violate trading rules
closed-end fund
raises a set amount of capital for a particular purpose
Basel Banking Committee
recognized by worldwide banks as the authority for drafting banking regulations
Dodd-Frank Act
restores some banking relations, especially those having to do with bank reserves and liquidity
Since interest rates in Argentina are not stringently controlled, the country has mainly experienced _____.
runaway inflation
Basel II mainly has to do with _____.
safety in the event of a run on the banks
Jed sold 1,000 shares of ABC, a Canada-based corporation stock, and purchased 1,000 shares of XYZ, a U.S. corporation stock - both transactions were done through his broker. It sounds as though Jed bought these shares most likely through a _____.
secondary market
The XYZ bank has sold shares of the ABC Company to a client, who plans to hold the shares for a period of time. The securities are considered to be _____.
secondary securities
Changes in our Gross Domestic Product can be most directly attributed to _____. (Select all that apply.)
securities owned by employees of certain companies through stock purchase plans ready credit for middle class mortgages
unit investment trust
securities that are traded in large blocks
A derivative is a type of _____.
security
secondary markets
security offerings traded in public exchanges after they are issued
The European Central Bank is similar to the Federal Reserve Bank because it _____. (Select all that apply.)
sets monetary policy provides banking oversight sets interest rates to stabilize the market
Troubled Asset Relief Program
signed into law in 2008 to assist banks and other financial institutions from the collapse of the financial industry due to the unscrupulous sub-prime operations by purchasing assets and equity of these institutions and strengthen the financial sector
A poll of the first 10 attendees at a meeting in town indicated that their jobs included a teacher, a banker, a plumber, a mail deliverer, a baker, a tutor, a piano teacher, two brothers who own a chocolate-making company, and an automotive factory worker. The demographics of this group are _____.
similar to that of the workers in the U.S.
From the time a whistleblower made the SEC aware of Enron irregularities to Congressional hearings beginning was a span of approximately _____.
six months
Basel Committee
standardized ways to assess a bank's stability (or lack of)
The McCarran-Ferguson Act allows for _____.
state-by-state insurance regulation
A loan company packages high-risk mortgage loans and invites investors to invest in portfolios containing units of these loans. These mortgage loans are most likely to be _____.
subprime
The Stability and Growth Part has to do with _____.
the Economic and Monetary Union
International Order of Securities Commissions
the European counterpart to the U.S. Securities and Exchange Commission
All agencies that sell, trade, or deal with the commodities or securities industry are regulated by _____.
the SEC
European Central Bank
the central banking system for Europe which makes policy and acts as a banking regulatory authority; similar to the U. S. Federal Reserve Bank
Medicare
the first socialized medical program
economy
the flow of goods and services for a nation; the wealth and resources of a country, to include both production and consumption of goods and services
World Bank
the international regulatory body for banking
finance
the part of economics that studies money management, credit, banking, and investments
securitization
the process of converting a business asset into a publicly traded security, such as a new stock issue; a method for developing capital through shares of stock and involves substantial legal, financial, and government review
Systemic risk most nearly means _____.
the risk of the collapse of an entire financial system
Economies of countries with dictatorships do not have healthy financial systems mainly because they lack _____.
transparency
The United States has free-trade agreements with approximately _____.
twenty countries
XYZ Corporation's securities are offered in units of 50,000 units. These securities are mutual funds and are most likely _____.
unit investment funds
Maggie has 10,000 shares of XYZ Corporation, part of an industry that is not doing well right now. She is said to have stocks specifically with _____.
unsystematic risk
investment banker
works directly with an individual she represents to help earn a return on investments
securities analyst
works directly with the company she represents to help them earn a return on investments
insurance broker
works with companies to guard against risks and losses, and to manage claims.
The best example of a marketable asset below is _____.
100 shares of XYZ Corporation's common stock
Of every 100,000 jobs in the U.S., the approximate number of those through international firms are ____.
18,000
The gold standard was eliminated in the U.S. in _____.
1971
The Enron scandal mainly took place in the year _____.
2001
Of every 500,000 jobs in the U.S., the approximate number of those through international firms are _____.
90,000
Employee Retirement Income Security Act
Among other aims, this legislation protects funds in employee pension accounts.
The Basel Bank Accord(s) that deal with bank reserves in the event of a run on the banks is _____.
Basel II
McCarran Ferguson Act
Because of this law (which is about 70 years old) the insurance business is not federally regulated.
Some countries have changed their financial situation so much that they can now be referred to as emerging powerhouses. These countries include _____. (Select all that apply.)
Brazil India
What was the most direct reason for the creation of the Employee Retirement Income Security Act?
Employees were being taken advantage of in retirement, health, welfare programs.
The two regulatory bodies that are most alike are _____. (Select all that apply.)
European Central Bank Federal Reserve
Regulatory authorities for international banking include _____. (Select all that apply.)
European Central Bank International Monetary Fund Asian Development Bank Institute
The United States has free-trade agreements with _____. (Select all that apply.)
Korea Chile Israel
A corporation is in the final states of filing statements to issue their stock to investors. This stock issue was closely monitored by the _____.
SEC
Capital formation occurs by _____. (Select all that apply.)
Saving investing
The U. S. agency most like the Financial Conduct Authority is the _____.
Securities and Exchange Commission
stock broker
Series 7 General Exam
Enron overstated its earnings by $600 million for _____.
about four years
Sarbanes-Oxley Act
addressed accounting reform and financial disclosure for investors
Dodd-Frank Act
addressed unethical lending practices which allowed unqualified people to purchase homes they could not pay for
Aside from distributing investments and savings, the primary tasks of the financial service system are _____. (Select all that apply.)
aiding in the creation of capital formation growing the country's economy managing and mitigating the risks
The financial system is made up of _____. (Select all that apply.)
all of the industries which create and sell financial products the government regulatory agencies which police the financial service industry those who participate in the market
financial intermediaries
all the parties, both government and private sector corporations, that perform financial services in an economy; includes loans of all types, wire-transfers of money, and stock transactions
One standard guiding the SEC is to reduce systemic risk. That most importantly means they _____.
do not want the entire market to collapse
commercial banker
encourages deposits by customers, makes loans, negotiates terms
Bitcoin is currently being reviewed by Congress. This most likely means it will _____.
end up more regulated than it presently is
Dodd-Frank Act
known by its full term as the Dodd-Frank Wall Street Reform and Consumer Protection Act; a compliation of regulations addressed towards operations of financial institutions and protection of its customers; law was enacted in 2010
Although China has a robust economy, it is less attractive to invest there than the U.S. because of their _____.
lack of transparency in the financial markets
real estate
licensing varies by state
insurance
licensing varies depending on scope of license and type of position
Even an economically sound economy will have problems managing risk and with solving investment issues. As these are resolved, it is most crucial to maintain _____.
liquidity in the market
As of 2001, Enron was the largest corporate bankruptcy in U. S. history. That means it _____.
lost the largest amount of money
Basic requirements for a healthy securities marketplace are _____. (Select all that apply.)
low transaction costs accurate and timely information about previous trades the availability of reliable data on the value of securities
The Sarbanes-Oxley Act is mainly intended to _____.
make it more difficult to commit some kinds of stock fraud
Global financial markets are concerned with policies and regulations, and also _____. (Select all that apply.)
managing public debt pensions: private and publicly funded education for money management policies
primary markets
markets where new issues of stock, or Initial Purchase Options (IPOs) are created; the NYSE and NASDAQ are primary markets
securities market
may refer to the primary market for new stock issues or the secondary market where issued securi-ties are traded
Andres buys 1,000 shares of ABC Corporation's OTC stock. His next step is most likely to _____.
monitor the stock price
Important roles of the Federal Reserve are _____. (Select all that apply.)
monitoring of financial policies reviewing private banking reserves ensuring availability of credit through appropriate loan interest rates
When compared with 2007, the U.S. banking and financial industry is _____.
more regulated
A county three-lane highway that will stretch about 20 miles is being built in LeeTown. This highway is paid for by ____.
municipal bonds
Patient Protection and Affordable Care Act
national medical insurance mandate
