Chapter 3 - TM

All of these are attributes of Jumbo CDs except A. CDs must be held to maturity B. They are negotiable instruments with a secondary market C. The minimum denomination is $100,000 D. The funds invested are exposed to bankruptcy risk over the FDIC amount

A. CDs must be held to maturity

A commercial bank is an FI that A. accepts deposits and makes commercial loans. B. must limit its services to depository accounts and credit services. C. specializes in the handling and investment of funds. D. does not need a federal or state charter in the US.

A. accepts deposits and makes commercial loans.

Which is true of credit unions? A. Membership is restricted to individuals with a common affiliation. B. Credit unions operate in over 100 countries. C. In the US, the National Credit Union Administration charters and supervises all credit unions. D. A disadvantage to commercial banks is that deposits are not insured in the US.

B. Credit unions operate in over 100 countries.

What type of brokerage would be appropriate for a firm that wants the broker to manage its investment portfolios and generally needs to transact in large blocks of securities? A. Full-service retail broker B. Full-service institutional broker C. Discount retail broker D. Discount institutional broker

B. Full-service institutional broker

When utilizing a Factor to sell your receivables, all could be true except A. You will sell the receivables at a discount off of face amount B. They must be sold without recourse back to the selling company C. Factors can have recourse back to the selling company if customers do not pay D. Factoring can assist in raising cash for a company

B. They must be sold without recourse back to the selling company

What is the service a commercial bank traditionally does NOT make money from? A. Spread between investing and borrowing B. Underwriting security issued to the public C. Fees on payment transactions D. The spread on currency transactions

B. Underwriting security issued to the public

The type of underwriting that is most risky to the company putting out the public offering A. Full Underwriting B. Guaranteed Underwriting C. Best Efforts Underwriting D. Total Underwriting

C. Best Efforts Underwriting

Which of the following is true for full service banks that offer both underwriting/distribution and investment advisory or management functions? A. Bringing someone over the wall" is a clear violation of SEC regulations. B. Distribution and underwriting is the buy side. C. Buy- and sell-side transactions should be separated by a "wall" to prevent each party from getting and acting on MNPI. D. Possession of MNPI constitutes a crime.

C. Buy- and sell-side transactions should be separated by a "wall" to prevent each party from getting and acting on MNPI.

A retail brokerage firm is MOST like which one of the following types of financial institutions? A. Captive finance companies B. Factoring companies C. Investment banks D. Insurance companies

C. Investment banks