Financial Institutions Management: A Risk Management Approach 10th Edition by Anthony Saunders Test
FALSE
32. The ability of savers to transfer wealth between youth and old age and across generations is called maturity intermediation.
FALSE
33. Time intermediation involves the investment of small amounts by investors into mutual funds that invest in long-term securities such as stocks and bonds.
FALSE
34. The efficiency with which FIs provide payment services directly benefits the economy.
TRUE
35. The adverse effects on the economy that can occur because of major disturbances to the special functions or services provided by financial institutions are negative externalities.
TRUE
36. Unfairly excluding some potential financial service consumers from the financial services marketplace is a reason why FIs must absorb net regulatory burden.
TRUE
37. Regulation of FIs is an attempt to enhance the social welfare benefits and mitigate the social costs of providing FI services.
TRUE
38. In an attempt to enhance the net social welfare benefits of the services provided by financial intermediaries, safety and soundness regulation requires a DI to hold a minimum level of cash reserves against deposits.
FALSE
39. The part of the money supply produced by depository institutions is referred to outside money because it is produced outside of the government.
FALSE
40. Because of changes in regulatory barriers, technology, and financial innovation, a single financial service firm may now be able to offer a full set of financial services.
TRUE
41. Small investors in mutual funds are often able to realize larger returns than they would receive from bank deposits.
TRUE
42. The purpose of guaranty funds in safety and soundness regulation is to protect claim-holders when an FI collapses or fails.
TRUE
43. In most countries, cash is required to be held in reserve against deposits.
TRUE
44. The passage of legislation to prevent discrimination in lending is an example of regulation to protect investors.
FALSE
45. The passage of legislation to ensure that FIs are meeting the needs of their local communities is an example of entry regulation.
FALSE
46. Firms in industries that have low costs of entry tend to enjoy larger profits than firms in industries with high costs of entry.
FALSE
47. In recent years, the proportion of savings and demand deposits have decreased and the proportion of pension funds have increased in the financial assets held by U.S. households.
TRUE
48. The proportion of financial assets controlled by depository institutions has been increasing in recent years.
FALSE
49. One reason for the increasing proportion of total financial assets controlled by pension funds and investment companies is that these intermediaries exploit the comparative advantages of size and diversification.
TRUE
50. Pension and mutual funds have a lower correlation between the maturities of their assets and liabilities than do commercial banks and thrifts.
FALSE
51. Savers increasingly favor investments that closely imitate diversified investments in the direct securities markets over the transformed financial claims offered by traditional FIs.
TRUE
52. The standardization of many FI products is evidence of the inefficient institutionalization by financial markets and the mechanisms through which these products trade.
FALSE
53. The Internet has allowed individual investors to purchase securities while benefiting from decreased transactions costs.
TRUE
54. Services provided by depository institutions have become relatively less significant as a portion of all services provided by FIs.
TRUE
55. As a result of adopting an enterprise risk management approach, an FI will invest heavily in advanced risk measurement and management systems and practices.
FALSE
56. The concept of enterprise risk management encourages FIs to manage all of the risks to which they are exposed as a portfolio, rather than managing each risk individually.
TRUE
57. Financial technology or FinTech refers to the use of technology to deliver financial solutions in a manner that competes with traditional financial methods.
TRUE
58. FinTech services such as cryptocurrencies and blockchain provide a system that supports the exchange of value between two parties unknown to each other in a swift and effective way, without the need for financial intermediaries.
TRUE
59. The adoption of new technologies in financial services does not require a large expenditures to adapt to the new and evolving industry standards including consumer preferences.