1) an investment banker agrees to a best efforts offering of 2.5 million shares of crew
stock. the offer price is set at $35 per share. if the stock is actually sold to the public at
$34.50 and the banker charges a 3.45 cent commission per share sold, what is the
amount of funds crew receives? (ignore any other fees or expenses.)
a.$88,750,000
b.$87,500,000
c.$86,163,750
d.$85,176,430
e.$84,122,560
2) a negotiable cd
a.is a bank issued transactions deposit
b.is a registered instrument
c.is a bank issued time deposit
d.has denominations ranging from $50,000 to $10 million
e.pays discount interest
3) an investment banker agrees to a best efforts offering of 2.5 million shares of crew
stock. the offer price is set at $35 per share. if the stock is actually sold to the public at
$34.50 and the banker charges a 3.45 cent commission per share sold, what is the
amount of funds crew receives? (ignore any other fees or expenses.)
a.$88,750,000
b.$87,500,000
c.$86,163,750
d.$85,176,430
e.$84,122,560
4) from october 1983 to july 1993 the federal reserve targeted
a.the fed funds rate
b.borrowed reserves
c.nonborrowed reserves
d.m1
e.m3
5) tier ii (supplementary) capital includes which of the following?
i. allowance for loan and lease losses, up to 1.25% of risk-weighted assets
ii. subordinated debt not maturing within 5 years (max amount = 50% of tier 1 capital)
iii. common stock and retained earnings
iv. nontransaction deposits
a.ii and iii only
b.i and iv only
c.i and ii only
d.i, ii, and iii only
e.i, iii, and iv only
6) for a bank with a positive duration gap, an increase in interest rates will
a.increase the likelihood of insolvency
b.decrease the likelihood of insolvency
c.not affect the likelihood of insolvency
d.result in increased loan trading
7) bearer bonds are bonds
a.with coupons attached that are redeemable by whoever has the bond
b.where the registered owner automatically receives bond payments when scheduled
c.in which the issue matures on a series of dates
d.issued in another currency other than the bond issuer’s home currency
e.issued in a different country other than the bond issuer’s home country
8) in may 2007, the largest known credit card theft was discovered when it was revealed
that 200 million card numbers were stolen from tjx company. this is an example of
a.credit risk
b.operational risk
c.liquidity risk
d.technological risk
e.regulatory risk
9) financial intermediaries (fis) can offer savers a safer, more liquid investment than a
capital market security, even though the intermediary invests in risky illiquid
instruments because
a.fis can diversify away some of their risk
b.fis closely monitor the riskiness of their assets
c.the federal government requires them to do so
d.both a and b
e.both a and c
10) the largest two categories of swaps are
a.credit risk and interest rate swaps
b.currency and commodity swaps
c.interest rate and currency swaps
d.equity and interest rate swaps
e.none of the above
11) the two major components of expense risk for p&c insurers are
a.the combined ratio and the premium ratio
b.loss adjustment expenses and variations in commission and other expenses
c.investment yield and premiums earned
d.dividend ratio and investment yield
e.none of the above
12) in 2010, _______________ had on average the greatest amount of equity as a
percentage of assets and ______________ had the lowest.
a.savings institutions; credit unions
b.banks; credit unions
c.credit unions; finance companies
d.finance companies; credit unions
e.finance companies; banks
13) for p&c insurers, if the combined ratio is more than 100%, that firm
a.could not have been profitable
b.must have been profitable
c.may have been profitable if investment returns were high enough
d.was profitable if the lae was low enough
14) a) what are the mandatory prompt corrective action (pca) provisions for an
undercapitalized bank? explain why these provisions are required.
b) why does one of the mandatory pca provisions for a critically undercapitalized bank
include appointing a receiver/conservator within 90 days?
15) secondary markets help support primary markets because secondary markets
i. offer primary market purchasers liquidity for their holdings
ii. update the price or value of the primary market claims
iii. reduce the cost of trading the primary market claims
a.i only
b.ii only
c.i and ii only
d.ii and iii only
e.i, ii, and iii
16) rates on federal funds and repurchase agreements are stated
a.on a bond equivalent basis with a 360 day year
b.on a bond equivalent basis with a 365 day year
c.as a discount yield with a 360 day year
d.as an ear
e.as a discount yield with a 365 day year