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Financial Institutions Management A Risk Management Approach Saunders 7th Edition Test Bank
Financial Institutions Management A Risk Management Approach Saunders 7th Edition Test Bank
1-9 FIs typically provide secondary claims to household savers that have inferior liquidity
than primary securities of corporations such as equity and bonds.
Answer: F
1-10 Because the average maturity of assets and the average maturity of liabilities are often
different on an FIs balance sheet, the FI is exposed to liquidity risk.
Answer: F
1-11 When an FI functions as a broker, they are selling a financial asset that they have created
and will continue to hold on their balance sheet.
Answer: F
1-12 An FI acting as an agent in matching savers and borrowers of funds can attain economies
of scale and provide this service more efficiently than either the saver or borrower could
on their own.
Answer: T
1-13 Financial institutions are subject to economies of scale in the collection of information.
Answer: T
1-14 As an asset transformer, the FI issues financial claims that are more attractive to
household savers than the claims directly issued by corporations.
Answer: T
1-16 Secondary securities are securities that serve as collateral for primary securities.
Answer: F
1-17 FIs are independent market entities that create financial assets whose value is the
transformation of financial risk.
Answer: T
1-18 The more costly it is to supervise the use of funds by a borrower, the less likely a saver
will encounter agency costs.
Answer: F
1-2
Chapter 01 - Why Are Financial Institutions Special?
1-20 The ability of diversification to eliminate much of the risk from the asset side of the
balance sheet of an FI is the result of choosing assets that are less than perfectly
positively correlated.
Answer: T
1-21 Research shows that there is a significant reduction in risk achieved by investing in as
few as 8 different securities.
Answer: F
1-22 Depository institutions serve as the primary conduit through which monetary policy
actions impact the economy.
Answer: T
1-23 The liabilities of depository institutions are significant components of the money supply.
Answer: T
1-24 The goal of credit allocation is the encouragement of FIs to diversity the composition of
their assets.
Answer: F
1-25 Credit allocation regulations are typically designed to benefit customers as well as the
financial institution that must implement the guidelines.
Answer: F
1-26 The qualified thrift lender test is utilized to determine whether an institution can serve as
an FI.
Answer: F
1-27 Commercial banks and finance companies have traditionally served the needs of the
residential real estate market.
Answer: F
1-28 The Federal Reserve mandates reserve requirements for depository institutions so that the
DIs may provide payment services for the U.S. economy.
Answer: F
1-29 The ability of savers to transfer wealth between youth and old age and across generations
is called maturity intermediation.
Answer: F
1-30 Time intermediation involves the investment of small amounts by investors into mutual
funds that invest in long-term securities such as stocks and bonds.
Answer: F
1-31 The efficiency with which FIs provide payment services directly benefits the economy.
1-3
Chapter 01 - Why Are Financial Institutions Special?
Answer: T
1-32 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.
Answer: T
1-33 Unfairly excluding some potential financial service consumers from the financial services
marketplace is a reason why FIs must absorb net regulatory burden.
Answer: T
1-34 Regulation of FIs is an attempt to enhance the social welfare benefits and mitigate the
social costs of providing FI services.
Answer: T
1-35 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.
Answer: F
1-36 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.
Answer: T
1-37 Small investors in mutual funds are often able to realize larger returns than they would
receive from bank deposits.
Answer: T
1-38 The purpose of guaranty funds in safety and soundness regulation is to protect claim-
holders when an FI collapses or fails.
Answer: T
1-41 The passage of legislation to ensure that FIs are meeting the needs of their local
communities is an example of entry regulation.
Answer: F
1-42 Firms in industries that have low costs of entry tend to enjoy larger profits than firms in
industries with high costs of entry.
Answer: F
1-4
Chapter 01 - Why Are Financial Institutions Special?
1-43 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.
Answer: T
1-44 The proportion of financial assets controlled by depository institutions has been
increasing in recent years.
Answer: F
1-45 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.
Answer: T
1-46 Pension and mutual funds have a lower correlation between the maturities of their assets
and liabilities than do commercial banks and thrifts.
Answer: F
1-47 Savers increasingly favor investments that closely imitate diversified investments in the
direct securities markets over the transformed financial claims offered by traditional FIs.
Answer: T
1-49 The Internet has allowed individual investors to purchase securities while benefiting from
decreased transactions costs.
Answer: T
1-50 Services provided by depository institutions have become relatively less significant as a
portion of all services provided by FIs.
Answer: T
Multiple-Choice
1-51 Economic collapse during the 1930s, the banking system in the U.S> performed directly
or indirectly all financial services. Those functions included all of the following
EXCEPT
a. commercial banking.
b. money market funds.
c. investment banking.
d. stock investing.
1-5
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262. «Quando osservavamo con insultante dispregio que’ secoli che ci
trovarono servi e ci lasciarono uomini, non somigliavamo a persona che
siasi dimenticata della famiglia e de’ primi suoi anni? Or ne troviamo la
ricordanza; e senza ribramarlo, perchè il passato compì la sua
destinazione, e l’avvenire deve crescere per esso non già con esso, non
possiamo che ammirare secoli di tanta vita, ecc.» Epoca xii, p. 334.
263. Pur dianzi un giornale grave contrapponeva a giudizj da noi dati nella
presente opera, i giudizj portati da Lamartine nel Cours familier de
littérature; e un giornale leggero riproduceva questo parallelo,
applaudendovi.
269. Teme che la Russia ci mandi per Odessa i grani, sicchè i paesi d’Italia si
cambierebbero in deserti. Nuovo prospetto, tom. v. p. 127 e Filosofia
della statistica, tom. ii. p. 159.
270. «Il dazio sulle importazioni delle manifatture estere è ottimo finchè le
fabbriche nazionali bambine devono lottare colle estere adulte».
Filosofia della statistica, Arti e mestieri.
281. Nel 1874 si pronunziò una divisione fra gli economisti italiani: gli uni
volendo l’assoluta astensione dello Stato nelle ragioni economiche, gli
altri ammettendone, anzi credendone necessaria una moderata
ingerenza.
283. Messedaglia, Levi, Mora, Zanini, Boccardo, Leone Carpi, Luzzato, ecc.
285. Ora si sta eseguendo una nuova triangolazione di tutta la penisola, sotto
la presidenza del padre Secchi.
286. Il Governo italiano gli commise nel 1811 il più gran telescopio che
ancora si fosse veduto in Italia. Il fisico Gualtieri di Modena ne pretese il
merito, e ne fabbricò uno più grande, cioè di undici piedi di fuoco e nove
e mezzo d’apertura, che darà luce doppia di quello d’Herschel.
291. Accenniamo fra le sue scoperte quella del piccolo verme entro le perle
degli unio e degli anodonti, dalla cui molestia crede originata la preziosa
concrezione.
292. È curioso a notare che erano preti anche i più di quelli che, nel secolo
passato, ridestavano l’agricoltura in Toscana: il pievano Paoletti, il
parroco Landeschi, il preposto Lastri, gli abati Lupi, Lami, Manetti,
Giovan Gualberto Franceschi, l’arcidiacono Giuseppe Albizzi, il canonico
Zucchini, il monaco Soldani, e a tacer altri, il canonico Ubaldo
Montelatici che nel 1753 fondava l’accademia de’ Georgofili. Così
canonico era il Guasco agronomo piemontese, abati il Genovesi e lo
Scrofani e molti della Società patriotica a Milano.
293. L’uso dell’acqua come rimedio esterno è raccomandato anche dal Nessi
medico comasco (1741-1820), che diede un buon corso d’ostetricia.
295. Il bellunese Zanon pretende ora di saper dare solidità lapidea alle
sostanze animali, mentre Gorini crede poterne mantenere la morbidezza
e le altre qualità fisiche.
296. Alla confutazione che fino dal principio del secolo ne faceva il Moreschi,
professore d’anatomia a Bologna, è messa quest’epigrafe tolta dal
Menkenio, che proverebbe già da un pezzo conosciuta quella teoria:
Quis nescit nostris temporibus extitisse plures, qui novam quamdam
artem exploratoriam commenti, intimos mentis humanæ recessus
perreptarunt, et iræ, avaritiæ, cupiditatis nunc semiuncium, nunc assem
deprehendisse sibi visi sunt?
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