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1 | |
According to the text several insurance companies have run into deep trouble and some have failed due to: |
| | A) | heavy purchases of junk bonds |
| | B) | poorly performing real estate investments |
| | C) | high fixed-cost sources of funds |
| | D) | all of the above |
| | E) | none of the above |
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2 | |
Assets selected by the pension funds depend heavily upon what one factor, according to your text? |
| | A) | Who has invested in the fund |
| | B) | Who manages the fund |
| | C) | Current financial circumstances |
| | D) | Whether the fund is private or government controlled |
| | E) | The size of the pension fund |
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3 | |
The principal reason life insurers hold U.S. Government securities in their asset portfolios is to: |
| | A) | maximize interest income |
| | B) | avoid call privileges which are attached to most corporate bonds |
| | C) | satisfy state and federal regulations |
| | D) | minimize their federal tax liability |
| | E) | none of the above |
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4 | |
Property/Casualty are grouped by whether they are agency companies or direct writers. Direct writers sell directly to the public via: |
| | A) | telephone |
| | B) | television |
| | C) | the Internet |
| | D) | all of the above |
| | E) | none of the above |
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5 | |
Which of the following is not a new form of consumer-oriented finance company that has emerged recently? |
| | A) | pawnshop |
| | B) | title loan company |
| | C) | venture capital firm |
| | D) | check-cashing company |
| | E) | none of the above |
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6 | |
Life insurance companies typically insure their policyholders or their beneficiaries against which of the following risks: |
| | A) | premature death |
| | B) | living too long |
| | C) | serious illness or accident |
| | D) | all of the above |
| | E) | none of the above |
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7 | |
An investment fund which purchases securities from firms in trouble in the hope of scoring exceptional returns should these firms recover or when their more valuable assets are liquidated is called a: |
| | A) | hedge fund |
| | B) | venture fund |
| | C) | high-yield or "junk" fund |
| | D) | vulture fund |
| | E) | index fund |
| | F) | none of the above |
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8 | |
A recent, growing trend among mutual life insurance companies is: |
| | A) | to use less and less reinsurance |
| | B) | to limit the number of policyholders/owners |
| | C) | to convert to stock companies |
| | D) | to use high-yield debt as a hedge against inflation |
| | E) | none of the above |
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9 | |
According to the textbook two areas of growing insurance needs for the future are: |
| | A) | small businesses and apartment dwellers |
| | B) | home owners and military personnel |
| | C) | apartment dwellers and people on pensions |
| | D) | small businesses and retired citizens |
| | E) | none of the above |
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10 | |
The approximate number of life insurance companies headquartered and operating in the United States is: |
| | A) | 1,700 |
| | B) | 3,200 |
| | C) | 4,600 |
| | D) | 900 |
| | E) | 400 |
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11 | |
A life insurance company's promise to provide long-term mortgage funds to a real estate development before a residential or commercial construction project begins is known as a(n): |
| | A) | advance commitment |
| | B) | promissory deed of trust |
| | C) | mortgage credit line |
| | D) | revolving construction line of credit |
| | E) | none of the above |
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12 | |
Life and property-casualty insurers make most of their net earnings or profits from: |
| | A) | insurance premiums |
| | B) | investment income |
| | C) | interest on loans made to policyholders |
| | D) | appreciation in real estate values |
| | E) | none of the above |
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13 | |
In a loan to a policyholder by a life insurance company, the policyholder may borrow: |
| | A) | up to the face value of the policy |
| | B) | up to the cash value of the policy |
| | C) | up to the amount of premiums paid in |
| | D) | any amount the company agrees to loan |
| | E) | none of the above |
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14 | |
As investors, pension funds: |
| | A) | are long-term investors |
| | B) | need more liquidity than most other investors |
| | C) | need the highest available income |
| | D) | are interested in generating current cash flow |
| | E) | none of the above are correct |
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15 | |
Investment company policies are determined by: |
| | A) | fund managers |
| | B) | shareholders |
| | C) | government regulations |
| | D) | the funds' trust company |
| | E) | none of the above |
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16 | |
Mortgage banks: |
| | A) | originate, sell and service mortgages |
| | B) | hold most of the mortgages they make in their own portfolio |
| | C) | cannot cross state lines |
| | D) | are restricted in the interest rates they can charge on mortgages |
| | E) | are another name for savings and loan associations that more accurately reflects what they do |
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17 | |
What measures of a financial institution's performance are the most widely used? |
| | A) | The stock price (market value) of a stockholder-owned financial institution. |
| | B) | The rate of return or profitability of a financial institution. |
| | C) | The risk exposure of a financial institution, which encompasses multiple aspects of its financial condition and behavior. |
| | D) | The operating efficiency of a financial institution, measuring how well the institution uses the resources at its command to produce and deliver its services. |
| | E) | All of the above. |
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18 | |
If an insurer contracts with other insurance companies to share some of the risks of insurance underwriting in return for a share of some of the first insurer's premium income this is known as: |
| | A) | multiple line coverage |
| | B) | reinsurance |
| | C) | shared risk acceptance |
| | D) | portfolio diversification |
| | E) | none of the above |
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19 | |
A source of funds drawn upon by many life insurance companies in recent years that promises a fixed rate of return for a stipulated period is called: |
| | A) | NIFs |
| | B) | Variable Annuities |
| | C) | GICs |
| | D) | Universal insurance |
| | E) | none of the above |
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20 | |
An example of property/casualty insurance is: |
| | A) | medical malpractice |
| | B) | homeowner's insurance |
| | C) | worker's compensation |
| | D) | all of the above |
| | E) | choices a and b only |
| | F) | none of the above |
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