FIN350- Questions and applications

Chapter 22: Questions and Applications 1, 7, 8, 9, and 10

1. Exposure to Interest Rate Risk Is the cost of funds obtained by finance companies very sensitive to

7. Regulation of Finance Companies Describe the kinds of regulations that are imposed on finance companies.

8. Liquidity Position Explain how the liquidity position of finance companies differs from that of depository institutions such as commercial banks.

9. Exposure to Interest Rate Risk Explain how the interest rate risk of finance companies differs from that of savings institutions.

10. Exposure to Credit Risk Explain how the default risk of finance companies differs from that of other lending financial institutions.

Chapter 23: Questions and Applications 5, 7, 12, 16, and 20

5. Risk of Treasury Bond Funds Support or refute the following statement: Investors can avoid all types of risk by purchasing a mutual fund that contains only Treasury bonds.

7. Exposure to Exchange Rate Movements Explain how changing foreign currency values can affect the performance of international mutual funds.

12. Risk of Money Market Funds Explain the relative risk of the various types of securities in which a money market fund may invest.

16. REITs Explain the difference between equity REITs and mortgage REITs. Which type would likely be a better hedge against high inflation? Why?

20. How Private Equity Funds Can Improve Business Conditions Describe private equity funds. How can they improve business conditions? Money that individual and institutional investors previously invested in stocks is now being invested in private equity funds. Explain why this should result in improved business conditions.

 
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