43) Which of the following are not investment intermediaries A) A life insurance company B) A pension fund C) A mutual fund

D) Only A and B of the above Answer: D

44) Which of the following are investment intermediaries A) Finance companies B) Mutual funds C) Pension funds D) All of the above

E) Only A and B of the above Answer: E

45) The government regulates financial markets for two main reasons:

A) to ensure soundness of the financial system and to increase the information available to investors. B) to improve control of monetary policy and to increase the information available to investors. C) to ensure that financial intermediaries do not earn more than the normal rate of return and to improve control of monetary policy.

D) to ensure soundness of financial intermediaries and to prevent financial intermediaries from earning less than the normal rate of return. Answer: A

46) Asymmetric information can lead to widespread collapse of financial intermediaries, referred to as a

A) bank holiday. B) financial panic.

C) financial disintermediation. D) financial collapse. Answer: B

47) Foreign currencies that are deposited in banks outside the home country are known as A) foreign bonds. B) Eurobond.

C) Eurocurrencies. D) Eurodollars. Answer: C

48) . dollars deposited in foreign banks outside the United States or in foreign branches of U.S. are referred to as A) Eurodollars.

B) Eurocurrencies. C) Eurobonds. D) foreign bonds. Answer: A

49) Banks providing depositors with checking accounts that enable them to pay their bills easily is known as

A) liquidity services. B) asset transformation. C) risk sharing.

D) transaction costs. Answer: A

50) A ________ is when one party in a financial contract has incentives to act in its own interest rather than in the interests of the other party. A) moral hazard B) risk

C) conflict of interest D) financial panic Answer: C

51) Fire and casualty insurance companies are what type of intermediary A) Contractual savings institution B) Depository institutions C) Investment intermediaries D) None of the above Answer: A

52) The country whose banks are the most restricted in the range of assets they may hold is A) Japan. B) Canada. C) Germany.

D) the United States. Answer: D

53) The largest depository institution (value of assets) at the end of 2009 was A) commercial banks. B) pension funds. C) credit unions. D) mutual funds. Answer: A