Davidson; Management - 3rd Australasian Edition



1.
All but one of the following is classified to some extent as “nonbank financial institutions”:
A.
commercial bank
B.
building societies
C.
finance companies
D.
credit union


2.
The major assets of building societies are:
A.
mortgage-backed securities.
B.
loans and advances.
C.
saving accounts.
D.
cash and investment accounts.


3.
Building societies diversified product base include
A.
deposit accounts, credit cards, investment savings accounts.
B.
deposit accounts, construction loans and residential mortgage.
C.
deposit accounts, credit cards, mortgage-backed securities
D.
deposit accounts, credit cards, investment savings accounts, mortgages, business loans and Internet banking services.


4.
Nonbank financial institutions are characterized as being
A.
small relative to commercial banks
B.
similar in size with commercial banks
C.
having large asset base
D.
none of the above.


5.
Building societies primary source of fund is
A.
members' funds
B.
investments
C.
deposits
D.
purchased securities


6.
The main source of income for building societies is
A.
investment securities
B.
loans and advances
C.
interest income
D.
all of the above


7.
Credit unions are owned by
A.
managers
B.
depositors
C.
stockholders
D.
members


8.
Which of the following statements is not true?
A.
Credit unions regulated by APRA.
B.
To use the services of a credit union one must be a member.
C.
Credit unions have been exempt from antitrust laws.
D.
The total number of credit unions is increasing in Australia.


9.
The primary assets of Credit unions are
A.
investments securities
B.
loans
C.
cash and liquid assets
D.
either a or b


10.
All of the following serve as an advantage for credit unions except
A.
small size.
B.
sponsor support.
C.
federal income tax exemption.
D.
payroll deduction.


11.
Which of the following statements is not true?
A.
Credit unions, most of which are very small, cannot match the extent of services offered by a commercial bank.
B.
Credit union deposit accounts are the functional equivalent to passbook accounts.
C.
Credit unions may arguably be more comparable to “clubs” than to businesses.
D.
Credit unions have a common-bond requirement.


12.
Credit unions capital predominantly consists of
A.
shareholders equity
B.
borrowed funds
C.
retained earnings
D.
deposits


13.
In contrast to commercial banks, finance companies tend to
A.
obtain their funds in large amounts, lend in small amounts.
B.
obtain their funds in small amounts, lend in large amounts.
C.
have a greater proportion of deposit sources of funds
D.
be less flexible in their ability to branch.


14.
The major assets of large finance companies are
A.
certificates of deposit.
B.
cash, ready to be loaned out.
C.
loan receivables.
D.
commercial paper.


15.
Investment securities are owned by finance companies to provide
A.
income and financing.
B.
liquidity and cash.
C.
liquidity and income.
D.
collateral and income.


16.
Major finance companies place their commercial paper "directly," which is
A.
directly from the bank.
B.
through direct contact with dealers.
C.
through direct contact with suppliers of funds.
D.
directly through the mail.


17.
Much of the flexibility and variety associated with finance companies is associated with
A.
the wide variety of financial services allowed by APRA.
B.
little constraining regulation at the commercial finance level.
C.
the opportunistic culture of finance company managers.
D.
b and c above.


18.
Which of the following statements is true about floor-plan financing?
A.
In floor-plan financing, the finance company pays the manufacturer when the goods are delivered to the dealer.
B.
In floor-plan financing, the manufacturer retains the title to the goods.
C.
In floor-plan financing, the manufacturer pays the finance company when the goods are delivered to the dealer.
D.
None of the above


19.
Revolving credit implies
A.
a borrower can extent his or her existing loan indefinitely
B.
a borrower can borrow as much as he or she wants
C.
a borrower can borrow up to his or her credit limit many times
D.
a borrower can borrow more with more collateral


20.
Debt consolidation companies are
A.
typically small finance companies that offer very short-term loans at exceedingly high interest rates.
B.
companies that specialise in a particular type of finance product
C.
are finance companies that help finance goods sold by their parent companies.
D.
which target individuals with excessive levels of personal debt or those with several different loans.


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