商业银行管理彼得S罗斯英文原书第8版 英语试题库Chap010.docx

1、商业银行管理彼得S罗斯英文原书第8版 英语试题库Chap010Chapter 10The Investment Function in Banking and Financial-Services ManagementFill in the Blank Questions 1. A(n) _ is a security issued by the federal government which has less than one year to maturity when it is issued. Answer: Treasury bill 2. Debt instruments issu

2、ed by cities, states and other political entities and which are exempt from federal taxes are collectively known as _ . Answer: municipal securities 3. The investment maturity strategy which calls for the bank to have one half of its investment portfolio in very short term assets and one half of its

3、 investment portfolio in long term assets is known as the _ . Answer: barbell strategy 4. A(n) _ is a security where the interest portion of the security is sold separately from the principal portion of the security. Answer: stripped security 5. _ are the way the federal, state and local governments

4、 guarantee the safety of their deposits with banks. Answer: Pledging requirements 6. The most aggressive investment maturity strategy calls for the bank to continually shift the maturities of its securities in responses to changes in interest rates and is called the _. Answer: rate expectation strat

5、egy 7. _ is the risk that the bank will have to sell part of its investment portfolio before their maturity for a capital loss. Answer: Liquidity risk 8. _ is the risk that the economy of the market area they service may take a down turn in the future. Answer: Business risk 9. _ is the risk that the

6、 company whose bonds the financial institution owns may retire the entire issue of corporate bonds in advance of their maturity leaving the bank with the risk of earnings losses resulting from reinvesting the cash at lower interest rates. Answer: Call risk 10. A security issued by the federal govern

7、ment with 1 to 10 years to maturity when it is issued is called a(n) _ . Answer: Treasury note 11. A short term debt security issued by major corporations is known as _. Answer: commercial paper 12. The investment maturity strategy which calls for the bank to have all of their investment assets in v

8、ery short term maturities is called the _. Answer: front-end-loaded policy 13. A money market security which represents a banks commitment to pay a stipulated amount of money on a specific future date under specific conditions and which is often used in international trade is known as a(n) _. Answer

9、: bankers acceptance 14. A(n) _ is an interest-bearing receipt for the deposit of funds in a bank for a stipulated time period. Ones that are oriented towards business customers or institutions are known as jumbos. Answer: certificate of deposit 15. _ are any securities which reach maturity in under

10、 one year. Answer: Money market securities 16. _ are any securities whose original maturity exceeds one year. Answer: Capital market securities 17. Securities sold by Fannie Mae, Freddie Mac and others are known as _. Answer: federal agency securities 18. Claims against the expected income and princ

11、ipal generated by a pool of similar-type loans are known as _. Answer: securitized assets 19. The long term debt obligations of major corporations are known as _. Answer: corporate bonds 20. The investment maturity strategy which calls for the bank to have all of their investment assets in very long

12、 term maturities is known as the _. Answer: back-end-loaded policy 21. Financial Institutions may invest in municipal bonds issued by smaller local governments. These bonds are known as _ bonds. Answer: bank qualified 22. Marketable notes and bonds sold by agencies owned by the government or sponsor

13、ed by the government are known as .Answer: government agency securities23. A security issued by the federal government with greater than 10 years to maturity when it is issued is called a(n) .Answer: Treasury Bond24. are time deposits of fixed maturity issued by the worlds larges banks headquartered

14、 in financial centers around the globe. The heart of this market is centered in London.Answer: Eurocurrency deposits25. are a type of municipal bond that are backed by the full faith and credit of the issuing government.Answer: General obligation bonds26. are a type of municipal bond that are paid o

15、nly from certain stipulated source of funds.Answer: Revenue bonds27. are closely related to CMOs and partition the cash flow from a pool of mortgage loans or mortgage backed securities into multiple maturity classes in order to reduce the cash-flow uncertainty of investors.Answer: Real Estate Mortga

16、ge Investment Conduits (REMICs)28. is the risk that loans will be terminated or paid off ahead of schedule. This is a particular problem with residential home mortgages and other consumer loans that are pooled and used as collateral in securitized assets.Answer: Prepayment risk29. A lending institut

17、ion that sells lower-yielding securities at a loss in order to reduce current taxable income while simultaneously purchasing higher-yielding new securities in order to boost future returns is doing a(n) .Answer: tax swap30. A(n) is a picture of how market interest rates differ across loans securitie

18、s of varying times to maturity.Answer: yield curveTrue/False Questions T F 31. Investments in securities provide diversification for a banks assets because most loans come from the local areas served by a banks offices. Answer: True T F 32. Bank income from loans is fully taxable. Answer: True T F 3

19、3. Investment securities are expected to dress up a banks balance sheet, according to the textbook. Answer: True T F 34. Investment securities are expected to help stabilize a financial institutionss income. Answer: True T F 35. A short-term IOU offered by major corporations that is of short maturit

20、y (most of these lOUs mature in 90 days or less) is known as a CMO. Answer: False T F 36. Prepayment risk on securitized assets generally increases when interest rates rise. Answer: False T F 37. Stripping a security eliminates prepayment risk. Answer: False T F 38. According to the textbook the dom

21、inant security held in U.S. bank investment portfolios is state and local government bonds. Answer: False T F 39. Interest income and capital gains from a banks portfolio of investment securities is taxed in the United States as ordinary income.Answer: True T F 40. Eurocurrency deposits that some ba

22、nks purchase as investments generally carry higher market yields than domestic time deposits issued by comparable-size U.S. banks. Answer: True T F 41. Bankers acceptances are considered to be among the safest of all money market instruments. Answer: True T F 42. An eligible acceptance is one that c

23、an be used as collateral for borrowing from a Federal Reserve bank. Answer: True T F 43. When a bank irrevocably guarantees a commercial paper issue, the banks credit rating substitutes for the borrowers credit rating. Answer: True T F 44. The principal risk banks face from investing in structured n

24、otes is credit (default) risk. Answer: False T F 45. The principal risk to a financial institution buying CMOs is market risk. Answer: False T F 46. Stripped mortgage-backed securities fully protect investors from having to reinvest their income at lower and lower interest rates. Answer: False T F 4

25、7. Stripped mortgage-backed securities make maturity matching of bank assets and liabilities easier to accomplish than do most other investment securities that banks buy. Answer: False T F 48. Lower interest rates increase the present value of all projected cash flows from a loan-backed security so

26、that its market value could rise. Answer: True T F 49. Treasury bills are the long term debt obligations issued by the federal government. Answer: False T F 50. Commercial paper is the short term debt instrument issued by major banks. Answer: False T F 51. Treasury notes and bonds are issued by the

27、federal government and are coupon instruments. Answer: True T F 52. Interest rate risk is the risk financial institutions face due to changes in market interest rates. Answer: True T F 53. One investment maturity strategy popular among smaller institutions is the ladder or spaced maturity policy. It

28、 is popular because it does not take much expertise to implement. Answer: True T F 54. One investment maturity strategy, called the front end loaded policy, requires that the bank put all of its investment portfolio in long term securities. Answer: False T F 55. Business risk is the risk that the ba

29、nk will experience a cash shortage and will have to sell some of its investments securities. Answer: False T F 56. Inflation risk is the possibility that the purchasing power of interest income and repaid principal from a security or loan will be eroded by rising prices for goods and services.Answer

30、: True T F 57. Call risk refers to the right of debt collectors to call in the loans in advance of maturity and get an early repayment. Answer: False T F 58. If interest rates fall, a callable bond at par has the potential for large increases in price.Answer: FalseT F 59. The yield to maturity is the discount rate that equates a securi