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
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
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
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.