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Exam 14: Other Lending Institutions: Savings Institutions, credit Unions, and Finance Companies

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Question 31

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________ are the most diversified of depository institutions and ________ are on average the largest depository institutions.

A) Banks; savings institutions
B) Credit unions; commercial banks
C) Credit unions; credit unions
D) Commercial banks; commercial banks
E) Savings institutions; commercial banks

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Question 32

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After deposits,the second largest source of funds at savings institutions is FHLB loans.

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Question 33

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Generally,a captive finance company is wholly owned by major manufacturing companies with the purpose of providing financing to customers purchasing the parent company's product.

In 2016,credit union's largest portion of investment securities was ________.

How do the primary risks of credit unions differ from banks? from savings institutions (SIs)? from finance companies?

Credit unions are not taxed and,as a result,well-run credit unions are often able to charge lower loan rates and pay slightly higher deposit rates than banks.

Sales finance institutions specialize in loan sales to banks and thrifts.

In a mutual organization,the depositors are owners of the institution.

Factoring is the term used when a finance company purchases accounts receivable from corporate customers at premium.

The National Credit Union Administration is the primary regulator of federally chartered credit unions.

SI profitability declined in the mid-2000s due to I. the yield curve becoming more positively sloped. II. decreases in the NIM ratio. III. increases in the NIM ratio. IV. the yield curve becoming flatter and even inverted.

Deposits at savings banks are backed by the ________ and deposits at savings institutions are backed by the ________.

The largest U.S. banks are larger than the entire credit union industry.

The U.S. Central Credit Union and the corporate credit union

Factoring is

A savings institution (SI)has funded $12 million of 30-year fixed-rate mortgages with an average interest rate of 5.75 percent. These assets are funded with time deposits with an average maturity of six months. The deposits are currently paying 3.5 percent. In six months time,however,the Fed has raised interest rates twice and the depositors now must be paid 4.25 percent. What will happen to the SI's ROA and NIM? How would your answer change if the SI normally sells the mortgages every six months and originates additional new mortgage loans?

Floor plan loan is a type of short-term loan to finance high priced inventory in which the purchased inventory is placed as collateral for the loan.

In 2016,the largest U.S. savings institution was

Finance companies obtain a significant portion of their short-term financing from

Finance companies are regulated at the federal and state levels similar to commercial banks.