Chapter 10 MC

Question 1

Which of the following statements concerning the Pension Benefit Guaranty Corporation is (are) correct? I. It was created by ERISA in 1974. II. It protects vested benefits in defined benefit plans

Answer 1

Both I and II are correct.

Question 2

Which of the following statements concerning disintermediation is (are) correct? I. It reduces reserves in the banking system. II. It reduces deposits held in banks.

Answer 2

Both I and II are correct.

Question 3

Which of the following statements concerning monetary policy is (are) correct? I. It is used to manage the deficit. II. It is used to manage inflation.

Answer 3

II only

Question 4

Which of the following statements concerning the Sarbanes-Oxley Act of 2002 is (are) correct? I. It created an oversight board to monitor the auditing profession. II. It increased corporate reporting responsibilities.

Answer 4

Both I and II are correct.

Question 5

Which of the following statements concerning the public benefit from regulating the financial services industry is (are) correct? I. It fosters public confidence in institutions. II. It reduces the profit margins of firms.

Answer 5

II is incorrect because regulating the financial services industry does not reduce the profit margins of firms.

Question 6

Monetary policy tools include which of the following? I. setting margin requirements on brokerage accounts II. changing federal income tax rates

Answer 6

II is incorrect because changing federal income tax rates is not a monetary policy tool but a fiscal policy tool.

Question 7

Which of the following statements concerning the Pension Benefit Guaranty Corporation is (are) correct?

I. Single-employer pension plans pay a basic flat-rate premium.
II. Underfunded pension plans pay an additional charge per $1,000 of unfunded vested benefits.
Answer

Answer 7

Both I and II are correct.

Question 8

Registered investment advisers must comply with all the following responsibilities imposed by the SEC EXCEPT to

Answer 8

use the initials RIA after their names on all business cards and letterheads
The SEC has taken the position that a registered investment adviser must not use the initials RIA after his or her name

Question 9

All the following acts affect the securities industry EXCEPT

Answer 9

The McCarran-Ferguson Act of 1945 states that regulation of insurance will remain with the states provided the states actually regulate the insurance companies operating within their borders