F15-F16

Question 1

nontransaction deposits

Answer 1

higher interest
savings accounts
CD/time deposit
fixed maturity date and less liquid

Question 2

bank managers four concerns

Answer 2

liquidity management-enough cash to pay when there are deposit outflows
asset management-low default, diversifying
liability management-funds at low cost
capital adequacy management-about capital bank should keep

Question 3

reason to hold excess return

Answer 3

when deposit outflow occurs bank don’t need to:
borrow from other banks
sell securities
borrow from fed
calling in or sell of loans
-> the higher the cost is for deposit outflows, the more excess return the bank should have

Question 4

princips for insurance

Answer 4

• beneficiary must suffer potential harm
• insured must provide full and accurate information
• if third party compensate insured for loss, insurance company is reduced to pay same amount
• the insured is not to profit as a result of insurance
• insurance company must spread out risk by having a lot of people insured
• loss must be quantifiable
• must be possible to compute probability of occurrence

Question 5

deductible

Answer 5

amour loss insured must pay before insurance company pays

to reduce moral hazard

Question 6

underwriters

Answer 6

hired to review and sign off each policy

can write or turn down

Question 7

two different types of insurance companies

Answer 7

stock company-wants to earn profit
metal insurance company-owned by members
try to reduce cost and reinvest profit in company

Question 8

why pensions?

Answer 8

the world became more urban

people live longer and retire younger

Question 9

pension plan

defined benefit plan

Answer 9

promise specific benefit when retire

puts burden on employee to provide right amount to ensure agreed payments can be made

Question 10

pension plan

defined contribution pension plan

Answer 10

specifies what will be contributed
benefits depend on earnings on fund
fixed percentage on employees wage
can choose how individual fund will be invested

Question 11

three types of insurance

Answer 11

life insurance
health insurance
property and casualty insurance-protects from liability for harm.business.

Question 12

reinsurance

Answer 12

insurance for insurance companies

Question 13

life insurance

term life

Answer 13

insured is covered while insurance is in effect

10-20 years

Question 14

life insurance

whole life

Answer 14

pays out to hires or receives cash at maturity date

Question 15

life insurance

annuities

Answer 15

pays during all retirement years

Question 16

försäkringsteckningsskuld+bonusallokering

Answer 16

garantiränta för det man kommer få när man pensionerar sig varje månad.
bonus ges om avkastningen i företaget är positiv.