Questions from Financial Markets


Q: Explain how savings institutions could use interest rate futures to reduce interest

Explain how savings institutions could use interest rate futures to reduce interest rate risk.

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Q: Is the cost of funds obtained by finance companies very sensitive to

Is the cost of funds obtained by finance companies very sensitive to market interest rate movements? Explain.

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Q: How might a firm’s board of directors discourage its managers from attempting

How might a firm’s board of directors discourage its managers from attempting to manipulate financial statements to create a temporarily high stock price?

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Q: Explain what exchange-traded notes are and how they are used

Explain what exchange-traded notes are and how they are used. Why are they risky?

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Q: Explain how the credit risk of finance companies differs from that of

Explain how the credit risk of finance companies differs from that of other lending financial institutions.

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Q: Explain why some finance companies are associated with automobile manufacturers. Why

Explain why some finance companies are associated with automobile manufacturers. Why do some of these finance companies offer below-market rates on loans?

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Q: Describe the major uses of funds by finance companies.

Describe the major uses of funds by finance companies.

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Q: Explain how finance companies benefit from offering consumers a credit card.

Explain how finance companies benefit from offering consumers a credit card.

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Q: Explain how finance companies provide financing through leasing.

Explain how finance companies provide financing through leasing.

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Q: Describe the kinds of regulations that are imposed on finance companies.

Describe the kinds of regulations that are imposed on finance companies.

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