1
FINA 3317 Final Exam Review Questions with
Correct Answers | Updated (100% Correct
Answers)
The McFadden Act grants states the primary right to regulate
insurance companies. Answer: FALSE
The top 10 property and casualty firms underwrite half of all the
P&C premiums written. Answer: TRUE
Liability lawsuits related to asbestos claims are an example of long
tail losses. Answer: TRUE
A whole life insurance policy pays the face value of the contract on
death of the policyholder to the beneficiaries. Answer: TRUE
The United States, China, and western Europe dominate the global
insurance market. Answer: FALSE
Which of the following type(s) of life insurance policies do not have
a savings feature? Answer: Term Life
The primary regulator of insurance firms is the: Answer: state
insurance regulator.
The largest asset category of life insurers is _______________ and the
largest liability category is ___________ Answer: bonds; policy reserves
© 2025 All rights reserved
,2
Hurricane damage in a given area is an example of a
____________________ for which it is difficult to predict loss exposure.
Answer: high-severity, low-frequency event
For P&C insurers, if the combined ratio is more than 100 percent,
that firm: Answer: may have been profitable if investment returns
were high enough.
Premiums received before the coverage period are termed: Answer:
unearned premiums.
Insurance companies face the problem of ________ when people with
highest probability of getting the insurance payoffs are the ones
who purchase insurance. Answer: adverse selection
Diversified full-line investment banks act as both broker-dealers and
securities underwriters. Answer: TRUE
An example of a national full-line investment banker that specializes
in corporate finance is Goldman Sachs. Answer: TRUE
A market maker buys IBM at $185 for his own account and sells the
stock later in the day at $187. He is acting as a broker in this
transaction. Answer: FALSE
A stockbroker acts as a principal on behalf of the customer. Answer:
FALSE
© 2025 All rights reserved
, 3
If you buy 100 shares of IBM stock in anticipation that earnings will
increase by more than anticipated, you are engaging in what is
termed a risky arbitrage. Answer: TRUE
The Securities Investor Protection Corporation protects investors
against losses due to unfavorable market moves of up to $500,000.
Answer: FALSE
FINRA is a government agency that has a mandate to protect
America's investors by making sure the securities industry operates
fairly and honestly. Answer: FALSE
Diversified full-line securities firms engage in all but which one of
the following? Answer: Raising money via insured deposits
Investment firms that pool money from individuals and/or
institutions and invest equity funds in start-up firms are called:
Answer: venture capital firms.
_____________ are examples of investment bankers offering traditional
commercial banking services. Answer: Cash management accounts
Which one of the following statements about venture capitalists is
not correct? Answer: Venture capitalists are passive investors.
In 2019, the top five underwriters engaged in about _____________ of
global equity issues. Answer: 38.5 percent
© 2025 All rights reserved
FINA 3317 Final Exam Review Questions with
Correct Answers | Updated (100% Correct
Answers)
The McFadden Act grants states the primary right to regulate
insurance companies. Answer: FALSE
The top 10 property and casualty firms underwrite half of all the
P&C premiums written. Answer: TRUE
Liability lawsuits related to asbestos claims are an example of long
tail losses. Answer: TRUE
A whole life insurance policy pays the face value of the contract on
death of the policyholder to the beneficiaries. Answer: TRUE
The United States, China, and western Europe dominate the global
insurance market. Answer: FALSE
Which of the following type(s) of life insurance policies do not have
a savings feature? Answer: Term Life
The primary regulator of insurance firms is the: Answer: state
insurance regulator.
The largest asset category of life insurers is _______________ and the
largest liability category is ___________ Answer: bonds; policy reserves
© 2025 All rights reserved
,2
Hurricane damage in a given area is an example of a
____________________ for which it is difficult to predict loss exposure.
Answer: high-severity, low-frequency event
For P&C insurers, if the combined ratio is more than 100 percent,
that firm: Answer: may have been profitable if investment returns
were high enough.
Premiums received before the coverage period are termed: Answer:
unearned premiums.
Insurance companies face the problem of ________ when people with
highest probability of getting the insurance payoffs are the ones
who purchase insurance. Answer: adverse selection
Diversified full-line investment banks act as both broker-dealers and
securities underwriters. Answer: TRUE
An example of a national full-line investment banker that specializes
in corporate finance is Goldman Sachs. Answer: TRUE
A market maker buys IBM at $185 for his own account and sells the
stock later in the day at $187. He is acting as a broker in this
transaction. Answer: FALSE
A stockbroker acts as a principal on behalf of the customer. Answer:
FALSE
© 2025 All rights reserved
, 3
If you buy 100 shares of IBM stock in anticipation that earnings will
increase by more than anticipated, you are engaging in what is
termed a risky arbitrage. Answer: TRUE
The Securities Investor Protection Corporation protects investors
against losses due to unfavorable market moves of up to $500,000.
Answer: FALSE
FINRA is a government agency that has a mandate to protect
America's investors by making sure the securities industry operates
fairly and honestly. Answer: FALSE
Diversified full-line securities firms engage in all but which one of
the following? Answer: Raising money via insured deposits
Investment firms that pool money from individuals and/or
institutions and invest equity funds in start-up firms are called:
Answer: venture capital firms.
_____________ are examples of investment bankers offering traditional
commercial banking services. Answer: Cash management accounts
Which one of the following statements about venture capitalists is
not correct? Answer: Venture capitalists are passive investors.
In 2019, the top five underwriters engaged in about _____________ of
global equity issues. Answer: 38.5 percent
© 2025 All rights reserved
