FINA 465 EXAM 1 2026 ACTUAL
QUESTIONS WITH VERIFIED
ANSWERS.
Why do broker dealers tend to hold less equity capital than do
commercial banks and thrifts? - correct answer-Securities
balance sheets contain more tradable (liquid) securities
Securities firms are required to maintain an aggregate
indebtedness to net capital of no more than 1,500 percent (ie
debt cannot be more than 15 times higher than equity)
What was the major result of NSMIA? - correct answer-
Reaffirmed the significance of SEC
Gives the SEC exclusive regulatory jurisdiction over securities
firms
What regulatory changes resulted from the financial crisis? -
correct answer-2010 Wall Street Reform and Consumer
Protection Act:
Created the Financial Services Oversight Council to give
financial regulators oversight o the industry in its charge to
identify emerging systematic risks.
1 | Page
,Increased the dollar amount for determining whether or not an
investment advisor must register with state or federal law. ( >
$100 million register with state, < $100 million register with
SEC)
Gives Federal Reserve the right to supervise all firms that could
pose a threat to financial stability fan called for stronger capital
and other prudential standards for all financial firms and even
higher standards for large interconnected firms.
stronger regulation of credit rating agencies
requirement for issuers and originators retain a financial
interest in securitized loans, all over the counter derivatives,
and the federal reserve to oversee payment, clearing and
settlement systems.
government can resolve nonbank financial institutions whose
failures could have serious systematic effects and revised the
Federal Reserves emergency lending authority.
Volcker Rule
Volcker Rule - correct answer-prohibits US depository
institutions from engaging in proprietary trading ( trading as the
principal for the trading account of the bank)
investment banking holding companies now subject to
oversight
2 | Page
,What were the trends in foreign transactions in US securities
and US transactions in foreign securities in the 1990s through
2010s. - correct answer-US investment are global leaders
increase in US transactions in foreign securities
foreign transactions in US securities also grew
Investment banks wanted to make global strategic alliances
Why do foreign banks operating in the United States compete
with both US commercial and investment banks? - correct
answer-
Where do mutual funds rank in terms of asset size among all FI
industries? - correct answer-They rank second overall, they are
out ranked by US charted depository institutions
Describe the difference between short term and long term
mutual funds - correct answer-long term funds consist of equity,
bond, or hybrid funds, they are more well diversified and the
risk is more market based or systematic.
Short term funds include money market mutual funds and tax
exempt money market mutual funds. The primary risk is interest
rate risk due to predominance of fixed income securities.
3 | Page
, What have been the trends in the number of mutual funds since
1980? - correct answer-They increased until 2008, from 2008
until 2010 they decreased. They have slowly increased since
2014.
What are the biggest mutual fund companies? How have their
funds performed in recent years? - correct answer-
Vanguard,American Funds, and Fidelity
All funds have seen positive returns in the past 10 years
Describe the difference between open end and closed end
mutual funds? - correct answer-Closed ended funds have a
fixed number of shares , they mirror REITS
Open ended funds have no limit on the amount shares, they
mirror efts
Describe the major assets held by mutual funds in the 1990s
through 2010s - correct answer-Money Market Funds:
Foreign Deposits
Checkable deposits and currency
Total time and savings deposits
Security RPs
Credit Market Instruments
4 | Page
QUESTIONS WITH VERIFIED
ANSWERS.
Why do broker dealers tend to hold less equity capital than do
commercial banks and thrifts? - correct answer-Securities
balance sheets contain more tradable (liquid) securities
Securities firms are required to maintain an aggregate
indebtedness to net capital of no more than 1,500 percent (ie
debt cannot be more than 15 times higher than equity)
What was the major result of NSMIA? - correct answer-
Reaffirmed the significance of SEC
Gives the SEC exclusive regulatory jurisdiction over securities
firms
What regulatory changes resulted from the financial crisis? -
correct answer-2010 Wall Street Reform and Consumer
Protection Act:
Created the Financial Services Oversight Council to give
financial regulators oversight o the industry in its charge to
identify emerging systematic risks.
1 | Page
,Increased the dollar amount for determining whether or not an
investment advisor must register with state or federal law. ( >
$100 million register with state, < $100 million register with
SEC)
Gives Federal Reserve the right to supervise all firms that could
pose a threat to financial stability fan called for stronger capital
and other prudential standards for all financial firms and even
higher standards for large interconnected firms.
stronger regulation of credit rating agencies
requirement for issuers and originators retain a financial
interest in securitized loans, all over the counter derivatives,
and the federal reserve to oversee payment, clearing and
settlement systems.
government can resolve nonbank financial institutions whose
failures could have serious systematic effects and revised the
Federal Reserves emergency lending authority.
Volcker Rule
Volcker Rule - correct answer-prohibits US depository
institutions from engaging in proprietary trading ( trading as the
principal for the trading account of the bank)
investment banking holding companies now subject to
oversight
2 | Page
,What were the trends in foreign transactions in US securities
and US transactions in foreign securities in the 1990s through
2010s. - correct answer-US investment are global leaders
increase in US transactions in foreign securities
foreign transactions in US securities also grew
Investment banks wanted to make global strategic alliances
Why do foreign banks operating in the United States compete
with both US commercial and investment banks? - correct
answer-
Where do mutual funds rank in terms of asset size among all FI
industries? - correct answer-They rank second overall, they are
out ranked by US charted depository institutions
Describe the difference between short term and long term
mutual funds - correct answer-long term funds consist of equity,
bond, or hybrid funds, they are more well diversified and the
risk is more market based or systematic.
Short term funds include money market mutual funds and tax
exempt money market mutual funds. The primary risk is interest
rate risk due to predominance of fixed income securities.
3 | Page
, What have been the trends in the number of mutual funds since
1980? - correct answer-They increased until 2008, from 2008
until 2010 they decreased. They have slowly increased since
2014.
What are the biggest mutual fund companies? How have their
funds performed in recent years? - correct answer-
Vanguard,American Funds, and Fidelity
All funds have seen positive returns in the past 10 years
Describe the difference between open end and closed end
mutual funds? - correct answer-Closed ended funds have a
fixed number of shares , they mirror REITS
Open ended funds have no limit on the amount shares, they
mirror efts
Describe the major assets held by mutual funds in the 1990s
through 2010s - correct answer-Money Market Funds:
Foreign Deposits
Checkable deposits and currency
Total time and savings deposits
Security RPs
Credit Market Instruments
4 | Page
