Midterm 1 WQ08
Midterm 1 WQ08 KEY

|1. |Financial intermediaries specialize in the production of money. |

FALSE
|2. |The brokerage function of an FI reduces transaction and information costs between a corporation and individual which encourages a lower rate of savings |
| |than would otherwise exist. |

FALSE
|3. |Privately placed bonds and equity can be traded on the secondary market because of amendments to Regulation 144A. |

TRUE
|4. |Negotiable certificates of deposits are distinguished from fixed time deposits by their negotiability and active trading in the secondary markets. |

TRUE
|5. |The securitization of mortgages involves the pooling of mortgage loans for sale in the financial markets. |

TRUE
|6. |In recent years, the number of commercial banks in the U.S. has been increasing. |

FALSE
|7. |The credit union industry avoided much of the financial distress of the 1980s because of the short maturity and relatively less credit risk of their |
| |assets. |

TRUE
|8. |Life insurance companies also manage private pension plans which include the offer of guaranteed investment contracts (GICs). |

TRUE
|9. |In group life insurance, lower rates can be offered because of cost economies as a result of mass administration of plans and reduced selling and |
|