Why do pension funds have vesting periods?

A.

Pension funds have vesting periods in order to reduce turnover among employees who are not yet vested.

B.

Pension funds have vesting periods in order to reduce transaction costs.

C.

Pension funds have vesting periods in order to increase turnover among employees who are not yet vested.

D.

Pension funds have vesting periods in order to increase the amount of future payments.

Do vesting periods have any advantages to employees relative to a system where new hires are eligible to participate in a pension plan right away?

A.

In the long run, vesting periods have some advantages to employees relative to a system where new hires are eligible to participate in a pension plan right away.

B.

Vesting periods do not have any advantages to employees relative to a system where new hires are eligible to participate in a pension plan right away.

C.

Vesting periods increase the amount of future payments relative to a system where new hires are eligible to participate in a pension plan right away.

D.

There is not enough information given to answer the question

In what ways are investment institutions similar to commercial banks?

A.

They both provide monetary policies.

B.

They both offer traditional banking activities, such as taking deposits and making loans.

C.

They both borrow short and lend long.

D.

They are completely different financial organizations.

In what ways are they different?

A.

Commercial banks are different from investment institutions because they do not offer short-term assets to borrow short and thus are unable to lend long.

B.

Investment institutions are different from commercial banks because they do not research the financial markets as commercial banks do.

C.

Investment institutions are different from commercial banks because they do not engage in traditional commercial banking activities, such as taking deposits and making loans.

D.

There are no differences between investment institutions and commercial banks.

A review of a biography of the British investment banker Siegmund Warburg states that Warburg believed:

"Investment banking should not be about gambling but about ... financial intermediation built on client relationships, not speculative trading...Warburg was always queasy about profits made from [investing] the firm's own capital, preferring income from advisory and underwriting fees."

Source: "Taking the Long View,"

Economist,

July 24, 2010.

What is underwriting?

A.

Underwriting is the signing of contract for buying or selling debt.

B.

Underwriting is the creation of sophisticated financial instruments.

C.

Underwriting is the first time a firm sells stock to the general public.

D.

Underwriting is an activity in which an investment bank guarantees to the issuing corporation the price of a new security and then resells the security for a profit.

In what sense is an investment bank that engages in underwriting acting as a financial intermediary?

A.

Underwriting is financial intermediation because the bank gains profit from the procedure.

B.

The statement is not correct and an investment bank that engages in underwriting does not act as a financial intermediary.

C.

Underwriting is financial intermediation because the bank creates the financial instruments.

D.

Underwriting is financial intermediation because the bank brings together savers and the issuers of securities.

Is an investment bank that buys securities with its own capital acting as a financial intermediary?

A.

An investment bank that buys securities with its own capital is not acting as a financial intermediary.

B.

By buying securities with its own capital the bank expects to get profit from the yield or the changes in price.

C.

A and B are correct.

D.

Neither A, nor B is correct.