1 . 2 . Finance Companies are a special class of depository institution . The Financial Services Modernization Act of 1999 prohibits commercial banks from participating in investment banking activities . 3 . 4 . Character is the least important of credit risk factors . Depositories are generally more strongly affected by interest rate risk than is the case for other types of financial companies . Actuaries are the primary asset / liability management professionals for investment banks . Credit risk is only an issue for financial intermediaries ." and liabilities .\ . Interest rate risk is solely a result of maturity ( or re- pricing ) mismatches between assets 8 . Loan pricing and structure are useful tools for managing credit risk . insurance policies . _The primary liabilities of Property & Casualty Insurers are multi - year fire , auto and liability 10 . The Glass Steagall Act currently limits the ability of commercial banks to participate in investment banking and securities underwriting activities . tiple Choice ( 1 point each ) Independent finance companies are generally more exposed to which of the following risk Factors when compared to " captive " finance companies : A ) Interest rate risk , B ) Currency exchange rate risk , C ) Credit risk , D ) Liquidity / Refinancing Risk , E ) None of these risks . Which is not a difference between finance companies and depositories A ) Finance companies lack access to the Federal Reserve Discount Window , B ) Finance companies are not allowed to issue federally insured deposits , C ) Finance Companies extend credit as their core business activity , D ) Finance Companies typically assume credit risks which are higher than those assumed by depository institutions . Gap Analysis is most useful for analyzing A ) Market Risk , B ) Credit Risk , C ) the Income Effect of Interest Rate Risk , D ) the Equity Effect of Interest Rate Risk . Which is the most heavily leveraged type of company among the following ? A ) Investment Bank , B ) Life Insurance Company , C ) Independent Finance Company , D ) Commercial Bank , E ) None of the above . _The riskiest activities in a securities firm or investment bank is A ) Advisory services , B ) Proprietary trading , C ) Securities brokerage , D ) Securities underwriting