1. Interest rates are important to financial institutions since an interest rate increase _________ the cost of acquiring funds and _________ the income from assets.

A) decreases; decreases

B) increases; increases

C) decreases; increases

D) increases; decreases

E) Funk this Ship question.

2. Changes in stock prices

A) affect people's wealth and their willingness to spend.

B) affect firms' decisions to sell stock to finance investment spending.

C) are characterized by some fluctuations.

D) can be guaranteed by insurance companies with no loses or guaranteed profits.

E) all of the above.

3. The largest financial intermediaries are

A) insurance companies.

B) finance companies.

C) banks.

D) all of the above.

E) CSULA & all CSUs

4. ____ are considered a financial institutions.

A) Banks

B) Insurance companies

C) Finance companies

D) Investment banks

E) Loan Sharks and Loan Sharks