1. Which are the followings is NOT correct about the bank holding companies?

a) Easy to transfer resources arounds the numbers of banks within the banking groups

b) Independent investment banks in U.S. formed BHC to expand because they were appealed to the expensive commercial banking business

c) Bank holding companies are tightly regulated by the government

d) Due to McFadden Act, bank in U.S. need to form a bank holding company if it wants to operate in another state

e) None of the above

2. Which of the followings is related to the economy of scope?

a) Investment bank specialize in advisory services expand to insurance business

b) Commercial bank form a BHC to expand its customer base to New York

c) Insurance company to collaborate with commercial bank to expand its customer base

d) Insurance company wants to specialize in advisory services by merging with investment bank

e) a) and d) of the above

3. Which of the following is NOT correct about the credit default swap?

a) It is a derivative instrument that typically requires holder (buyer) to pay a regular insurance premium to the writer (seller) over the life of the contract

b) The holder (buyer) has to own the asset when buying CDS products

c) In the case of default, writer (seller) pays holder (buyer) insured amount of money in return for defaulted asset

d) CDS spread (price) usually increase during economic downturn

e) band d) of the above

4. Which of the following is NOT correct about the loan securitization process?

a) Loan originators grant loans to borrowers and sell loan contracts to arrangers

b) Tranches (senior, mezzanine, and junior) usually share different interest rate

c) Arrangers (mostly, investment banks) create SPV to securitize pool of loans

d) Arrangers purchase loan contracts from the loan originators

e) None of the above