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FIN%204620%20Exam%201%20Study%20Guide - Finance 4620...

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Finance 4620 – Financial Management of Financial Institutions Spring 2012 - Exam #1 - Chapters 1, 2, 7, 8 & 9 STUDY GUIDE Exam Structure 30 multiple-choice and T/F questions worth 3.5 points each (maximum 105 points). Chapter 1 (Why FIs Are Special): - 5 questions, all of which are concept questions. Understand the primary role of Financial Intermediaries (FIs) and the meaning of asset transformation. Be able to distinguish the primary difference between the balance sheets for FIs versus non- financial firms. Know why savers of funds need FIs to function as middlemen. Understand the maturity structure of FI assets and liabilities and how FI diversification allows FIs to have assets that are high risk and illiquid funded with low risk and liquid sources of funds. Understand the degree to which FIs are regulated. Chapter 2 (Depository Institutions) – 3 questions, all of which are concept questions. Know the composition and leverage of Depository Institution balance sheets, and how customer deposits and customer loans are organized on the balance sheet.
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