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6 - investment and insurance products along with...

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Unit 6 - Financial Industry Structure 13-1 Unit 6: Financial Industry Structure Conceptual Problem 1 For many years, you have been using your local small-town bank. One day you hear that the bank is about to be purchased by Bank of America. From your vantage point as a retail bank customer, what are the costs and benefits of such a merger? Conceptual Problem 2 Describe the economies of scope that large financial holding companies hope to realize. Do you believe they will be successful? Conceptual Problem 3 When the values of stocks and bonds fluctuate, they have an impact on the balance sheet of insurance companies. Why is that impact more likely to be a problem for life insurance companies than for property and casualty companies? Analytical Problem 1 Consider two countries with the following characteristics. Country A has no restrictions on bank branching and banks in Country A are permitted to offer
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Unformatted text preview: investment and insurance products along with traditional banking services. In Country B, there are strict limits on branch banking and on the geographical spread of a bank’s business. In addition, banks in Country B are not permitted to offer investment or insurance services. In which country do you think the banking system is more concentrated? In which country do you think the banking system is more competitive? In which country do you think, everything else being equal, banking products are cheaper? Explain each of your choices. Analytical Problem 2 You examine the balance sheet of an insurance company and note that its assets are made up mainly of treasury bills and commercial paper. Is this more likely to be the balance sheet of a property and casualty insurance company or a life insurance company? Explain your answer....
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