FIN366 Final Exam 1) Demand deposits represent the largest deposit source of funds for commercial banks. 2) Property/casualty insurers have a tax incentive to hold preferred stock. 3) Which statement is not true about casualty insurance companies? a. they are subject to federal income tax. b. they invest heavily in municipal bonds. c. they have more predictable cash flows related to claims than life insurance companies. d. they invest in corporate stock. 4) The Glass-Steagall Act of 1933 separated a. insurance from credit. b. investment banking from mutual funds. c. investment banking from commercial banking. d. insurance from mutual funds. 5) The primary reason for the decline of the S&L industry was the passage of legislation that gave 6) An insurance policy in which fixed premium payments are invested in mutual funds of stocks, bonds, and money market instruments is called a. term life. b. universal life. c. whole life. d. endowment life. e. variable life. 7) The Fed can substantially control the level of total bank reserves. 8) Which Fed action does not directly increase total reserves in the banking system? a.
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