Question 1

Which insurance companies, life or property and casualty, would you think would invest more in long-term assets? Explain.

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Question 2

Explain why the decoding of the human genome has interesting implications for the life insurance industry.

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Question 3

Explain the difference between a pension fund that is a defined-contribution plan from one that is a defined-benefit.

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Question 4

There are two current trends in the financial industry which run in opposite directions.What are they?

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Question 5

A very controversial issue in many states currently is whether or not insurance companies should be allowed to use a person's credit history as a tool in determining the individual's automobile and homeowner insurance premium.Without getting into the legal or ethical issues, what do you think the insurance companies' motives might be for wanting to use the credit report?

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Question 6

Why do insurance companies often find it necessary to purchase re-insurance?

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Question 7

Within the insurance industry a common saying is that insurance works because of the "law of large numbers".What do you think is meant by this?

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Question 8

What is the basic difference(s) between term and whole life insurance?

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Question 9

Why do you think most health insurance policies require the first $100 or so of every claim and a percentage of the bill after that to be paid by the insured?

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Question 10

Many insurance companies sell group policies that cover all of the employees at a particular firm, or all of the members of a particular organization.How could this policy help to overcome the problem of adverse selection?

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Question 11

The growth of Internet banking seems to be on the rise.Discuss what the continued growth of Internet banking should do to both the economies of scale and scope of banking.

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Question 12

Why do you think Congress and the President are reluctant to fix the problems (identified in the text) with the Social Security System?

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Question 13

Explain why a domestic bank in the U.S.might create a subsidiary bank in a foreign location like the Cayman Islands.

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Question 14

It has been argued that the laws that prohibited branch banking were needed to protect consumers from large monopoly banks.Does that argument hold up to close scrutiny? Explain.

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Question 15

Owners and managers have cited three reasons for the creation of large financial firms or universal banks.What are these reasons?

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Question 16

In what way(s) can a pension plan be seen as the opposite of life insurance?

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Question 17

The number of banks in the U.S.has fallen almost by half in the past twenty years or so.Was this the result of bank failures or were some due to another cause? Explain.

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Question 18

Explain why anti-branching laws often created credit crunches that slowed economic growth.

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Question 19

It has been argued that regulations can often be the source of innovation.Provide an example of this in the banking industry.

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Question 20

The Reigle-Neal Interstate Banking and Branching Efficiency Act has allowed banks to diversify themselves geographically.Has this geographical expansion resulted in the harm to consumers that early supporters of anti-branching laws feared? Explain.

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Quiz 13: Financial Industry Structure