Question 1

Which of the following are NOT examples of institutional investors?&#10;A)Mutual funds and pension funds&#10;B)Insurance companies&#10;C)Commercial Banks&#10;D)All of the above are institutional investors

Accepted Answer

All the options listed (mutual funds, pension funds, insurance companies, and commercial banks) are examples of institutional investors.

Question 2

The largest category of institutional investor's are:&#10;A)Foundations&#10;B)Personal trusts&#10;C)Mutual savings banks&#10;D)Pension funds

Accepted Answer

Pension funds are the largest category of institutional investors, with trillions of dollars in assets under management. They are created by employers to provide retirement benefits for their employees and are managed by professional investment managers. Foundations, personal trusts, and mutual savings banks are also institutional investors but are not as large as pension funds.

Question 3

Pension funds represent a declining segment of the institutional market.

Accepted Answer

False

Question 4

___________ represent permanent capital funds that are donated to universities,churches or civic organizations.&#10;A)Trusts&#10;B)Endowments&#10;C)Commingled funds&#10;D)Annuities

Accepted Answer

Endowments are permanent capital funds that are specifically donated to universities, churches, or civic organizations with the intention of earning income to support the organization's activities in perpetuity. Trusts, commingled funds, and annuities are all types of investment vehicles that can be used to manage endowments or other types of funds.

Question 5

Organizations responsible for bringing together large pools of capital for purposes of reinvestment are called:&#10;A)Individual investors&#10;B)Institutional investors&#10;C)Social security clubs&#10;D)B and C

Accepted Answer

Institutional investors are organizations that control large pools of capital from various sources and are responsible for reinvestment. Examples include pension funds, mutual funds, and insurance companies. Social security clubs do not exist as a term in finance, and individual investors typically do not have the same level of investment capital as institutional investors.

Question 6

Foundations represent profitable organizations set up to accomplish social,educational,or charitable purposes.

Accepted Answer

Foundations represent non-profit organizations set up to accomplish social, educational, or charitable purposes.

Deck 27: The Makeup of Institutional Investors