As a Result of the Financial Services Modernization Act

question 40

Multiple Choice

As a result of the Financial Services Modernization Act

• A)securities firms had to search for loopholes to expand into other types of financial services.
• B)firms that formed a special finance holding company were regulated by the SEC.
• C)banking, securities activities, and insurance services could be consolidated in a single financial institution.
• D)securities firms were prohibited from expanding into other types of financial services.

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Definitions:

Required Return

The minimum expected return on an investment necessary to compensate for the risk taken by the investor, including the time value of money and inflation.

Payback

A method of investment appraisal that calculates the time needed for an investment to generate cash flows sufficient to recover the initial outlay.

Four Year Payback

A capital budgeting method that calculates the time required to recoup the initial investment in a project, specifically over a period of four years.