Exam 11: The Nature of Financial Intermediation

A rise in deposit rates, all else constant, __________ a bank's __________ risk.

In the 1980s, banks __________ the amount of highly speculative loans they were holding due to __________ deposit rates.

Which of the following is not true with respect to money market mutual funds?

Banks still have a strong comparative advantage in extending __________ to __________ businesses.

If the problem of asymmetric information is so serious that a lender chooses not to lend to any potential small business borrower, then the problem is

Which of the following is not a characteristic of "perfect" markets?

The problem of "asymmetric information" is that the

The general perception in the early 1980s was the S&Ls were not in serious trouble, partly because S&Ls were insured by the

A wave of bank failures in the United States

Most bank loans are __________ maturity by the bank because of the __________ in monitoring how the borrower maintains his obligations.

"Information problematic" borrowers must usually go the __________ finance route and issue __________ securities.

Another term for "don't put all your eggs in one basket" is

Which of the following are not thrift institutions?

In the 1960s, banks started issuing negotiable CDs in order to

In the early 1980s, rising interest rates caused a tremendous __________ in the value of savings-and-loan __________.

Asymmetric information occurs when

One type of financial intermediary now rising in relative importance is

In the context of portfolio diversification,

If a banker lacks enough information to determine exactly which applicants for a loan are good risks and which are bad risks, then he faces a(n)__________ problem.

In the early 1980s, many savings-and-loan associations pretended to be solvent by