Exam 11: Financial Crises

A sharp decline in the stock market means that the ________ of corporations has fallen making lenders ________ willing to lend.

Asymmetric information problems that act as a barrier to efficient allocation of capital are often described as ________.

Credit market problems of adverse selection and moral hazard increased as a result of all of the following except ________.

The originate-to-distribute business model is when ________.

Explain why the too-big-to-fail problem is a moral hazard problem.

The housing price bubble ________.

Credit rating agencies were subject to conflicts of interest in the subprime mortgage market because ________.

Credit default swaps ________.

The net stable funding ratio is the ratio of ________ and ideally should be relatively ________.

A possible sequence for the three stages of a financial crisis in Canada might be ________ leads to ________ leads to ________.

Banking crises or bank panics have started when ________.

Fitch and Standard & Poor announced downgrades on ________ of mortgage-backed securities and CDOs.

When financial institutions go on a lending spree and expand their lending at a rapid pace they are participating in a ________.

The agency problem in the mortgage markets was due to the ________ business model.

To reduce the incentives of financial institution managers to engage in excessive risk taking regulators might require that bonuses be ________.

An economic downturn which causes the price level to fall and a deterioration in firms' net worth because of the increased burden of indebtedness results in ________.

The Dodd-Frank Act of 2010 requires financial institutions to ________.

The housing boom in the United States was aided by ________.

Between October 2007 and March 2009, asset prices in the stock market fell by ________.

The Dodd-Frank Act of 2010 ________.