Question 1

During the first half of 2009, a total of _____ banks failed.

Accepted Answer

A)  0 
B)  3 
C)  52 
D)  26 
E)  100 
A)  0 
B)  3 
C)  52 
D)  26 
E)  100

Question 2

Commercial banks are to keep their leverage ratio at roughly 15 to 1.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following was not created by the U.S. government in an attempt to create a nationwide market for home mortgages?

Accepted Answer

A)  Ginnie Mae 
B)  Freddie Mac 
C)  Fannie Mae 
D)  Fannie Mac 
E)  Both A and C 
A)  Ginnie Mae 
B)  Freddie Mac 
C)  Fannie Mae 
D)  Fannie Mac 
E)  Both A and C

Question 4

The term "underwater" means that owner owes more on their mortgage than they would like to.

Accepted Answer

A) True 
 B)False

Question 5

One of the fundamental principles of the Obama Plan was the need to identify potential sources of systemic risk before they manifest themselves in the markets.

Accepted Answer

A) True 
 B)False

Question 6

According to the textbook, both subprime and traditional mortgages were shown to be counter-cyclical.

Accepted Answer

A) True 
 B)False

Question 7

Merrill Lynch was purchased by Bank of America.

Accepted Answer

A) True 
 B)False

Question 8

The Financial Services Oversight Council would be put in place to oversee all things related to consumer protection in the financial services sector.

Accepted Answer

A) True 
 B)False

Question 9

The term too big to fail is used to refer to a firm that has grown so large and strong that it could weather any economic problem.

Accepted Answer

A) True 
 B)False

Question 10

The increased federal regulations under the Obama Plan will perform all of the following actions except:

Accepted Answer

A)  Ask mortgage lenders to retain some risk associated with their securitized assets 
B)  Seek to move derivatives trading to open and more transparent markets 
C)  Oversee nationwide insurers that are now supervised by state regulators 
D)  Limit financial innovation 
E)  None of the above 
A)  Ask mortgage lenders to retain some risk associated with their securitized assets 
B)  Seek to move derivatives trading to open and more transparent markets 
C)  Oversee nationwide insurers that are now supervised by state regulators 
D)  Limit financial innovation 
E)  None of the above

Question 11

An important task for regulators going forward is for them to ensure that financial innovation is closely monitored and occurs only after it receives approval from the government.

Accepted Answer

A) True 
 B)False

Question 12

According to the textbook, the most damaging to AIG's balance sheet was its exposure to MBSs.

Accepted Answer

A) True 
 B)False

Question 13

Net worth is defined as one's monthly income less one's monthly expenses.

Accepted Answer

A) True 
 B)False

Question 14

Explain the main points of financial regulation under the Obama Plan as outlined by your text. What is the ultimate goal of the Obama Plan?

Accepted Answer

The main goals of new financial regulati

Question 15

The Federal Reserve has injected a total of ___________ into AIG.

Accepted Answer

A)  $50 billion 
B)  $1 trillion 
C)  $85 billion 
D)  $100 billion 
E)  $185 billion 
A)  $50 billion 
B)  $1 trillion 
C)  $85 billion 
D)  $100 billion 
E)  $185 billion

Question 16

A collateralized portfolio may consist of a pool of the lowest priority equity tranches of many CMOs.

Accepted Answer

A) True 
 B)False

Question 17

From September 2007 through December 2008, the collective net worth of U.S households fell by nearly $13 trillion.

Accepted Answer

A) True 
 B)False

Question 18

The great credit crisis of 2007-2009 is the worst financial crisis since the Great Depression.

Accepted Answer

A) True 
 B)False

Question 19

CDOs are one example of the financial derivatives known as asset-backed securities (ABSs).

Accepted Answer

A) True 
 B)False

Question 20

A bank's leverage ratio is the ratio of its loans and investments to its capital reserves.

Accepted Answer

A) True 
 B)False

Exam 4: The Financial Crisis and Its Impact on the Mortgage Market and Economy

During the first half of 2009, a total of _____ banks failed.

Commercial banks are to keep their leverage ratio at roughly 15 to 1.

Which of the following was not created by the U.S. government in an attempt to create a nationwide market for home mortgages?

The term "underwater" means that owner owes more on their mortgage than they would like to.

One of the fundamental principles of the Obama Plan was the need to identify potential sources of systemic risk before they manifest themselves in the markets.

According to the textbook, both subprime and traditional mortgages were shown to be counter-cyclical.

Merrill Lynch was purchased by Bank of America.

The Financial Services Oversight Council would be put in place to oversee all things related to consumer protection in the financial services sector.

The term too big to fail is used to refer to a firm that has grown so large and strong that it could weather any economic problem.

The increased federal regulations under the Obama Plan will perform all of the following actions except:

An important task for regulators going forward is for them to ensure that financial innovation is closely monitored and occurs only after it receives approval from the government.

According to the textbook, the most damaging to AIG's balance sheet was its exposure to MBSs.

Net worth is defined as one's monthly income less one's monthly expenses.

Explain the main points of financial regulation under the Obama Plan as outlined by your text. What is the ultimate goal of the Obama Plan?

The Federal Reserve has injected a total of ___________ into AIG.

A collateralized portfolio may consist of a pool of the lowest priority equity tranches of many CMOs.

From September 2007 through December 2008, the collective net worth of U.S households fell by nearly $13 trillion.

The great credit crisis of 2007-2009 is the worst financial crisis since the Great Depression.

CDOs are one example of the financial derivatives known as asset-backed securities (ABSs).

A bank's leverage ratio is the ratio of its loans and investments to its capital reserves.

Understanding the Financial System and Its Impact on the Economy and Markets

Financial Systems, Monetary Units, and the Role of Money in the Economy

Financial Indices, Market Information, and Economic Data

Understanding Interest Rates, Savings, and the Wealth Effect

Financial Concepts and Interest Rates

Effects of Inflation and Yield Curves on Stock Prices and Investments

Understanding Risk and Market Factors in Financial Securities

Exploring Financial Markets and Hedging Strategies

Factors Affecting the Volume of CDs

Exploring the Reserve Accounting System, Money Markets, and Financial Instruments

Exploring Central Banks and Their Impact on the Economy and Financial System

Central Banking and Monetary Policy: Exploring Tools and Strategies

Banking and Financial Services: Regulations, Operations, and Trends

Comparative Analysis of Financial Institutions and Their Operations

Exploring Various Aspects of Pension Funds, Finance Companies, and Insurance Industry

The Impact of Deregulation and Regulation on Financial Institutions and Banking Industry in the United States

Treasury Auctions, Public Debt, and Government Borrowing: Exploring the Us Treasury System

Corporate Bond Pricing, Market Development, and Financing Strategies

The Truth About Regulation Fd and Stock Holdings: Debunking Common Myths in the Financial Market

Flexible Savings Account Options

Mortgage Market and Mortgage Instruments

International Financial Transactions and Balance of Payments

International Banking and Financial Regulations

Exploring the Complexities of Financial Services and Regulation

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