Question 1

Like a CDO,a structured investment vehicle pays off cash flows from pools of assets,however,rather than long-term debt the structured investment vehicle backs ________.

Accepted Answer

A)  commercial paper 
B)  Treasury notes 
C)  corporate bonds 
D)  municipal bonds 
A)  commercial paper 
B)  Treasury notes 
C)  corporate bonds 
D)  municipal bonds

Question 2

When there is a deterioration in financial institutions' balance sheets ________.

Accepted Answer

A)  economic activity contracts 
B)  asset prices increase 
C)  financial engineering takes place 
D)  financial globalization increases its pace 
A)  economic activity contracts 
B)  asset prices increase 
C)  financial engineering takes place 
D)  financial globalization increases its pace

Question 3

Banking crises or bank panics have started when ________.

Accepted Answer

A)  there is a reduction of the adverse selection and moral hazard problems 
B)  there have been periods of low interest rates 
C)  depositors withdraw their funds from banks 
D)  when information is made available to investors 
A)  there is a reduction of the adverse selection and moral hazard problems 
B)  there have been periods of low interest rates 
C)  depositors withdraw their funds from banks 
D)  when information is made available to investors

Question 4

The Irish government helped mitigate the financial crisis by ________.

Accepted Answer

A)  guaranteeing all deposits 
B)  privatizing the banking system 
C)  increasing short term borrowing 
D)  refusing to inject more capital into the failing system 
A)  guaranteeing all deposits 
B)  privatizing the banking system 
C)  increasing short term borrowing 
D)  refusing to inject more capital into the failing system

Question 5

Mortgage brokers often did not make a strong effort to evaluate whether the borrower could pay off the loan.This created a ________.

Accepted Answer

A)  severe adverse selection problem 
B)  decline in mortgage applications 
C)  call to deregulate the industry 
D)  decrease in the demand for houses 
A)  severe adverse selection problem 
B)  decline in mortgage applications 
C)  call to deregulate the industry 
D)  decrease in the demand for houses

Question 6

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

Accepted Answer

A)  originate-to-distribute 
B)  business-as-usual 
C)  securitization 
D)  "pass-through" 
A)  originate-to-distribute 
B)  business-as-usual 
C)  securitization 
D)  "pass-through"

Question 7

Asset-backed commercial paper is backed by all of the following except ________.

Accepted Answer

A)  unsecured promissory notes 
B)  mortgages 
C)  car loans 
D)  credit card receivables 
A)  unsecured promissory notes 
B)  mortgages 
C)  car loans 
D)  credit card receivables

Question 8

Most financial crises have started during periods of ________ either after the start of a recession or a stock market crash.

Accepted Answer

A)  high uncertainty 
B)  low interest rates 
C)  low asset prices 
D)  high financial regulation 
A)  high uncertainty 
B)  low interest rates 
C)  low asset prices 
D)  high financial regulation

Question 9

Financial innovations that emerged after 2000 in the mortgage markets included all of the following except ________.

Accepted Answer

A)  adjustable-rate mortgages 
B)  subprime mortgages 
C)  Alt-A mortgages 
D)  mortgage-backed securities 
A)  adjustable-rate mortgages 
B)  subprime mortgages 
C)  Alt-A mortgages 
D)  mortgage-backed securities

Question 10

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

Accepted Answer

A)  more than $10 billion 
B)  more than $100 billion 
C)  $50 billion 
D)  more than $10 million 
A)  more than $10 billion 
B)  more than $100 billion 
C)  $50 billion 
D)  more than $10 million

Like a CDO,a structured investment vehicle pays off cash flows from pools of assets,however,rather than long-term debt the structured investment vehicle backs ________.

When there is a deterioration in financial institutions' balance sheets ________.

Banking crises or bank panics have started when ________.

The Irish government helped mitigate the financial crisis by ________.

Mortgage brokers often did not make a strong effort to evaluate whether the borrower could pay off the loan.This created a ________.

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

Asset-backed commercial paper is backed by all of the following except ________.

Most financial crises have started during periods of ________ either after the start of a recession or a stock market crash.

Financial innovations that emerged after 2000 in the mortgage markets included all of the following except ________.

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

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

Understanding Interest Rates

The Behaviour of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Nonbank Finance

Banking and the Management of Financial Institutions

Risk Management With Financial Derivatives

Central Banks and the Bank of Canada

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, inflation, and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

The ISLM Model

Filters

Exam 9: Financial Crises

Like a CDO,a structured investment vehicle pays off cash flows from pools of assets,however,rather than long-term debt the structured investment vehicle backs ________.

When there is a deterioration in financial institutions' balance sheets ________.

Banking crises or bank panics have started when ________.

The Irish government helped mitigate the financial crisis by ________.

Mortgage brokers often did not make a strong effort to evaluate whether the borrower could pay off the loan.This created a ________.

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

Asset-backed commercial paper is backed by all of the following except ________.

Most financial crises have started during periods of ________ either after the start of a recession or a stock market crash.

Financial innovations that emerged after 2000 in the mortgage markets included all of the following except ________.

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

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

Understanding Interest Rates

The Behaviour of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Nonbank Finance

Banking and the Management of Financial Institutions

Risk Management With Financial Derivatives

Central Banks and the Bank of Canada

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, inflation, and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

The ISLM Model

Filters