Exam 9: Financial Crises

________ is the development of new, sophisticated financial instruments.

When regulators examine the adequacy of the financial system's liquidity it is engaging in ________ supervision.

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

In a bank panic ________.

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 ________.

A major disruption in financial markets characterized by sharp declines in asset prices and firm failures is called a ________.

The risk of asset-backed commercial paper depends on ________.

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

Other than breaking systematically important financial institutions, the too-big-to-fail problem could be mitigated by requiring ________.

"Plain vanilla" assets are ________.

When financial intermediaries deleverage, firms cannot fund investment opportunities resulting in ________.

During the 2007-2009 financial crisis in the U.S. the credit spreads peaked at ________ in December 2008.

Agency problems in the subprime mortgage market included all of the following except ________.

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

The elimination of restrictions on financial markets and institutions is also known as ________.

If the anatomy of a financial crisis is thought of as a sequence of events, which of the following events would be least likely to be the initiating cause of the financial crisis?

Credit default swaps ________.

Describe an asset-price bubble.