Exam 12: Money,Banking and the Financial System: Old Problems With New Twists

The interest rate on an adjustable rate mortgage (ARM)is

The Federal National Mortgage Association (or Fannie Mae)was created to

A subprime mortgage

Collateralized debt obligations always exclude subprime mortgages,because these are too risky for most investors.

If the supply of money decreases,the value of a dollar increases.

Stockholders can receive a capital gain when they purchase a financial asset.

An increase in the Required Reserve Ratio will allow banks to create less money.

One of the main functions of banks is to create money.

Silversmiths became banks when they started lending out money based upon the excess silver that they held for their customers.

A policy implemented by the Clinton administration resulted in tighter financial requirements for less creditworthy borrowers,so that financial markets were less risky.

If the Open Market Committee of the Federal Reserve sells securities,this action will

The Financial Crisis of 2008 affected

Stocks and bonds are essentially interchangeable financial assets,since owners of both of these instruments receive regular interest payments.

A number of banks encountered problems because a change in accounting rules required firms to mark assets at their original purchase price.

If you keep some cash in a safe place so that you have it to use later,money is serving which function?

Any time the Discount Rate increases,the money supply also increases.

A dividend

Each of the following is a financial intermediary except

Money serves as

Subprime mortgages and home equity loans contributed little to the increase in the demand for residential real estate,increasing prices dramatically.