Fin 3080 final exam - Study guides, Class notes & Summaries

Suppose that the Federal Reserve announces that it will sell a large amount of T-bills. This action will have ripple effects through the economy. What is the likely impact on the stock market? Decrease in the value of stocks - correct answer Decrease in the value of stocks Mortgage backed securities are often created with different tranches such as AAA, A, BBB. Which of the following statements is incorrect regarding the differences between these tranches...

Suppose that the Federal Reserve announces that it will sell a large amount of T-bills. This action will have ripple effects through the economy. What is the likely impact on the stock market? Decrease in the value of stocks - ANSWER Decrease in the value of stocks Mortgage backed securities are often created with different tranches such as AAA, A, BBB. Which of the following statements is incorrect regarding the differences between these tranches? - ANSWER The different tranches are backed ...

Mutual funds use economies of scale to lower trading costs and reduce administrative expenses. In doing so, they are providing which type of benefit - ANSWER Transaction Cost Services Which is an example of maturity intermediation? - ANSWER A commercial bank allows depositors to withdraw funds anytime, and makes long-term loans. Funds would not flow as freely in a world with no financial institutions as they would in a world with financial institutions. What are the three reasons for this?...

money markets - ANSWER markets that trade debt securities or instruments with maturities of less than one year motivation behind money markets - ANSWER cash on corporate balance sheets is mostly invested in money market securities. gives higher returns than holding cash and are very liquid major players in money markets - ANSWER governments, corporations, banks and mutual funds purpose of money markets - ANSWER transfer funds from those with short-term excess funds to those with sho...

Fin 3080 Final Exam Practice test questions and answers, (Answered 100%) In October 2009, following the financial crisis the unemployment rate peaked at over __% 10% Give one example of a problem that can occur if people believe that home prices will always raise Homeowners borrow a lot Rating agencies underestimate default rates on MBS Who was the chair of the Federal Reserve in 2008, during the financial crisis Ben Bernake What is the typical denomination of a treasury bill Multiple...

Fin 3080 Final Exam Practice test questions and answers, (Answered 100%) In October 2009, following the financial crisis the unemployment rate peaked at over __% 10% Give one example of a problem that can occur if people believe that home prices will always raise Homeowners borrow a lot Rating agencies underestimate default rates on MBS Who was the chair of the Federal Reserve in 2008, during the financial crisis Ben Bernake What is the typical denomination of a treasury bill Multiple...

Fin 3080 Final Exam Practice test questions and answers, (Answered 100%) In October 2009, following the financial crisis the unemployment rate peaked at over __% 10% Give one example of a problem that can occur if people believe that home prices will always raise Homeowners borrow a lot Rating agencies underestimate default rates on MBS Who was the chair of the Federal Reserve in 2008, during the financial crisis Ben Bernake What is the typical denomination of a treasury bill Multip...

Fin 3080 Final Exam Practice test questions and answers, (Answered 100%) In October 2009, following the financial crisis the unemployment rate peaked at over __% 10% Give one example of a problem that can occur if people believe that home prices will always raise Homeowners borrow a lot Rating agencies underestimate default rates on MBS Who was the chair of the Federal Reserve in 2008, during the financial crisis Ben Bernake What is the typical denomination of a treasury bill Multiple...

Fin 3080 Final Exam Practice test questions and answers, (Answered 100%) In October 2009, following the financial crisis the unemployment rate peaked at over __% 10% Give one example of a problem that can occur if people believe that home prices will always raise Homeowners borrow a lot Rating agencies underestimate default rates on MBS Who was the chair of the Federal Reserve in 2008, during the financial crisis Ben Bernake What is the typical denomination of a treasury bill Multiple...

Fin 3080 Final Exam Practice test questions and answers, (Answered 100%) In October 2009, following the financial crisis the unemployment rate peaked at over __% 10% Give one example of a problem that can occur if people believe that home prices will always raise Homeowners borrow a lot Rating agencies underestimate default rates on MBS Who was the chair of the Federal Reserve in 2008, during the financial crisis Ben Bernake What is the typical denomination of a treasury bill Multiple...