27. If a bond rate is 3% and inflation is 3% what is the real rate?

a. none of the Answers

b. 6%

c. -1%

d. 0%

e. 1%

28. What are off balance sheet vehicles and what role did they play in the 2008 crisis?

a. All of the Answers

b. None of the Answers

c. These vehicles are used to move assets to income statements

d. Banks used accounting methods to remove assets from their balance sheets

29. List one of main policy tools of central banks

a. Monetary policy

b. Provision of liquidity

c. Lender of last resort

d. None of the Answers

e. All of the Answers

30. According to the article Getting up to Speed on the Financial Crisis what is a haircut on collateral for a repo?

a. When the interest on the repo is reduced e.g. haircut

b. When the repo is paid back only a portion of the collateral is returned

c. None of the answers

d. When more collateral is posted than the deposit

e. All of the answers

31. If the inflation rate is 5% and the interest rate you get on your savings is 3% are you building wealth?

a. No

b. Yes

32. What is the difference between liquidity and solvency risk?

a. Solvency risk means that companies or countries are having a hard time staying alive

b. Solvency risk means that companies or countries have low or negative equity

c. None of the answers

d. Liquidity means companies or countries are having a hard time raising money

e. All of answers

33. What is usury?

a. Borrowers demanding easier terms

b. Lenders demanding longer periods to pay off

c. Control of prices by national governments

d. Rates set by the Central bank

e. None of the answers

34. According to Bernanke in Getting up to Speed on the Financial Crisis why did he not believe that losses on subprime mortgages caused the great recession?

a. The CDS concern was a larger problem than subprime

b. House price declines was a trigger for the crisis, but, they cannot explain the crisis

c. None of the answers

d. The Fed was able to lend to the home owners to solve the problem

e. All of answers

35. What is the key difference between the US central bank and that of the Bank of Canada?

a. None of the answers

b. The US central bank has a mandate to for inflation and full employment

c. All the answers

d. The Bank of Canada worries more about the deficit

e. The Bank of Canada is more concerned about short term rates

36. What happens if investors lose confidence in a governments ability to pay?

a. All the answers

b. It may become hard for the government to borrow

c. Rating agencies will likely downgrade the debt

d. The rate on their bonds will increase

e. None of the answers

37. According to the article Getting up to Speed on the Financial Crisis Reinhart and Rogoff listed several results that occur prior to a bank crisis what are they?

a. domestic government debt increases

b. external debt increases sharply

c. A and B and C

d. banking crises tend to lead sovereign?debt crises

e. A and B

38. According to the article Getting up to Speed on the Financial Crisis Bernanke said the current account imbalance is caused by what action?

a. When US borrowers invest in homes

b. None of the answers

c. When a country is saving is less than the amount required to finance domestic investment

d. All the answers

e. When there is large and persistent capital outflows

39. During the Great Depression what did Glass Steagall Act do?

a.

created deposit insurance for banks

b. Separated commercial from investment banks

c. introduced expanded federal bank supervision

d. All of the answers

e. None of the answers

40. According to the article Getting up to Speed on the Financial Crisis did shadow banks help or hurt the 2008 crisis?

a. shadow banking was of little importance

b. shadow banking was the source of key vulnerabilities

c. shadow banking was not a factor

d. None of the answers

41. A liquidity crisis for a bank means that:

a. They are out of liquid investments or cash

b. They do not have enough gold to back paper money

c. They have negative equity

d. All of the answers

e. None of the answers

42. What is the Canadian prime rate and who set it?

a. Prime is set by the Bank of Canada on a monthly basis

b. Prime is set by the chartered banks and is the floating rate charge to the best borrowers

c. Prime is the fixed rate charged by the chartered banks

d. All of the Answers

e. None of the Answers

43. If each of the following persons had the same amount of take-home pay, who would need the greatest amount of life insurance?

a. An elderly retired man, with a wife who is also retired

b. A young single woman without children

c. A young single woman with two young children

d. A young married man without children

44. True or false: By using unit pricing at the grocery store, you can easily compare the cost of any brand and any package size.

a. False

b. True

45. What can affect the amount of interest that you would pay on a loan?

a. Your credit rating

b. All of the above

c. How much you borrow

d. How long you take to repay the loan

46. According to the article Getting up to Speed on the Financial Crisis why was there growth in the shadow banking system?

a. The growth of subprime mortgages

b. Traditional banking model became less profitable

c. All of the answers

d. None of the answers

e. The lowering of interest rates

47. According to Bernanke in Getting up to Speed on the Financial Crisis why did he not believe that losses on subprime mortgages caused the great recession?

a. None of the answers

b. All of answers

c. The Fed was able to lend to the home owners to solve the problem

d. The CDS concern was a larger problem than subprime

e. House price declines was a trigger for the crisis, but, they cannot explain the crisis

48. What does going private mean for a stock listed company?

a. Attracting money from the market on a confidential basis

b. Decision for publicity traded firms to de-list their firm

c. Listing their company on the stock exchange

d. None of the answers

e. Removing all their financial information from their web site

49. What affects the amount of interest that you would pay on a loan?

a. Your credit rating

b. How long you take to repay the loan

c. The type of security you pledge

d. How much you borrow

e. All of the answers

50. What is the Bank of Canada target for inflation?

a. 2%

b. None of the answers

c. 1%

d. 3%

51. Why are bonds are considered safer than stocks?

a. There is less volatility in prices

b. Bonds return principal at maturity

c. All the answers

d. There is a steady schedule of coupon payments

52. What is Shillers definition of a bubble?

a. Caused by fundamentals

b. A situation in which excessive public expectations of future price increases causes prices to be temporarily depressed

c. Made of soap

d. None of the answers

e. All of the answers

53. What is the biggest difference between an investment bank and a commercial bank in the US?

a. Investment banks do not take retail deposits

b. All of the answers

c. Investment banks have far more institutional liabilities

d. None of the answers