What was considered the "trigger" to the 2008 Financial Crisis?

Select one:

a.Falling stock prices

b.International turmoil

c.Fall in bond prices

d.Fall in home prices

Question2

LIBOR stands for London Inter Bank Offer Rate. Itis the average interest rate estimated by leading banks in London that the average leading bank would be charged if borrowing from other banks.What agency conducts the survey to get the average rate from the major banks (see the LIBOR video for clues)?

Select one:

a.The Federal Reserve

b.Central Bank of London

c.European Central Bank

d.British Bankers' Association

Question3

Choose and drop from below to the appropriate box.

__________ is an investment bank that declared bankruptcy on September 15, 2008.

__________ was the smallest, and arguably the scrappiest, of the Big Five Wall Street investment banks.

In late August of each year, most members of the _______ meet in Jackson Hole, Wyoming.

In 2008, Jamie Dimon was the CEO of the investment bank_______.

LehmanBrothers

BearStearns

FOMC

JPMorganChase

LTCM

ECB

Question4

What is the meaning behind the following statement:The central bank is supposed to be the lender of last resort.

Select one:

a.Banks so focus on lending to tourist industries

b.A shortage of liquidity in a panic can push even solvent banks the edge. So, the central bank must stop this from happening.

c.The central bank must never be the first to loan funds because the market may become too dependent on it.

d.Lending last is more profitable than lending first.

Question5

Which key interest rate does the FOMC target?

Select one:

a.3-month Treasury Bill

b.prime rate

c.30-year mortgage rate

d.federal funds rate

Question6

Which of the following statements best describes a core function of a central bank:

Select one:

a.lender of last resort

b.banker to the rich

c.controller of fiscal policy

d.capital market guru

Question7

In finance,leverageis any technique to multiply gains and losses. Most often it involves buying more of an asset by using borrowed funds, with the belief that the income from the asset or asset price appreciation will be more than the cost of borrowing.At the end of 2007, as the housing crash was gathering steam, Fannie Mae and Freddie Mac (large mortgage companies) were highly leveraged about

a. 75

b. 100

c. 50

d. 25

toAnswer

a. 1

b. 2

c. 3

d. 4

Question9

A firm is

a. insolvent

b. illiquid

when the value of its liabilities exceeds the value of its assets, making its net worth negative.

Question10

A firm isAnswer

a. illiquid

b. insolvent

when it is short on cash, even if its balance sheet displays a healthy net worth.