18- which of the statements given below is false? Please select one; a) a financial intermediary borrows funds from people who have saved b) in a bull market stock prices are rising on average c) interest rates can be accurately described as the rental price of money d) a stock is a debt security that promises to make periodic payments for a specific period of time e) banks are financial intermediaries that accept deposits and make loans

18- which of the statements given below is false? Please select one; a) a financial intermediary borrows funds from people who have saved b) in a bull market stock prices are rising on average c) interest rates can be accurately described as the rental price of money d) a stock is a debt security that promises to make periodic payments for a specific period of time e) banks are financial intermediaries that accept deposits and make loans

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Nonbank financial institutions do not earn the interest on reserves (IOR) rate. a. True b. False
f1
15) Different banks in a country offers high interest rate on Negotiable certificate of deposits. It a. Attracts banks to increase their deposit b. Banks will become insolvent c. Attracts banks to purchase more assets d. Attracts customers to increase their loan
1. What is the purpose of stock and bond markets? 2. Why do people participate in them? 3. Why are they important for the economy? 4. when financial markets channel funds from savers to investors, who benefits? Condition: 1. Be precise. Explain your answers on each question in 3-5 sentences only
7- which of the statements given below is true? Please select one; a) every financial market allows loans to be made b) The New York Stock Exchange is an example of a primary market c) the capital market is a financial market in which only short term debt instruments (generally those with an original maturity of less than one year) are traded d) a pansion fund is not a contractual savings instution e) in the US financial intermediaries are restricted in what they are allowed to do and what assets m m they can hold
If a bank has a negative gap, it is likely that it has a: a. positive duration gap. b. negative duration gap. c. low stock price. d. high return on assets.
Which of the following is NOT an advantage of depositing funds into a bank account (compared to directly purchasing corporate bonds and shares): Options 1. Higher transactions costs 2. Monitoring performed by the bank on behalf of the depositor 3. Better liquidity if funds are needed quickly 4. Efficient payment services 5.Reduced price risk if funds are needed immediately
4. Gap and Duration Analysis Take the following balance sheet, which of the assets and labilities are rate-sensitive? Which assets and liabilities are not? a. Assets Value Liabilities Value Checkable Deposits Savings Deposits Money Market Accounts 40 Long-Term Loans Long-Term Securities 75 26 100 Reserves 54 10 Variable Rate CDs 25 Short-Term Securities Variable-rate Loans 15 30 Long-Term CDs 25 b. What is the estimated rate of change of bank profit, in terms of next year's interest rate, conditional on this year's interest rate being 2%? c. Suppose that all the long-term securities that the bank holds mature in 4 years and their interest rate will be 5% in that year. What is the approximate market-value of these long-term securities in 4 years given this year's interest rate is 2%?
What is the SUBPRIME crisis What is a SUBPRIME credit How the Subprime crisis has been transferred to the financial system and the markets What a lesson the fall of Lehman leaves. Establish 05 conclusions about the case and compare it with the economic crisis of the covid
Which of the following statement is TRUE? Select one: O a. None of the other options is correct. O b. Losses on real estate loans are first compensated by the investors in commercial paper issued by the financial institution. O c. In a syndicated loan, a group of lenders shares the return, but not the default risk of the loan Od. When a bank gives a secured loan, the bank has first claim on specific assets of the borrower in the event of a default. Oe. When the repayment probability of a loan is equal to zero, the financial institution investing in this loan faces low credit risk.
Which of the following will have the same effect on money supply as raising the reserve requirement? a) The central bank decreases the interest rate. b) The central bank purchases bonds in the market. c) The central bank purchases securities and debentures in the market. d) Lower bond prices.
Which of these statements about banks is true: i) Banks cannot convert all deposits in the Reserves Accounts into loans. ii) Banks can convert all deposits in the Reserves Accounts into loans. iii) Banks can create money iv) Banks can issue money. v) Commercial Banks decide on the reserves ratio O i and iii O ii and iii ii and iv i and v

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